Ecosystem

A Michigan Program Combines Crowdfunding And Grants to Fund Civic Projects

Ingrid Ault | November 20, 2015

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The Midtown Green Alley is more than a 415-foot stretch of green space connecting Alexandrine and Selden Streets in Midtown Detroit. It’s a symbol of the community’s hopes for the area.

The newly renovated alley features native landscaping, an edible garden, permeable paving stones and art installations created by local artists. And it will serve as a vital pedestrian corridor connecting the residential and commercial developments underway on either side of the alley.

Just a year ago, this vibrant walkway was a dark and unused alley. Its transformation—part of a broader renaissance underway in Midtown Detroit—was made possible by an innovative program combining crowdfunding with government grants to support community improvements.

The program, called Public Spaces Community Places, is a partnership between the Michigan Economic Development Corp. (MEDC) and a local crowdfunding platform called Patronicity. The first state-sponsored grant program to use crowdfunding, it is changing the way grants are applied for, evaluated and approved in Detroit, and serving as a model for other communities looking to fund civic projects.

Leveraging Public and Private Dollars

Michigan-based communities and nonprofits with place-making projects apply to the Public Spaces Community Places program on the Patronicity site. Those that qualify can then set up free crowdfunding campaigns to raise donations for projects that revitalize or create public spaces—everything from parks and bike trails to pop-up retail and community kitchens. Projects that demonstrate public support by reaching their crowdfunding goals are matched dollar for dollar, up to $50,000, by the MEDC. (Patronicity takes a 5% fee of the funds raised on its platform).

The Midtown Green Alley Restored an Unused Alley
The Midtown Green Alley transformed an unused alley into a vibrant public space

The program also leverages private dollars. For example, Shinola, a Detroit-based retailer that experienced firsthand the power of an earlier alley transformation by Midtown Detroit, Inc., the nonprofit behind the Green Alley project, contributed a grant of $100,000.  That, combined with the more than $50,000 in crowdfunded donations and the $50,000 matching grant from the MEDC, allowed Midtown Detroit to reach the total $200,000 needed for the Green Alley project.

47 projects have been funded, raising $1.7 million through crowdfunding and generating another $1.4 in matching grants

Cari Easterday-Kar, the chief financial officer for Midtown Detroit, Inc., says the Public Spaces Community Places program helps to strengthen and scale the kind of locally-based, multi-stakeholder funding that takes place all the time in Detroit and other communities by drawing in a broader audience and amplifying public funds. “It makes a significant difference,” she says. For smaller projects in particular, she added, the matching funds can be a make or break factor.

Since Public Spaces Community Places began in June 2014, 47 projects have been funded, raising  $1.7 million in crowdfunded donations from more than 4,000 people, and generating another $1.4 in matching grants from MEDC. In addition, the projects have spurred more than $10 million in private investment.

Massachusetts is expected to launch a similar program next year

In addition to the Midtown Green Alley, communities have used the program to open a maker space and restore an old theatre in Detroit, create a skate park in Marquette, and a soccer field in downtown Lansing.

To qualify for the program, projects must be community-oriented in nature and located within a city that has a traditional downtown.

The project has exceeded the Michigan EDC’s expectations. The agency just renewed its support for another year, earmarking a total of $2 million for matching grants in 2016. And the Michigan State Housing Development Authority has joined it as a matching grant partner. Patronicity is also in talks with other grant organizations that may participate.

Ebrahim Varachia, president and cofounder of Detroit-based Patronicity, calls the model “crowd-granting.” “It’s been model wildly successful,” he says. “Grantors are looking for community members to propose projects, as donations are viewed as more meaningful.”

Patronicity's Ebrahim Varachia
Patronicity’s Ebrahim Varachia

The Public Spaces Community Places model embodies a new spirit of economic development that seeks to engage citizens and put more decision-making power in their hands. While MEDC approves the projects, ultimately it is the community that determines support by voting with their dollars.

“It’s one thing to press a ‘like’ button,” says Varachia, “but it’s another thing if that ‘like’ button has a dollar sign attached to it. By voting with their credit cards for projects that are meaningful to them, the impact (citizens can have) is far greater.”

Streamlining the Grant Process

The approach holds great potential. In addition to allowing the public to vet projects, the Patronicity platform streamlines the grant process and makes it more transparent.

As anyone who has ever applied for a grant will tell you, the process can be tedious and time consuming, and applicants often wait months to learn if they are accepted. In contrast, the Public Spaces Community Places program promises to let applicants know if their projects qualify within 72 hours.

For MEDC, the streamlined process saves time and money. More important, it increases the impact of the agency’s dollars and generates publicity and public engagement.

Eaton rapids
Kayaking on Eaton Rapid’s placid river

And it has enabled projects to be undertaken across the state that may not have otherwise been possible.

One example can be found in Eaton Rapids, where community members are seeking to restore the city’s namesake rapids, currently blocked by a dam, and create a kayaking and fish migration route.

The project organizers, which include the City of Eaton Rapids and two local nonprofits, have received pledges from two companies for donated goods (rocks) and services (shipping of rocks) valued at $200,000. They are hoping to raise the remaining funds through a $50,000 crowdfunding campaign, which runs through December 18 on Patronicity, and the $50,000 match it will generate if successful. (If they don’t meet their crowdfunding goal, they get to keep what they raised but forfeit the match money).

A screenshot from the Restore the Rapids campaign
A screenshot from the Restore the Rapids campaign

A Learning Process

The Public Spaces Community Places program was very much an experiment, and MEDC used the first year as a pilot to learn what worked, what didn’t work, and how to improve the program.

Some small changes have been made. Initially, any entity could apply for the matching grant program. That’s been changed to allow only municipalities and non-profits. And in response to the popularity and success of the program, the EDC lowered its maximum match amount to $50,000 from an initial $100,000.

“Lowering the amount allows more communities to participate,” says Varachia, who adds that the program is best suited for smaller projects anyway.

Setting an unrealistic goal is one of the biggest reasons projects fail at crowdfunding

Patronicity’s role goes beyond simply listing the crowdfunding campaigns. Once projects are approved by the MEDC, the company works with project leaders to help them create a successful campaign. “We are the training wheels, from beginning to end,” says Varachia.

That includes helping project leaders determine a realistic fundraising goal. Setting an unrealistic goal is one of the biggest reasons projects fail at crowdfunding, he says.

“In crowdfunding, raising $100,000 is very, very difficult,” says Varachia, noting that the typical donation-based crowdfunding campaign raises around $5,000 to $7,000.  “Planning for your audience and what they are capable of is key to success.”

The ‘all or nothing’ model, he adds, where the match is dependent upon reaching or exceeding the target raise, encourages a realistic goal. At the same time, the program’s matching funds help to incentivize the donors.

Public Spaces Community Places is attracting wider interest. Massachusetts is expected to launch a similar program next year. And Patronicity has spoken to officials in California and Arkansas that are interested in replicating the program.

For more information on applying to the program, see this pdf

Ingrid Ault is an urban planner and Community Development Educator based in Calhoun County, MI.

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