Council to Consider Crowdfunding for City Projects

With Dublin City Council short of money, councillors on the finance committee have agreed to consider a different way to raise cash: civic crowdfunding.

Asking the public for money for city projects might not be something that works, says Séamas McGrattan of Sinn Féin. “We just set it as one of our things that we’d examine.”

“I know some UK councils do it, some of them are very successful with it,” said McGrattan, who is head of the council’s finance committee.

In 2017, 45 local authorities in the United Kingdom were using civic crowdfunding, according to research by Future Cities Catapult and Spacehive.

There, and elsewhere, though some have raised questions about whether funding projects this way would aggravate inequality or be used as an excuse to underfund basic public services.

Early Days

Councillors and officials haven’t said they will definitely pursue civic crowdfunding. Just that they’ll look at it, as part of the work of the city’s finance committee.

That means details are still hazy.

At a recent meeting, Kathy Quinn, the city’s head of finance, pointed to how it is used by Ireland’s neighbour as inspiration.

“In the UK, that’s typically used for parks and social facilities. But typically it’s aligned with social enterprise,” she said.

If, say, there was a cafe in a local park, they might get crowdfunding to do it up, and then it would be operated by people who’ve left school, or been excluded from school, she said. “I suppose it’s two pieces to look at on that.”

McGrattan, the Sinn Féin councillor, said that recent budget talks had again shown how the city was struggling to fund itself.

“The trend is likely to continue so it’s looking at new, innovative ways and different ways to raise money going forward,” he said.

There are hints that interest is already there, said Social Democrats Councillor Mary Callaghan, who also sits on the finance committee.

She was approached by somebody saying they wanted to contribute to building a playground in their local area, she says. “At the time there was no mechanism to do that.”

Another item that the finance committee plans to revisit to raise more money for its budget is the idea of a hotel bed tax or a “transient visitor levy” as many other European cities have. But a hotel bed tax would require buy-in, and legislation, from central government.

A local authority wouldn’t need permission to crowdfund money from the public for capital or civic projects, said a spokesperson for the Department of Housing Press Office, by email.

“Once there is no expectation that donations would be refunded (which would constitute borrowing, and would therefore require permission from the appropriate Minister), no approval is required,” they said.

What Projects?

It’s still too early to say what kinds of projects the council could look to fund this way, says Callaghan, of the Social Democrats. “It’s still to be discussed.”

In a way, though, there have been proto-projects already, she says. Take the monument to Liam Mellows in Finglas, says Callaghan.

“That was very much a collaboration between Dublin City Council and a variety of locals and business people who wanted to contribute to that,” she said.

They didn’t use the word “crowdfunding”, as such, she says. But “it was people-on-the-ground-led, and the council matched in a lot of ways”.

McGrattan mentions playgrounds, greening areas, or planting trees. “There are probably some projects in local areas that you would like to do but can’t because there’s no budget there,” he said.

Some projects work better for civic crowdfunding than others, says Rodrigo Davies, who researched the upsides and downsides of civic crowdfunding a few years ago, while at MIT’s Center for Civic Media.

If you’re looking to provide a core service with a uniform provision, crowdfunding isn’t a good fit, he says. “It might not allocate resources in an equal way because it’s based on campaigning.”

Also, if you’re saying you’ll fund a basic service, such as the bus network, that doesn’t send a good signal about government, he said. “That’s clearly undercutting the role of what people expect, at least in Europe, what people expect government to do.”

On the other hand, if you’re wanting to pilot something, or test an idea – a public art project, or streetscape improvement, say – people might be willing to back that. “Maybe it can go on and be something funded by the government,” he says.

Daniel A. Brent, an assistant professor at Pennsylvania State University, said he also heard concerns from city councils that crowdfunded projects wouldn’t be popular, given that people already pay taxes.

“They were worried that the population of their citizens would say, ‘Hey, we’re already paying taxes, why do we have to pay for this?’” says Brent, who is an environmental economist.

And basics that people think they should already be receiving because of taxes – roads, police, and public services – those are probably better funded through taxes, he says.

Successful projects are likely to be when a community would benefit from something but there’s really and clearly not the money there, he says.

It’s about “really convincing that this is something extra that we really can’t support from the general tax-base. And my hunch is that those are smaller, more local projects,” says Brent.

How Much, and Where?

How much Dublin City Council would be looking to raise for what size projects, is also too early to say.

