For years, crowdfunding has been a popular way to raise money to develop the latest gadgets. Now, Michigan communities can utilize crowdfunding to launch placemaking projects for economic development.
As more and more Michigan communities are learning the economic benefits of placemaking, redevelopment of private and public spaces are helping to retain and attract talent and restore prosperity in communities big and small. However, many municipal budgets continue to be slashed and public funding for placemaking projects remains lean.
Michigan State University Extension suggests considering a new funding opportunity which holds promise for Michigan communities. Crowdfunding is now a tool available to Michigan businesses, local governments and non-profits for funding private and public placemaking projects. On December 20, 2013, Michigan Legislature passed Public Act 264 allowing investment crowd-funding for economic development projects. To date, only three other states have passed such laws on the books. Investment crowdfunding is to be used for a private development project where the business owner eventually returns a portion of revenues back to investors with return on their investments.
In a similar approach, the Michigan Economic Development Corporation (MEDC) is administering a new program called Public Spaces and Community Places which relies on reward-based crowdfunding and allows communities to raise funds from private investors for public placemaking projects. Reward-based crowdfunding is an approach where donations are gathered from individuals in the community who support the placemaking project and want to personally contribute to its success.
Public Spaces and Community Places launched June 25, 2014. The new program is an exciting opportunity for communities with great plans for public space projects, but little room in the municipal budget for funding the initiative. Using the new crowdfunding tool, a local government or non-profit attempts to raise up to half the cost of the project through crowdfunding, with the MEDC matching the funds up to $100,000. Of course, the community can put forth its own funds initially to lower the amount needed through crowdfunding and this kind of commitment shows potential investors the commitment of the local government or organization to the placemaking project.
The first crowdfunded placemaking project in Michigan – Green Alley in Midtown Detroit – recently exceeded its target of $50,000 to revitalize a pedestrian alley connecting future developments and promoting walkability and community connectivity. Projects must be located in traditional downtowns (defined in the Application Guide) and there is a 60-day window to reach the project crowdfunding goal. Any one ‘investor’ can contribute up to $10,000, but the majority of funders for such projects contribute much less. The majority of funders for the Green Alley project contributed between $100 and $500 to seeing the project through.
For more information on Public Spaces and Community Places, visit the website or contact your MEDC Community Assistance Team member. Looking for placemaking ideas? Contact a Michigan State University Extension land use educator.