The Michigan Economic Development Corp (MEDC) teamed up with private partner Patronicity to launch a first of its kind crowd-granting program to help create vibrant communities throughout Michigan. The crowdgranting model streamlines the granting process, increases community engagement and results in more sustainable projects that better serve and impact the communities they are within.
Of the 170 completed projects, 165 of them exceeded their crowdfunding goal at a ratio of total private investment per public grant dollars spent of 7:1 , with a revitalizing impact on 774,284 square meters of public space.
We believe thriving places help define a community’s economic vitality. From bike trails to pocket parks to public art projects, they contribute to a strong quality of life, help attract and retain talent, and grow stronger local economies. In 2014, as Michigan was facing declining public revenues and local budgetary concerns in communities across the State, the MEDC saw a need to empower them to continue these types of improvements during a time of economic distress. Communities tend to stray away from innovative, place-making improvements when limited budgets are focused on hard infrastructure such as water lines and crumbling roadways. With that in mind, the Michigan Economic Development Corporation (MEDC) partnered with the civic & community based crowdfunding platform, Patronicity to create the “Public Spaces, Community Places” (PSCP) crowdfunding matching grant program.
The program focuses on creating new or activating distressed public spaces for community use; such as pocket parks, trails, outdoor plazas, public art, farmers markets, art centers, and more. The practice of crowdfunding aims to fund projects by raising small amounts of money from a large number of people that invites residents to engage in the process from start to finish and beyond. The goal is to have an inclusive platform that allows local residents and stakeholders to play a role in projects that will transform their communities into places where talent wants to live, businesses want to locate, and entrepreneurs want to invest.
Due to the innovative crowdfunding component of the program where qualifying and approved applicants only receive matching funds if they are able to raise their target crowdfunding goal, the program has enabled the following outcomes:
a.) Democratizing the access to capital where non-profits and municipalities apply by submitting qualifying projects that fall within the grant parameters and receive funding through community demand, establishing the community as the final review committee.
b.) A deeper sense of civic engagement where the program enables community members, residents, businesses and local organizations to vote with their dollars on projects they find valuable within their community.
c.) Increased public awareness and press towards community projects, which enables greater support for public initiatives.
d.) Freed up organizational resources while expanding the number of projects and overall granting budget. This program builds off of matching grant programs, however enabling the crowd to be involved through crowdfunding revolutionizes the mechanism in which the match is leveraged.
This program was an award-winning finalist in Harvard's 2017 Innovation in American Government awards and won the the 2015 Gold Award for Public Private Partnerships from the International Economic Development Council. The success of the program has led this innovative model to be replicated with other state organizations (MassDevelopment & the Indiana Housing and Community Development Authority) as well has foundations and even a corporate firm looking to engage the community through crowdgranting. The success has shown that this model not only works with government entities but other granting giving organizations to further drive exposure and community engagement. All organizations have partnered with Patronicity to model the programs success.
What Makes Your Project Innovative?
This program is the first of its kind in the United States to have state matching grant dollars allocated to projects that receive support by engaging community through a crowdfunding campaign. The biggest achievement of the program has been enabling communities to participate in an innovative funding model that allows citizens to have a voice in what projects should be funded within their neighborhood. It has not only reactivated spaces but built bridges and collaboration within communities and their members while building a process of engagement. We’ve seen communities connect with a greater audience than before and find funding in a new untapped space, fight issues of blight and crime, and achieve higher levels of civic engagement.
What is the current status of your innovation?
The Public Spaces, Community Places grant program has been renewed for 4 years in a row and continues to gain traction and success. Its success has led to other states adopting the exact same model and working with Patronicity. The biggest innovations include disrupting the traditional granting approach and empowering communities to be in charge of their own sustainable development.
