Atlantic Cities

Could Kickstarter Work as a Tool for Neighborhood Economic Development?

Could Kickstarter Work as a Tool for Neighborhood Economic Development?
Seed Chicago

As Kickstarter has grown over the past few years into the Internet's go-to crowdfunding platform, it's been tempting to try to apply the model to anything and everything in need of cash – to products, places, programs, public parks, potholes, you name it. But the concept has some clear limitations when implemented at the urban scale. Maybe a neighborhood could fund its own park and street improvements when City Hall can't. But what about the communities that can't afford to do that? Crowdfunding of community assets could potentially double down on inequality.

As we wrote last year, "Kickstarter urbanism" also bumps up against the twin problems that effective city solutions are rarely as sexy as a new bike design, while the bureaucracies for implementing them get much more complicated than Kickstarter can handle. As Alexandra Lange wrote last year for Design Observer, "a suitable funding platform for a watch is not a suitable funding platform for a city."

Maybe, though, there is a less glamorous role for Kickstarter, and sites like it, to play in cities, not necessarily funding high-tech park architecture or the latest pop-up fad... but simply supporting small businesses and programs that create jobs. The city of Chicago this week is attempting this idea, rolling out a curated Kickstarter site called Seed Chicago for 11 (for now) neighborhood-based small businesses and community organizations in need of money.

"These are not the typical sort of new product offerings that many Kickstarter opportunities are," says Julia Stasch, one of the co-chairs of the neighborhood and place-based strategy within Mayor Rahm Emanuel's Plan for Economic Growth & Jobs. "It’s not ‘I have a great design for a something.’ These are projects and businesses whose goal is their own growth, but whose residual benefit is greater vitality in a place."

She means, by that, vitality created through jobs and skills and opportunity. In that sense, each of these projects has more to do with creating economic development than "bringing creativity to life." Most of the offerings are decidedly not Kickstarter-y. One salon owner in Englewood wants to open a training center where residents would learn to become state-certified hair braiders (she's looking for $32,025). Another small business is aiming to open up a third dance studio location ($15,000). There's also an urban farm in search of funding, a couple of community markets, and programs to teach neighborhood children photography and computer coding.

For each of these groups, the greatest obstacle is access to capital, particularly in an environment, Stasch says, where most small lenders estimate that they're able to meet only about 5 percent of the demand for loans. "Not that Kickstarter is a small business loan," Stasch says. "But Kickstarter could be thought of as an alternate source of seed capital."

These companies and organizations could obviously vie for money on Kickstarter on their own, without the city's imprimatur. But the hope is that by rounding them up into a city-wide class – with future classes to come – each project will get more visibility (these particular businesses and programs were recruited to participate; they weren't simply stapled together from existing Kickstarter campaigns).

If these bids are successful, the ultimate idea is that communities would be engaged in funding small businesses and programs in their midst, which would in turn help build stronger communities.

"If you invest in a business, you have your skin in the game," says Ankur Thakkar, the digital director for the mayor's office. "People that invest in businesses feel a sense of ownership that they wouldn't otherwise feel, and in this case it's a business in one of their communities, creating jobs in their community, giving back to the community."

The whole concept is premised on the bet that these potential investors exist, that people will want to hand over cash on Kickstarter for reasons that go beyond having the inside track on a new tech product or art installation. Supporting a hair-braiding school, after all, is a different proposition from supporting an electric skateboard. And the pool of investors will inevitably be different, too. Stasch and others behind the project with the economic development group World Business Chicago are planning to keep close tabs on who gives to these campaigns and which ones work best.

"We might be able to find out whether it’s true that investment opportunities in lower-income neighborhoods have a harder time," Stasch says, "but I don’t think we presume that."

Emily Badger is a former staff writer at The Atlantic Cities based in Washington, D.C. She now writes for The Washington Post. All posts »

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