Thirteen years ago an American jazz artist managed to raise $130,000 to compose, record and produce a Grammy Award winning album. What made this different was that she raised the money online through donations from her fans. Crowdfunding was born.
Like many things involving the internet, the idea took off rapidly. It’s grown so big that in 2015, it was estimated that US$34 billion worldwide was raised through crowdfunding.
Crowdfunding is a way of raising finance by asking a large number of people for a small amount of money. It uses the internet to talk to thousands of potential funders by setting up a profile of their project on a website and then using social media, alongside traditional networks of friends, family and work colleagues, to raise money.
The London Assembly Regeneration Committee, which I chair, looked at London’s crowdfunding potential at a meeting earlier this month.
We started off with the Mayor’s Civic Crowdfunding Programme (CCP) which is the first crowdfunding scheme of its kind in a major European city. It’s an initiative offering local groups the opportunity to propose and crowdfund for projects with support and pledges of up to £20,000 from the Mayor. These projects must ‘improve their neighbourhood for the benefit of the wider community’.
This approach enables a much wider group of Londoners to access Mayoral funding. And by opening up access in this way you get much better ‘bang for your buck’. It has the potential to attract a more diverse, imaginative range of project ideas, by combining Mayoral money with small contributions from individuals, businesses and organisations.
We also heard from a volunteer involved in one of the most successful projects in the capital. The Peckham Coal Line project hopes to connect the two high streets and communities of Queens Road and Rye Lane using a 900 metre-long route on disused coal sidings alongside the railway line through Peckham.
The project has raised £75,757 (the original target was £64,132) from 928 backers to fund a feasibility study, promote community engagement with residents, businesses, schools and commuters and to build the momentum to ensure that the idea is realised by the community, for the community.
The next stage will be seeking capital funding to get it built. This might come through social finance, further crowdfunding or sponsorship.
We recognise that crowdfunding is not going to deliver huge infrastructure projects – that was never what it was designed for. What it does have though, is the potential for small projects that local authorities do not have the funds to deliver.
By demonstrating community support, backed by local pledges of money, local groups can develop confidence and ensure they come to the table as equals with local authorities and City Hall. As we heard from Louise Armstrong, from the Peckham Coal Line project “crowdfunding unlocked that process, which is amazing and probably one of the best outcomes that come out of it from us. It is opening up that community. We were running events and we were bringing people together. That was probably the biggest impact that it has had.”
So far the Mayor has committed £840,000 towards 58 local projects, achieving match funding of £830,000 from 2,300 crowdfunding backers.
From refurbished playgrounds in Wanstead, creative hubs in Waltham Forest, pop-up art exhibitions in Twickenham, community kitchens in Surbiton and a Soho social enterprise café offering work experience to homeless young people, projects are appearing on the ground all over London.
Crowdfunding gives communities the fuel to fund the projects they really want. It’s certainly an idea worth considering and a trendy and effective new tool to bring about change.
NAVIN SHAH AM, CHAIR OF THE LONDON ASSEMBLY REGENERATION COMMITTEE