Civic crowdfunding and the future of government and taxation

Crowdfunding is central to my interests in understanding the future. My background in capital markets and long-standing perspective of the living networks has made it a natural space for me, in looking at new ways our collective financial resources can yield the greatest economic and social benefit.

I was recently named one of the top 30 influential thought leaders in crowdfunding in the world (of which there are only 2 outside the US). I think it’s fair to say that’s an exaggeration of my prominence, however as I am increasingly focusing on the future of crowdfunding I hope the insights and perspectives I am currently developing will have a significant reach.

One of the most obvious ways in which crowdfunding can have a far broader impact than it does today is in playing a role alongside government, by allocating funds to benefit citizens. The “civic crowdfunding” space, focused on funding local community projects such parks, community centers, festivals, and education, has thrived, with platforms such as Spacehive and Neighborly doing well, and strong enthusiasm from cities such as Bristol.

MIT researcher Rodrigo Davies has written a very interesting 173 page report Civic Crowdfunding: Participatory Communities, Entrepreneurs and the Political Economy of Place as part of his studies.

Rodrigo compiled data from major crowdfunding platforms, including specialist civic crowdfunding platforms as well as general platforms such as Kickstarter which are also used for civic projects, showing the dramatic rise of the space.

Source: Civic Crowdfunding: Participatory Communities, Entrepreneurs and the Political Economy of Place (CP = Civic Platforms – civic crowdfunding only; GP = Generic Platforms – multi-category crowdfunding)

Very interestingly, the 81% success rate of civic projects on Kickstarter is higher than that of any defined category on the site, as Kickstarter does not specifically have a civic category.

Many projects are low budget and ones that local citizens see value in supporting, such as local gardens or events, however there is a very diverse range of kinds of civic projects.

Source: Civic Crowdfunding: Participatory Communities, Entrepreneurs and the Political Economy of Place

The report is rich in scope, going into some edge-case examples of civic crowdfunding, examining some theoretical frameworks for understanding the space, and looking at how government can best engage with crowdfunding.

Crowdfunding and the future of government

This goes to the broader point of the role of crowdfunding in the future of government and society. From my perspective, civic crowdfunding begins to blur the role of government and citizens. Democratic governments are effectively agents of citizens, acting on their behalf for their good. Yet now we have tools that allow citizens to take that role for themselves, choosing directly how they allocate their financial contributions to society.

There are a variety of possible responses from governments, with as noted in the report Hawaii referring to civic crowdfunding in new legislation for school maintenance, while other governments essentially ignore their citizens’ efforts.

As I noted in a recent keynote I gave on the future of crowdsourcing in government, there are clear principles that allow governments to engage successfully with their citizens’ contributions.

Could crowdfunding ultimately replace taxation? It is doubtful, but as a futurist I would like to explore how far that may be possible.

Perhaps citizens could have some element of control over aspects of budget spending or discretionary allocations. Certainly the increasing financial challenges of governments globally suggests that citizens may often need to support worthy initiatives that would otherwise go unfunded.

Civic crowdfunding is very early in its development, but will definitely play an increasingly important role in government and community.