Combining Crowdfunding And Place-Making To Help Communities Improve Themselves
In July 2014, Midtown Detroit Inc, a nonprofit planning and development group founded to revitalize the Cass Corridor neighborhood in the Motor City, wanted to renovate an overlooked kind of community connector: a rundown alley between Selden and Second streets could be a nice pathway and gathering spot between shops, making the city a more walkable place. The vision accompanied a plan to revive a series of derelict buildings that flanked the rutted, trash-can-lined artery. The city and other investors were rehabbing an apartment complex, cleaning up an adjacent park, and even planned to add a wine shop with outdoor seating that opened into the alleyway itself.
Before moving forward, though, the group faced the usual civic project hurdles: Did people in the area actually even want this? Would they actually use and care for it? And, equally important, was there any grant money available to offset the costs? To find out, MDI turned to Patronicity, a Detroit-based online fundraising platform that’s pioneering a new form of crowdfunding dubbed “crowdgranting.”
At Patronicity, which resembles a GoFundMe or Kickstarter for civic projects, the process works like this: A local nonprofit or community group posts a request for citizens to cover about half the cost of their project, a shorthand way to demonstrate both need and demand. If that happens, their state economic development agency, in this case, the Michigan Economic Development Corporation (MEDC), will chip in to match. Such goal-based funding is assured from the second a project launches because of a separate deal that Patronicity has with each state in which it operates. (In this case, the underused space would become a “green alley,” complete with rain gardens, restored brick, and ample LED lighting.)
Patronicity works with each service group ahead of time to make sure the projects are structured in a way that will ensure state funding. “We thought: What if we can take the impact of Kickstarter had in the art community and transform it towards community development, making people champions of their own community?” says Patronicity president and co-founder Ebrahim Varachia. “Beyond that, there are other grant organizations already funding these types of projects. What if we marry the two?”
The answer turns out to be a pretty successful business model. In the two years since Patronicity launched, the group has helped nonprofits and municipalities in three states–Michigan, Massachusetts, and Indiana–green light about 140 projects. (These were the first handful of places unafraid to act as pilots for these funding arrangements.) Over 24,000 people have contributed money, unlocking nearly $8 million in immediately-accessible development funds. The group expects to double that total this year and is approaching other states about expansion. In most cases, states already have funds earmarked for this kind of development, officials just have become comfortable with outsourcing that process, allowing the activity on Patronicity to highlight what projects residents endorse, instead of leading the community meetings to spot and then justify such needs. Eventually, Patronicity would like to see more states, philanthropies, and even corporate social responsibility programs join the movement.
Unlike GoFundMe and Kickstarter, which leave users adrift to figure out the best way to ask for charity, Patronicity is a more full-service agency. it helps groups figure out how best to structure the pitch others will get interested, and then shoot promo videos, and assist with solicitation ad copy. (Individuals can’t use it unless they’ve partnered with or started their own nonprofit beforehand.) On the back end, Patronicity compiles other statistics: each project’s total square footage, anticipated visitors, jobs created, and additional private investment on a back-end dashboard, so places like the MEDC can review a snapshot of the overall impact. “We are a vetting service for the granting organizations,” adds Varachia. “But the beauty of the program is that they want to make the community the final review committee.”
Like most crowdfunding companies, Patronicity takes a 5% fee from the community donations. State partners are also charged an undisclosed administrative fee. The payoff for both is that the company’s approach to data collection and showing public support shortens the grantmaking approval process from six weeks to just under 72 hours from the point that a project meets its goal. So far, 97% of all projects have achieved their match. It helps that Patronicity grooms those projects ahead of time to ensure they aren’t lemons: In order for MEDC to provide funding, each must be publicly accessible, community-minded, and located in a downtown area, and meet the right metrics of price to demonstrated impact.
Nate Scramlin, a senior community assistance specialist at the MEDC considers the process a win-win. “They’re essentially voting for these projects with their own dollars,” he says of site donors, noting that it’s an easy way to spur both early and sustained community engagement. “For the long haul, if John Q. Citizen lays down $20 to improve their park or give a farmers’ market a home, then they will become invested in that piece of property or that place. It instills a pride in their community where they will probably go to that location and take care of it.”
At the same time, private investors may be attracted to join or build off Patronicity projects because of that obvious level of support. About 140 “patrons” contributed to MDI’s green alley project, which met its $50,000 goal, thus triggering the same amount from the state. Along the way, the campaign caught the attention of Detroit-based watchmaker Shinola, who became a partner, adding additional funding. Selden’s Standard, a major restaurant, contributed–and opened a branch in the area after redoing another blighted building, piggybacking on the public interest.
For some groups, Patronicity has become a way to generate more interest around important projects that might have otherwise stagnated, says Scramlin. And it’s given MEDC more license to encourage communities to think big: there’s now a good mechanism to share and fund exciting projects. Michigan’s “Public Spaces, Community Places” has funded projects in 60 communities, putting up $3.3 million that generated over $20 million in private investment.
Patronicity didn’t actually start out targeting state money at all. Their first success came from similarly structured pilot in which a neighborhood association that wanted to recycle thousands of discarded tires amassing on unkept lots, and generated enough local patronage to receive a grant from the Skillman Foundation, which works to improve the education, safety, and long-term prospects of Detroit’s children.
The true power of the platform may be that it gives groups and even individuals working in ignored areas a voice, even if they don’t know how to apply for a grant or execute whatever ambitious project they’re imagining. Of course, all of that’s still constrained by needing to rally a tremendous amount of peer support and cash, and being willing to team with a nonprofit. The company says it will work with individuals to figure out what group they might join — or perhaps form — to get on the platform. In rural Portland, Michigan (population just 4,000), for instance, newly formed Friends of the Red Mill found 750 patrons to meet their $50,000 goal for new town pavilion, which was matched by the MEDC. “We really look at what we do as democratizing capital for these people,” Varachia says.
That grassroots mentality may become ever more crucial to getting projects off the group given the Trump administration’s proposed federal cuts to domestic spending. “America is becoming increasingly polarized between the right and the left. What’s interesting about this program is it really brings people together,” adds cofounder and CEO Chris Blauvelt. “That’s really our focus. Place-making done right and bringing people together regardless of where they stand.”
Originally published at www.fastcompany.com on April 11, 2017.