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Crowdfunding to become de-facto funding method for councils

A report released by Future Cities Catapult claims that in the future, crowdfunding will become the de-facto method to assign council resources and budget to local projects.

The UK’s Government-backed centre for urban innovation has been working with Spacehive and the cities of Manchester and Hull to untap their civic funding potential, advising on the ‘Our Manchester’ and ‘Make Hull’ initiatives launched last year (2016).

Hailing numerous economic and social benefits, the report explores how cities could use crowdfunding as a tool to adopt and foster innovation and change, and its potential to revolutionise local democracy.

45 councils across the UK are utilising crowdfunding, but little work has been done to understand what it can offer communities, with 90% of local authorities largely unaware of the domain and how it could apply to them.

Crowdfunding addresses the key city challenge of public authorities operating with structures that have been in place for decades, and their ridged and complex citizen engagement mechanisms. The report encourages cities to share knowledge, build partnerships and ultimately create an ecosystem where government, businesses and citizens can creatively collaborate.

The findings come at a crucial time, as councils search for ways to ease pressure on council budgets, and community and voluntary organisations are finding ways to provide the same services with limited funds.

Scott Cain, Chief Business Officer at Future Cities Catapult said:

“We’re very pleased to be launching our Civic Crowdfunding report, encouraging local authorities to adoption crowdfunding approaches that lead to stronger communities, more attractive neighbourhoods and a more democratic approach to community engagement.

“Crowdfunding is not a new concept, and can be traced back to 1884 when over 120,000 micro-donations were made towards the Statue of Liberty. It’s a great solution to a very real problem and considering it as simply another fund-raising tool is to ignore its huge potential for citizen participation and practical democracy.”

Chris Gourlay, CEO and Founder of Spacehive said:

“What we’re seeing is that civic crowdfunding is beginning to open up an exciting new space where councils can collaborate directly with citizens and businesses to add value to communities.

“More and more councils are seeing the value empowering local people to create places they love: get it right and we can unlock a huge amount of new creativity and funding for the civic environment, boosting people’s quality of life and the local economy.”

John Rossant, Chairman of the NewCities Foundation said:

“It is essential that we rethink the way cities can unlock the energy and creativity of their residents to produce vibrant, successful public spaces.

“We see enormous potential in new tools such as civic crowdfunding that can make a real difference in the city and deliver communities’ needs and aspirations if they are properly understood by city authorities, residents, and and the private sector alike.

“The potential impact of leveraging the crowd in urban development may prove itself the new normal for working with communities to shape public space in cities. ‘Crowd urbanism’ may be an unstoppable force in how we make and re-make our cities.”

Civic crowdfunding is still in the early stages of development and the market is growing rapidly. The Cambridge Centre for Alternative Finance reported that in 2015, the UK online alternative finance market facilitated loans, investments and donations totalling £3.2bn[1]. It facilitates a marketplace-led model, where citizen demands and institutional supply can meet more effectively.

Download the report.

[1] Zhang, Brian. Pushing boundaries: The 2015 UK Alternative Finance Industry Report. s.l. : Cambridge Centre for Alternative Finance, 2016.

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