Abstract
The digital age has changed the way we consume information and left organizations struggling to adapt to new technologies and information exchange mechanisms. Civic crowdfunding is one such new technology that has the potential to redefine what local government means from an individual and administrative perspective, but there remains little knowledge about what it is and where it fits in the public space. This research attempts to unravel these questions by providing an overview of the field of civic crowdfunding and explaining what types of projects are undertaken, what projects are successfully funded, and what factors lead to successful projects.
In early February of 2011, an individual living in Massachusetts tweeted at then Detroit Mayor Dave Bing suggesting that Detroit should erect a Robocop statue in the name of civic pride, much like Philadelphia had done years prior with its own endearing statue of Rocky. If looking for proof that technology was changing interaction with government officials, and design, funding, and creation in the public space, look no further.
Within days of Mayor Bing’s acknowledgment that there were no plans for a Robocop statue, a group of individuals set to change that. Having raised more than $67,000 from over 3,000 contributors worldwide in just over a month on the Kickstarter platform, it was clear that Robocop was coming back to Detroit. What followed was nearly a decade of bureaucratic red tape, working with local government, nonprofits, and licensing agencies in order to gain approvals and support to make the project a reality. As of spring 2020, the Robocop statue will finally enjoy the long-awaited unveiling outside of the Michigan Science Center in downtown Detroit.
While an extreme example, the crowdfunding of the Robocop statue highlights the continued evolution of technology and citizen involvement in the public space. Effective public participation hinges on having an informed citizenry (Jordan et al. 2016). Gone are the days when information was consumed primarily from print and broadcast media. Technology has changed the way citizens interact with government, and it has changed the way government provides services. Increasingly, the use of technology and digital media sources has become a primary source of information exchange between administrators and citizens; the use and embrace of this media has ushered in a new form of “participatory civics” (Zuckerman 2014). “One of the characteristics of this version of civics is an interest—perhaps a need—for participants to see their impact on the issues they’re trying to influence” (Zuckerman 2014, 156). Crowdfunding is one such way that this relationship has and continues to evolve.
By understanding how the process works and what factors contribute to project success, we can begin to provide information on the effectiveness of such new forms of engagement while also revealing citizen interest and preference. What does project success look like? What are the characteristics of both funded and unfunded projects? This research takes an exploratory approach toward beginning to unravel these questions by providing an overview of the field of civic crowdfunding and explaining what types of projects are undertaken, what projects are successfully funded, and what factors lead to successfully funded projects.
Literature Review
Crowdfunding
Crowdfunding is the process of appealing to and leveraging the resources of the crowd to better achieve a goal or project (Brabham 2013). This is typically done through online platforms in which organizers can “pitch” their ideas to a community of potential investors. One recent example saw an individual jokingly request $10 to make a potato salad. What followed highlights the irreverence and potential of such platforms that allow people to pitch their projects on the interwebs. A mocking $10 request turned into nearly 7,000 donors raising more than $55,000 in the name of potato salad.
With projects like this gaining popularity and vast sums of money being contributed from across the globe, it was but a matter of time before more civic-minded individuals got involved. Civic crowdfunding can be conceptualized as the crowdsourcing of fiscal resources to address a community need. Civic crowdfunding does not necessarily include public-sector actors or even involvement (although it often does) but more so refers to projects that operate in the public space such as neighborhood cleanups, civic pride projects, the creation of dog parks, and the like. To date, crowdfunding has been a predominantly private-sector activity in which ideas and projects are pitched to potential investors through online hubs that circumvent the traditional bank/investor process. The “private” sector crowdfunding described above often hinges on the exchange of a tangible good in return for a donor’s investment. Think back to the potato salad, these types of projects provide incentive for donors through the promise of tangible rewards. In this case, a potato salad cookbook. Ultimately the success of the project is determined by the public’s willingness to invest in it.
