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Crowdfunding for councils?

Crowd

 

Parramatta City Council is matching crowdsourced public donations for popular projects in its area. Marie Sansom shops around for the community benefits.

No council ever has enough money to fund all the worthy projects in its area, but there are strong signs popular alternative funding mechanisms being used overseas will soon be generating cash in Australia.

Already a staple of the entrepreneurial and start-up sectors, Crowdfunding – or inviting people to donate money online to help fund an idea or project through platforms like Pozible, Kickstarter or Indiegogo.s – is garnering genuine local interest for its ability to make projects that might otherwise not happen a reality.

It’s a bold new frontier for Australian councils, yet that hasn’t stopped Sydney’s Parramatta City Council from collaborating with platforms and the community through the ‘Parramatch’ initiative to capitalise on positive interest and commuinity goodwill.

In Parramatta’s case, the City partnered with crowdfunding platform ‘StartSomeGood’ and put up $30,000 to match innovative projects which broadly fitted council objectives. Projects could be put forward by anyone who lived, had a business or ran services in Parramatta.

New thinking, new money

Parramatta’s Community Capacity Building Officer Lucy Brotherton is one of those ready to try something different to make new things happen.

“Often in grant funding programs people are doing something tried and true, this was trying to fund innovative programs with positive social outcomes,” Ms Brotherton told Government News.

Parramatta first ran workshops with community groups and schools to help them understand crowdfunding and the mission behind Parramatch. Thirteen projects were suggested and the council picked seven.

They included ParraFit, a group of young people who wanted to run a Biggest Loser-type of program involving personal training, healthy eating and community interaction which would then be expanded to other young people.

Another group wanted to raise $2,000 for sewing machines and materials to create a welcoming space for migrant women and finished up raising three times the amount they were expecting.

Ms Brotherton said the three-month process raised $72,000 ($30,000 of this was council money) and galvanised people in Parramatta.

“It was very much around the community deciding what they thought was a good idea because they were contributing to people’s projects and council was contributing too,” she said.

“It was such a fun program. The level of engagement and excitement that we got was really high. It generated twice as much community activity than the grant funding program would.”
In terms of learnings from process, Ms Brotherton said it was important to have a good understanding with the crowdfunding platform about the services they would provide.

During Parramatch, some community groups had found it difficult to operate solely online, particularly because the crowdfunding site was administered overseas so responses could be delayed due to time differences.

She said it would also have been helpful to limit the financial scale of projects, which had made it a more complicated process to fund. Applicants to the program ranged from $2,000 to $30,000.

What did go well was awarding small, ‘extra mile’ funding to ideas that hit targets – like an idea that reached $1,000 first was given $1,000 by the council.

“It gave people comfort in crowdfunding and that it can work. It’s a nice easy step.

City Limits

Parramatta Mayor Scott Lloyd said he backed crowdfunding but that the council would be unlikely to use this method to fund its own projects.

“Crowd funding can be an innovative way of raising participation and finance for specific community projects that have a benefit for local residents and Parramatta City Council has provided additional funding support to a number of these projects through its Parramatch initiative,” Mr Lloyd said.

“Council has no plans to use crowd funding to finance its own projects or service provision and will continue to fund its core services, programs and infrastructure through its normal budget process.”

But expert Keith Whelan (who’s been dubbed ‘The Grants Guy’ for helping private and public sector organisations secure grants and manage them once they’ve been successful) believes councils need to be more creative when looking for money, especially when funding is tight.

Mr Whelan says councils are sometimes hesitant to use crowdfunding because of concern ratepayers will take a dim view of being asked to contribute more when they’ve already paid rates, but this could be challenged by educating communities about the power and possibilities of crowdfunding.

“It’s like: every other funding model we have is 50:50, with state and federal government funding,” he says.

Mr Whelan recently spoke about crowdfunding to councils at a WA local government finance conference.

“It totally blew their minds and opened up their perspective [but] they are worried about the logistics in rolling it out, risk management and governance and managing community entities.”

“The mindset hasn’t been there and that’s not an indictment on them, they just haven’t been exposed to it.”

This story first appeared in Government News magazine August/September 2015.

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