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Kickstarter has made quite a name for itself turning the business of fundraising on its ear. And made a lot of money as well for various projects — $119 million in its third year that ended in April of 2012. A Kansas City, Mo. company expects to similarly turn the process of raising funds for broadband projects on its ear with a civic approach to crowdfunding.
On Wednesday the Fiber to the Home Council and Kansas City (Missouri and Kansas) kicked off their conference. “From Gigabit Envy to Gigabit Deployed.” Broadband stakeholders from across the U.S. have gathered to tackle the question “how do we get better broadband to our communities?” Paying for this infrastructure is a burning issue for many, and quite a few are receptive to new approaches.
The idea for using a crowdfunding platform as an investment engine for broadband solidified while Neighbor.ly CEO Jase Wilson served on a team, to help Kansas City plan for Google Fiber. “As we brainstormed ideas for how to use the network to improve communities, it was clear there were going to be gaps between what people hoped Google Fiber would do, and what it actually would do,” states Wilson.
Many of the suggestions for filling those gaps hit the same snag – “If we only had money…” Wilson recalls. “‘Google’s only doing homes, but what about businesses?’ Someone else suggested subscribers create little outdoor wireless hot spots from their Google accounts, but the contract won’t allow for wireless overflow from home accounts.” Wilson and several colleagues created Neighbor.ly, in part, to get past these challenges.
Blending “traditional” crowdfunding with civic interest
Wilson took note that Kickstarter was on to something big and was doing well. He also observed the work being done by the Free Network Foundation, which envisioned a communications infrastructure that is owned and operated cooperatively by the whole community, rather than by corporations and states. It struck Wilson that the solution to filling in the broadband gaps was to give nonprofits, development agencies, local governments and civic-minded institutions the ability to raise money the same way Kickstarter enables artists and performers to raise money for their projects.
Neighbor.ly only allows organizations that represent community and civic interests to post projects. Broadband initiatives, particularly wireless mesh networks for underserved communities, are one of Wilson’s primary target audiences though Neighbor.ly’s fundraising platform also supports a range of civic projects. “Since the company’s start in July of 2012, we have funded several broadband projects, and we’re gearing up to do more neighborhood-owned distributed mesh networks,” Wilson said.
Neighbor.ly plans to soon announce support from a major foundation, which will allow it to build out a lot more of the platform infrastructure the company wanted to build initially. Adding to the company’s horsepower, it also is working with a civic business accelerator that will enable them to help neighborhoods implement high speed networks. Though Neighbor.ly’s type of funding for broadband is in its infancy, communities should expect to see more crowdfunding efforts targeted to broadband. At the Broadband Communities Magazine Summit in Dallas in April, a start-up called CrowdFiber gave demos to select attendees of its entry for this space.
Designing projects that work
Wilson made some adjustments to Kickstarter’s methodology to address civic and nonprofit organizations. The company’s staff works with organizations to establish criteria for the fundraising effort, including creating incentives for investors. The organizations raising the money often are not able to offer gifts such as t-shirts and watches, so they need to consider alternatives. What drives many of Neighbor.ly’s fundraising campaigns is civic pride, so incentives are selected to tap into this sentiment.
With broadband projects, many potential investors in and outside of the communities understand the pressing need for broadband, which also drives fundraising. Also, Neighbor.ly replaces Kickstarter’s “all or none” philosophy in which projects receive no funding if they fail to reach their fundraising goal in time, and relies on an “every dollar counts” approach. Whatever an organization raises by the deadline, it gets to keep.
Juniper Gardens Apartments, a 390-unit complex that is part of the Kansas City Kansas Housing Authority and located in one of the poorest sections of Kansas City, Kan., is one of Neighbor.ly’s fundraising projects. The nonprofit Connecting for Good builds wireless networks, secures computing equipment and provides digital literacy training for low-income communities. They wanted to install an indoor-outdoor wireless network at Juniper Gardens but needed to raise nearly $40,000. The Neighbor.ly effort raised $34,500 and equipment manufacturer Ubiquiti made up the difference with an in-kind contribution of product.
Wilson sees crowdfunding as being an increasingly important part of funding not only for infrastructure, but also for planning, adoption, digital literacy and other broadband-related programs in rural and urban communities. Networks built via crowdfunding do not need to offer free services, Neighbor.ly strongly favors these assets being owned by the communities doing the fundraising. As crowdfunding is relatively new on the investment scene, much care should be exercised to make sure all the legalities are addressed.
Focus on the community, not the organization doing the fundraising
Tom DiFiore, CEO of National Community Development Services, Inc. (NCDS) helps communities execute economic development fundraising for all types of projects. He believes approaches such as crowdfunding can effectively raise money for broadband, and offers four things communities need to remember.
1) It’s about the community’s needs. So make the community and the benefits they’ll receive from broadband the focus of the campaign, not the organization doing the fundraising.
2) It’s much easier to raise big money for specific initiatives and projects [digital inclusion, online workforce retraining programs, improving healthcare delivery] than it is to fund an “organizational budget.” No one is interested in ensuring an income stream for an organization.
3) What they help write, they will help underwrite. Key stakeholders and funders must have a sense of ownership in the initiative being funded. The best way to achieve that is to involve them during planning and development.
4) The initiative must be relevantto the community’s needs and opportunities; there must be measurable goals that define progress and success; and the leaders of the organization/initiative must be accountable to the investors.