As crowdfunding has become increasingly popular over the last few years, local governments have begun to consider it as a mechanism by which to fund projects and generate resources that may not otherwise be possible. From a local government perspective, this may be a project at the bottom of the budget that there is interest in but not enough to make a priority. The public-sector actors, platforms, networks, and process can take a variety of forms and functions, but generally, there is an articulated issue of project need, a description of how the issue will be addressed, and a funding goal on whatever particular platform that has been chosen. Proponents argue that this new form of fund raising, and project development is a better, more effective way to connect citizens with government in the twenty-first century (Davies 2014). Not only do such platforms increase democratic citizenship and community (Mayer 2018), but they also have the potential to curb budget shortfalls in cities across the country (Mayer 2016).
Collective Intelligence and Public Value
As technology and the various growth and stages of the internet have continued to evolve, it has had a profound effect in reshaping traditional business organization and structure over the last two decades. Now government and other deeply ingrained institutions are beginning to show signs of adopting and embracing the possibilities and utilizing the crowd in large and loosely drawn collaborative networks (Bryson, Crosby, and Bloomberg 2014).
Creating public value and the articulation of public interest should not be viewed solely from a macro local government level or as an all or nothing process. The efforts of public managers and other civil servants highlight how each individual administrator can create public value within their sphere of influence by being more democratic, transparent, and ultimately creative in their service of the public (Moore 1995). Technology has increasingly made this easier through several platforms and outlets that aggregate opinion, resources, and other materials that can help to create better targeted and ultimately more efficient offerings (Quittner 2012).
Public Goods and Citizen Preference
Civic crowdfunding can also provide insight into citizen preferences. Citizen participation can reveal citizen preferences and in turn positively impact public good provision (Robbins and Simonsen 2002). Tiebout (1956) suggested that in general, local governments are inefficient and have little incentive to offer services to citizens. The solution to increasing efficiency is public choice. Assuming citizens have both perfect mobility and perfect information, as well as behave in a rational, self-interested manner, they should in theory be able to move to jurisdictions that offer more of the services they seek, thereby revealing their preferences (Ostrom, Tiebout, and Warren 1961; Tiebout 1956).
Preference, when articulated by enough people often leads to service delivery, something that has changed since the Great Recession of 2008. In an environment that was already being impacted by local government decentralization, local government capacity for dealing effectively with policy issues, particularly when competing with business enterprises, has resulted in a conflicting system of service provision and delivery (Wagner 2011). One of the main reasons for the breakdown is the different values between sectors and the continual evolution of public-service values; the private-sector values efficiency, while the public sector is predicated on service and the public interest (Van Wart 1998).
The Intersection of Crowdfunding, Public Value, and Preference
As the civic crowdfunding literature continues to grow, there remains a striking lack of theoretical development. By exploring the growing field of civic crowdfunding through the lens of New Public Service, it offers a connection explaining the democratic processes of the projects. This provides context and insight into areas of engagement, citizenship, and the proper role of administrators in highly networked situations much like those of civic crowdfunding. While civic crowdfunding also has the potential to explain how new models of engagement focusing on the public interest, responsiveness, and community work within the New Public Service and the greater public administration community.
The recent growth of civic crowdfunding can be attributed primarily to a few factors; first, the increasing prevalence of local government not being able to provide the services that citizens have grown accustomed to in their communities. Dixon and Dogan (2002) call it governance failure when, due to a lack of administrative capacity, institutional knowledge, or other breakdown, government fails to provide the services citizens come to expect. This has in turn led to a hollowing of the state where the traditional roles and duties of government are increasingly filled by third-party actors (Milward and Provan 2000). The resulting transformation of governance has led to a greater emphasis and need for collaborative networks but has also created several boundary issues between actors (Kettl 2002). Civic crowdfunding is one small example of this but also is an example that may be able to add both economic and public value for users and consumers within a community. These projects are designed to offer public goods and services through more inclusive processes utilizing networks of citizens and officials aimed at understanding and achieving the collective interest. When done successfully, they can create public value through the articulation of the public interest within a community.
Citizen engagement
Perhaps the most critical element of the New Public Service is responsiveness to the public interest; therefore, designing and incorporating strategies to solicit this citizen input is imperative. An active and engaged citizenry is viewed as more than a by-product of engagement strategies but also as a necessary and welcomed input into administrative processes (Stoker 2006). Administrators need to be able to work with and alongside citizens, striving for more than just efficiency and effectiveness, but also a reorientation of public-sector management to create lasting public value (Boyte 2011).