With Patronicity's customized dashboard for the MEDC to review and approve projects within 72 hours (down from average of 6 weeks), the MEDC can spend less time reviewing and more time supporting projects. With Patronicity's initial vetting to ensure projects fit within the grant parameters the MEDC can give the final confirmation and the community can vote with their dollars to help fund projects they want to see built within their community. Such projects will receive the matching grant to ensure complete construction and funding.
Collaborations & Partnerships
Patronicity manages and administers the grant application, the initial vetting process, and the crowdfunding system. They thus streamline the process and allow for a quicker final approval process to be administered by the MEDC approval team.
The Michigan Municipal League (MML) supports the PSCP program, and promotes the projects on social media in order to achieve the match. Both organizations share the grant opportunity across the state, thus creating a wide pool of applicant projects.
Users, Stakeholders & Beneficiaries
The MML recognized that matching grant opportunities were available to municipalities across the state but those municipalities were unable to find the additional funds to secure those grants. Their input in this program and collaboration with their member municipalities resulted in the demand for allowing additional funding to come from neighbors, business owners, residents and stakeholders which would not burden the municipality government to come up with the match from already tight budgets.
Results, Outcomes & Impacts
The project approval process takes less than 72 hours, and grant disbursement is paid out within 4 weeks of projects achieving their funding goals. With crowdfunding success rates across the industry under 10% for projects achieving their funding goal, the MEDC’s Public Spaces, Community Places program has achieved a 97% success rate. Of the 170 completed projects, 165 of them exceeded their crowdfunding goal. The ratio of total private investment per public grant dollars spent is over 7:1 dollars.
Lastly, a current total of 8,334,333 square feet (~774,284 square meters) of public space has been activated across the State of Michigan through this program since its inception in the summer of 2014. The program has served as a model for other states and has led to increased funding towards community initiatives. Projects have spurred further economic development of local businesses and engagement as a direct result from the creation of the projects funded through the program.
Challenges and Failures
The biggest obstacle was education on what civic/donation-based crowdfunding is and is not. The MEDC’s CEO at the time was very concerned about the risks and liabilities that crowdfunding could bring. Through many conversations, internally and externally, with legal counsel, they were able to gain support to move forward.
The second biggest obstacle was structuring a contract with Patronicity that allowed for flexibility in payment distribution and full protection for the MEDC.
The third obstacle, which has diminished with time, is funding. Because this is an annual budget allocation the program budget can fluctuate depending on the strength of the overall MEDC budget. Fortunately, PSCP (Public Spaces, Community Places) has brought the agency significant positive press and has strengthened our relationship with the Michigan Municipal League. Both of these factors have led to sustained board and leadership support.
Conditions for Success
Conditions for the success of this innovation include:
-grant funding without large restrictions
-understanding that the community is a part of the final review committee. They help vote with their dollars on projects that they feel valuable.
-set up grant parameters that can serve as the framework for the acceptable projects, without new evaluations that arise from each project application.
The success of the program served as inspiration for other states to replicate the work that has been done in Michigan. MassDevelopment, Massachusetts’ economic development agency, replicated the program in June 2016 with Commonwealth Places. Meanwhile, the Indiana Housing and Community Development Authority also replicated the program in November 2016 with CreatINg Places. The programs sought the advice/framework from the MEDC to model their programs along with best practices. This included implemented project size, fundraising expectations, and parameters around the types of locations of projects.
The model has also been adopted by foundations looking to achieve the same level of impact and community engagement around grant projects within their communities.
The biggest lesson of this experience is to go beyond a single pilot project to test this model. We want to create an ecosystem for communities, non-profits, and individuals to propose grassroots ideas that can grow only with the support of the greater community. Another big lesson is to adapt to a new mechanism for the grant application and approval process, different than that of a traditional grant program. This streamlined process for the PSCP program has allowed the MEDC to no longer pick "winners and losers" in the grant application process but rather allow for the community to show their demand and value for the local projects impacting the communities they are a part of. It's changed the way organizations and governments think about the granting process from a closed door review process to a more public submission, review and approval process.
- Implementation - making the innovation happen
30 October 2014