Innovative councils embrace crowdfunding to fill budget gap for civic projects

By Andy Teacher

“There’s no money left,” read the famous note left by former Treasury Minister Liam Byrne to his successor following the 2010 election. Since then, the Government has worked relentlessly to reduce Britain’s yawning budget deficit.

Local councils are being hit especially hard. In the next two years, they will have to slash £3.5bn from their budgets and a council tax freeze lasting until 2014, will make it hard to replenish budgets. As a result, funding for civic improvements – from parks to sport centres – has plummeted by half.

Amazingly, some councils are at the forefront of technology turning to online crowdfunding as a mechanism for tapping new sources of funding for civic schemes and social ventures.

Spacehive.com, a British crowdfunding platform is the first anywhere in the world designed specifically for civic projects. It’s funded £1m of projects since launching a year ago – from a community centre in Wales to a town centre WiFi network in Mansfield.

The platform now has a further 300 projects in its pipeline dotted around the UK.

Users upload a project and then encourage local people and businesses to pledge cash along side the council. They are only charged when the funding target is hit.

The model is philanthropic, so those who contribute don’t legally “own” anything; they just enjoy the benefit of the scheme once delivered.

Councils are increasingly realising the potential of this kind of mass philanthropy to unlock new sources of funding for popular projects, whilst simultaneously boosting civic engagement in planning.

Some 12 councils have already pledged money to Spacehive projects, whilst 5 more have launched their own crowdfunding campaigns.

In the East-Midlands, Mansfield District Council pledged £1,000 to a project to install a free public Wi-Fi network covering the whole town, leveraging an extraordinary £35k from local people, businesses and corporates.

In Somerset, the council pledged £600 to the building of a £5,400 bouldering room in Minehead, whilst in High Wycombe, Berkshire County Council pledged £5,000 to a £60,000 project to transform a disused retail unit into a hub for young entrepreneurs.

Individual councillors are getting involved too. In Northern Scotland, councillor Chris Tuke created his own Spacehive project in a bid to create a tennis club in the town of Burghead, whilst in Somerset the former Mayor of Frume pledged £50 to a project to convert a derelict toilet block into an art gallery.

The foray into crowdfunding by public bodies comes as experts predict the wider crowdfunding market will skyrocket in the coming years, as the post-banking economy alights on new mechanisms for raising finance.

Whilst £900m was raised globally on crowdfunding platforms in 2011, accounting giant Deloitte predict that £1.9bn will be raised globally in 2013. By 2016, Nesta, the UK’s innovation charity, predict that £14bn a year will be raised in the UK alone.

An estimated £5bn of that £15bn, is expected to flow into civic and community sector. Liz Peace, chief executive of the BPF, said: “Getting communities on side while finding the money to make things happen are the holy grails of local politics and the astonishing thing about crowdfunding is how simple it is – even for those not used to social media. Public space is hugely important for communities and developers alike, so any route to improve it should be welcomed from all sides.”

Housing and Local Growth Minister Mark Prisk said: "Our efforts to revive our town centres and make them the centre of their communities have already captured the imagination of people up and down the country, and led to the creation of over 330 Town Teams dedicated to supporting their high streets. So I’m delighted that they will have even greater support thanks to ‘crowdfunding’, which will help ensure vital regeneration projects get off the ground and encourage more people to shop local once again."

About the author

Andy Teacher is PR for SpaceHive.

http://spacehive.com  

Nesta – Crowding In: How the UK’s Businesses, Charities, Government, and Financial System can Make the Most of Crowdfunding, December 2012. http://www.nesta.org.uk/home1/assets/features/crowding_in

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