Civic crowdfunding broadly reorients engagement into several potential “new” avenues that give citizens greater voice in government (Zuckerman 2014). Zuckerman (2014) argues that the shift to broader and particularly more digital forms of engagement is ultimately a response to a feeling of helplessness and dissatisfaction with partisan politics. These levels of engagement are more prevalent and can have greater impact at the local level than in state or federal politics.
Most civic crowdfunding platforms simply rely on intrinsic motivators and the desire for whatever the extrinsic result of a successfully funded project may bring; however, some platforms suggest adding additional incentives that can be a unique challenge in and of itself (Brabham 2013). Some of the more common incentives in civic-minded projects also go a long way to spur additional engagement. These typically include openings to further participate in various stages of the planning process, volunteer opportunities, and invitations to special commemorative events (Davies 2014).
The more effective project conveners are at building networks, establishing a social media presence and partnering with community organizations to spread the word, the more likely they gain funding support. The more supporters, the more money raised, the greater likelihood of a successfully funded project. Yet gaps exist throughout this process, and each project is approached differently. The analyzed projects reveal a mean project request of nearly $10,000 with the amount raised at nearly $4,500. This gap indicates a large disconnect in some of the proposed projects. These hypotheses explore the relationship between engagement and funding, specifically allowing for the exploration of a potential funding gap and whether there may be an optimum minimum and maximum request level as well as whether it is a linear relationship between pricing and success.
Democratic citizenship
Democratic citizenship assumes a broad civic interest among individuals within a community over the more traditional narrow self-interests of the citizenry (Denhardt and Denhardt 2003). Citizenship in this conception “implies active involvement in political life”; yet this public interest is often something that administrators must promote and design structures to foster and encourage (Denhardt and Denhardt 2003, 29). The rule of government then shifts from one in which free market capitalism dominates structure and decision-making to a more collaborative, citizen-centered government in which private and self-interests are increasingly balanced or “checked” by greater “citizen involvement in the governance process” (Denhardt and Denhardt 2003, 32).
Designing projects in ways that citizens can be active and engaged allows for a more inclusive process in which citizens can play a meaningful role. Civic crowdfunding in its many forms and iterations fits here as a channel through which citizens can impact and affect community. Projects vary greatly and do not always come directly from local government administration. In fact, much of the time they are proposed by community organizations and activists. This leads to some concern over who gets to determine the collective interests (Peters and Pierre 1998) that will be articulated through a project proposal.
Measuring democratic citizenship can be difficult and controversial. Ideally, we want to capture this variable at the local level across several electoral opportunities, but there are several challenges including incomplete data and different reporting that inhibit this practice. Fundamentally, the defining element of democratic citizenship is that of broad public participation in politics (Dahl 1998; Verba, Schlozman, and Brady 1995). Blais (2000) illustrates the importance of voter turnout as a critical component of citizen duty, a societal norm and duty that has a strong foundational and theoretical background in the study of democratic theory (Dalton 2008). Utilizing voter turnout as a component proxy measure for the New Public Service concept of democratic citizenship, this hypothesis explores the impact of voter turnout at a county level on project success. Presuming democratic citizenship implies active interest and involvement within community governance (Denhardt and Denhardt 2003), it is theorized that the more politically involved a citizenry within a proposal jurisdiction, the more likely project success. In this study, a jurisdiction refers specifically to the zip code and corresponding boundary lines where a project is proposed. This offers a way in which to classify and quantify the characteristics of areas where projects are proposed.
Incorporating multiple actors and sectors
Although much of the work by administrators is carried out within the traditional organizational hierarchy, over the last two decades, there has been an undeniable shift toward network governance or the incorporation of multiple sectors and actors (Agranoff 2006). This devolution (Kettl 2002) or hollowing out (Milward and Provan 2000) of the state has led to an increase in collaborative networks and third-party actor service provision. While this creates several organizational and accountability concerns, it also has one huge benefit: the potential to increasingly address resource shortages through several new channels (Agranoff 2006).