“Maybe, we just open a fund and ask people to contribute and see what you get,” said McGrattan, the Sinn Féin councillor. “I’m not sure.”

Brent says a big question for him has been how much could be raised. “What is the right scale for crowdfunding projects?” he said.

Figures that he has looked at so far – from the non-profit crowdfunding platform In Our Back Yard (IOBY) – show that the median project was roughly $3,000, he says. “Based on the data, and based on conversations, what are more likely to get funded are smaller projects.”

Davies, formerly of MIT, has slightly higher figures in his older research, looking at data from several crowdfunding sites.

In that, the median fundraising goal for a project was $8,000, while the median amount raised by completed projects was $6,357 – although some went much higher.

Another big question is where that money goes, says Brent.

In his research, he wanted to see whether communities and councils were justified in concerns that civic crowdfunding would exacerbate inequality, he said.

The fear was that a city, or community, would be funding really local public goods, and only people close to a project would be willing to contribute, he said.

“Then people in wealthier areas are going to contribute and they’re going to get projects and people in lower-income areas are not going to contribute and they’re not going to be able to fund projects,” he said.

“And that’ll just kind of accelerate existing inequalities with access to local public goods like parks and other nice stuff that people like,” he said.

He looked at IOBY data to try to untangle who donates, where projects are, and what are the socio-economic characteristics of the neighbourhood.

“You know, I found very little evidence that projects are coming up in wealthier places, or the ability to raise funding really depended on the neighbourhood income,” he said.

“Maybe, even more interesting, we found that the donors are from wealthier neighbourhoods than where the projects exist,” he said.

A lot of wealthier donors contributed to projects in less wealthy areas, he said. “We don’t have the data on the incomes of the donors, it’s all basically census data, so it’s more like neighbourhood average incomes.”

But “that somewhat alleviated that concern that civic crowding could accelerate some of these existing inequalities”, he said.

Brent had a caveat. IOBY is conscious of issues around social equity and social justice and spend a lot of time trying to acknowledge that, he said.

“They have put a lot of effort into trying to empower historically disadvantaged neighbourhoods,” said Brent.

“I guess what we found is that if you are trying to do that, you can be successful. If that wasn’t an objective, I don’t know if the same results would hold,” he said.

Here in Dublin, Callaghan of the Social Democrats says she wouldn’t expect projects in wealthy areas to be better-funded than in poorer communities. “I actually had thought it the other way around.”

Some Dubliners are really very well off and others in need, she says. “I think it’s an opportunity for those who are well off to help out their local community, or the community in other parts of the city, in a way that I think would appeal to people.”

Brent said there are measures that could be taken to rebalance any distortions that do happen. “What you could do is have what I would call a progressive match.”

Basically, the government could say it’s going to listen to communities’ voices, but for places with lower income, it’ll put in $2 or $3 for every $1 that the community puts in. For wealthier areas, they would get less.

“You can just make a formula so that it’s conditioned on neighbourhood income so that there’s no, you know, so you make it more neutral, rather than oh, I’m preferring that neighbourhood, or that neighbourhood,” he said.

That also gets around another problem that he worries there is: a free-rider problem, whereby people stand aside, as they think they can rely on others to donate.

If people know that for every dollar they put in, the government will also put in a dollar, that could help with that, he says. “It just an idea. It’s tough to really know that without testing it.”

Forward Planning

Another issue to think about? Maintenance, says Brent. “If you build a park, you have to pay to maintain that park, also,” he said.

“But it’s a lot to harder to raise money for general maintenance than to raise money for a park,” he said.

Suitable projects are probably those where the capital spend is larger than the overall costs, or the city has a healthy maintenance budget for it already, he said. “But definitely something not to omit and to think about in terms of planning.”

Davies raises a similar issue. Some have raised concerns around consistency of funding, and projects that might need money for three years or four years, he said.

“Having said that, some people I spoke to pushed back and said government funding can be the same way. Projects can get defunded, programmes can get defunded,” he said.

But if it is a public good, cities should think about how taxpayers can fund it eventually too, he said. “Maybe not immediately, but it should be somewhere on the roadmap.”

McGrattan, the Sinn Féin councillor, says they’ll be thrashing out all those issues in the finance committee over the coming council term.

It shouldn’t take the full five years to set a pilot up if they decide it’s a good idea, he said.

“It could grow then in years to come.”