Nesta highlights digital benefits of crowdfunding for local authorities

Written by Rebecca Hill on 7 June 2016 in News
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Crowdfunding projects offer local authorities the chance to gather data on their communities and access low-cost digital platforms, according to innovation agency Nesta.

Nesta’s report Crowdfunding Good Causes, published on 6 June, looks at the increase of alternative ways of financing community projects.

Although it acknowledges the concerns that crowdfunding shouldn’t be seen as a replacement for public funding - and is often too short-term to provide a sustainable solution - it highlights ways in which such projects could benefit local government.


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Speaking to PublicTechnology, co-author Peter Baeck, a researcher at Nesta whose work focuses on public and social innovation, said that engaging with crowdfunding platforms will give councils access to more digital infrastructure they can use for other work.

“Once you have set up a partnership with a crowdfunding platform, setting up a community for the local authority within that framework is low cost,” he said.

“The main cost is curation and management of projects; the digital infrastructure will be there.”

In addition, he noted that crowdfunding projects will generate a lot of useful data for councils.

 “Being digital-first platforms, many of the crowdfunding sites’ bread and butter is data,” Baeck said.

“They can create a lot of granular insights around the activities on their platforms, look at the performance of different campaigns and help local authorities understand which projects are popular and who are the people driving community change.”

This idea chimes with advice from a number of bodies urging authorities to consider their users’ needs first, and work with community-led projects to identify areas where services could be delivered more effectively and efficiently.

Baeck added that crowdfunded projects are more agile than mobilising local government funds and will react quickly to local needs, for instance in the London riots or widespread flooding. 

The report notes that most crowdfunding projects are active for just 30 to 40 days.

This will give councils time to develop longer-term strategies, and provide them with data and information at the same time.

The report also notes that encouraging crowdfunding projects allows local government to focus on developing infrastructure and core services.

Another potential benefit is the use of crowdfunded projects to raise awareness of issues within a community, and councils could piggy-back on such projects to establish community activity across a range of different areas in their area.

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