Community engagement is one way in which government and market shortfalls can be addressed (Demediuk, Solli, and Adolfsson 2012). There are several mechanisms, such as the coproduction of goods and services that along with crowdfunding, begin to fill the engagement gap. In this scenario, crowdfunding connects participants with administrators in a way that boosts local engagement and can have several additional positive impacts within the community (Demediuk, Solli, and Adolfsson 2012).
Initially, civic crowdfunding projects started as a way for enterprising citizens or organizations to pool resources for community improvement. More recently, larger organizations and many local governments have begun turning to crowdfunding to address revenue and funding issues (Davies 2014).
While crowdfunding holds potential to supplement revenue streams, it also has the potential to shift local government to an increasingly democratic model. In doing so, administrators retain final authorization and decision-making power, but citizens may have substantially greater input throughout the process (Cabannes 2004). By engaging citizens in such a manner, there will be greater potential for discourse between administrators and citizens to stress the need for a more appropriate balance between revenue generation and public service demands (Warner 2010). Greater engagement also means greater protections against concerns of fraud and manipulation. Furthermore, the more inclusive the process and the more funding sources identified beyond the traditional tax and spend model, then the greater potential quality of life for the citizenry (Warner 2010; Wright 2012).
Method
There are no known databases or available existing datasets examining civic crowdfunding. This is, in every aspect, an exploratory examination into the use and success of crowdfunding in the public space. All data are collected directly from the original source platforms and only include completed projects, specifically projects that have run the course of their funding proposal deadline, including both successfully funded and unsuccessful projects. There are 226 projects that meet the criteria and have been analyzed from the two primary civic crowdfunding platforms, Citizinvestor and ioby. Despite their differences, each platform requires thorough descriptions of the project proposals, goals, time frames, and other pertinent information.
Content analysis is performed on the platform data in addition to which a quantitative regression analysis is employed to better address the factors influencing project success (see Table 1). The unit of analysis in each case is the specific and individual civic crowdfunding project. The quantitative analysis employs both ordinary least squares (OLS) and logistic regression analyses in order to examine the impact that the explanatory variables have on both the percentage of the project funded (OLS) and overall project success (logistic).
Variables and Measures.
The OLS regression utilizes percentage funded as the dependent variable and community demographics, New Public Service variables, and project components as the independent variables. The percentage variable ranges from 0, if a campaign receives no funding, to 208 percent funded in the case of one project that received substantially more than had been requested. This dependent variable assesses the degree of impact the independent variables exhibit on percentage of project success. The logistic regression analysis examines the binary dependent variable of whether projects are fully funded and the factors that contribute to project success. Results including significant variables and factors contributing to project success and failure follow in discussion.
In running the analysis, residual values were compliant with normality. In the few instances where there were issues, such as with the request, raised, poverty rate, and population variables, data transformations were performed. There were no further issues with collinearity or homoscedasticity.
Results
Every project proposal starts with a budget request. This budget number is used as the baseline, which is then compared to the total amount raised by a project proposal. Dividing the total amount raised by the total amount requested gives the percentage funded, which in this instance is being utilized as the dependent variable. This model highlights the impact that specific variables identified through the literature and qualitative analysis have on project proposal funding. The analysis sheds light on the impact a variable may have on projects meeting and exceeding their 100 percent project success funding goal and the project proposals that fall short of full funding.
Overall, the determinants of support for the percentage funded model have a .18 adjusted R 2, meaning that the overall model explains nearly 20 percent of the variance. Four variables achieve statistical significance at the .05 threshold in the directions assumed. The first significant variables, the amount of monetary request and the amount raised, exhibit statistical significance at the .01 level in the assumed directions. Amount requested has a negative relationship with percentage funded, indicating that as project proposal budget requests increase, the percentage of total funding a project proposal receives decreases. In addition, the amount raised has a statistically significant relationship in the expected direction. The more money raised positively impacts the percentage of the project proposal funded.
Both median age and poverty rate were also found to be significant at the .05 level. These findings are interesting, indicating that for increases in age, success is more likely, and where there is greater poverty, projects tend to raise a higher level of capital. The findings indicate that civic crowdfunding projects raise a greater percentage of their initial request in more impoverished, older areas.
Moving on to the logistic regression model results, Table 2 shows the overall model results are fairly like the percent funded model. In each model, the amount requested and the amount raised are found to be significant predictors. Surprisingly, no other variables reached the .05 significance threshold in the overall success model. Again, several variables thought and expected to have an impact have not shown significance; this highlights the challenge of model specification in an emerging field. Generally, the significant predictors are as expected and in the direction expected. Surprisingly, we find little support for the hypotheses except for Hypothesis 2 and the amount of project proposal requests. The findings further reinforce the OLS results that while there may be several variables that matter, ultimately it comes down to money. Low-dollar requests are more successful in achieving their goals; increases in project proposal funding goals come at a steep price to the likelihood of overall project success.
Percent Funded and Project Success Results.
Note: Standard errors are in parentheses.
* Significant at .10.
** Significant at .05.
*** Significant at .01.
Conclusion
As an increasingly popular alternative funding and service delivery mechanism whether for making potato salad, building a shrine to Robo-Cop, or just cleaning up a local park, civic crowdfunding has shown the potential to augment traditional local government funding and service delivery. This research provides insight into the factors that contribute to project funding and begins to theorize how civic crowdfunding may be used in the future.
By addressing both project success and failure through the examination of fully funded projects as well as partially funded proposals, this study provides valuable insight for scholars interested in new forms of engagement and service delivery as well as practitioners focused on funding a community need. The models build on the relatively sparse crowdfunding research and incorporate literature from the New Public Service, as well as its tenets citizen engagement, public values, and network governance, to inform the research.
Perhaps most interesting is the information the analysis provides about how and where projects are funded. It is not as simple as the more affluent and involved an area is, the more likely project success is. Several other factors influence project success and failure highlighting the need for additional research to better understand project pricing and how it may impact project success among different types of projects and regions.
In looking beyond project components, the analysis sheds light on where projects may be successful and the characteristics that contribute to success. Better understanding where project proposals work can allow for more effective civic crowdfunding projects and campaigns. A surprise finding of the research was the negligible impact of population size within proposing jurisdictions. Surprisingly, voter turnout and income, also theorized to have a positive impact on project success, were also found to lack significance within the model. These findings collectively raise questions about the population characteristics of proposing jurisdictions. The more affluent communities may have larger budgets and other resources at their disposal to fund the types of projects typically proposed through civic crowdfunding platforms, whereas the jurisdictions on the other end of the financial spectrum may lack the necessary resources to get even a crowdfunding project off the ground. The smaller, middle-class areas in many cases exhibit a greater sense of project need than the more affluent proposing jurisdictions but still retain enough collective resources to meet funding goals.
Civic crowdfunding initiatives have continued to grow across the country, joining several alternative funding and service delivery mechanisms designed to better connect citizens and communities with much needed resources. This study provides valuable insight into what these projects look like on how to best utilize civic crowdfunding campaigns within local jurisdictions. By examining both project successes and failures, as well community demographics, we can begin to illustrate the types of communities where innovative financing is taking place and, perhaps most importantly, working. Being able to isolate communities and variables of interest within the models that drive success and failure lays the groundwork for a bevy of future research further exploring specific aspects of civic crowdfunding success and community use of innovative technology.
While there remains much work to be done in understanding how and why civic crowdfunding works in the public space, this exploratory study highlights how collectively empowered citizens and public servants can work through new and innovative channels to make a difference in their communities. Acknowledging that planning, design, and coordination are not free goods, and they involve substantial commitments of time, effort, and attention (Roberts 2011), the results provide insight and guidance into how, where, and why crowdfunding may work or fail in the public space. The lessons learned can inform planning and funding a civic crowdfunding campaign that can be of use to scholars and practitioners alike interested in citizen engagement and community betterment.
Footnotes
Declaration of Conflicting Interests
The author declared no potential conflicts of interest with respect to the research, authorship, and/or publication of this article.
Funding
The author received no financial support for the research, authorship, and/or publication of this article.
