Spazio 13 is Bari’s good practice for Com.unity.lab network.Com.unity.lab is an European consortium within the framework of the URBACT programme. The main policy addressed by Com.Unity.Lab is a Local Development Strategy focused on a Co-governance process that organizes and brings together a bottom-up participatory perspective with top-down public management practices, ensuring a horizontal and collaborative local approach, to decrease and mitigate the various forms of exclusion: social, economic, environmental and urban.to follow Com.Unity.Lab network: https://www.facebook.com/ComUnityLab-…

to follow Spazio 13:https://www.facebook.com/spazio13bari/

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Southern European countries were among the hardest hit by the 2008 economic crisis. In response to the economic pressure, declining public services and drastic unemployment situation generated by the crisis and the corresponding public policies, the Southern regions of the continent became terrains of experiments in self-organisation and gave birth to new forms of the civic economy. In this contribution, Tiago Mota Saraiva analyses the consequences of austerity policies on Portugal, Italy, Greece and Spain, focusing on how people tried to create networks of solidarity and resistance.

n his brilliant book about the history of Latin America – “Las Venas Abiertas de América Latina”, (The Open Veins of South America) originally published in 1971 – Eduardo Galeano (1940-2015) starts by writing that the international division of work consists of defining that some countries specialise in winning and others in losing. Galeano describes a history of the region that is made by its own People, a history that does not depend on the greatness and the richness of the Country. A system where development deepened inequalities and popular sovereignty had to be bonded because There Is No Alternative. “It’s a problem of mindsets”, would declare the canny eurocrat after reading Galeano’s introduction. But the system is not far from what is now happening in Europe. This article is about the PIGS, the continental countries of Southern Europe.

The PIGS

This racist acronym has never been claimed by any author. Some sources refer to its use during the end of the 70’s, but it definitely started to be used more often after the 2008 financial crisis as PIIGS (Portugal, Italy, Ireland, Greece and Spain) to refer to the five countries that were considered weak economies and possible threats to the eurozone. After 2013, with the Irish exit of eurozone bailout program, PIGS became four again as they were before. While each of these countries had different political and historical contexts and scales, over the last five years they have shared the similar financial impacts of EU austerity measures.

The PIGS countries. Image (cc) Eutropian

The People

From 2001 (the European economic and monetary union fully started on 1st January 2002) until the 2013 crisis peak, Southern Europe’s employment situation changed drastically according to Eurostat. In Portugal (unemployment increased from 3,8% in 2001 to 16,2% in 2013), Italy (9,6% to 12,1%), Ireland (3,7% to 13,0%), Greece (10,5% to 27,5%) and Spain (10,5% to 26,1%) unemployment rates increased dramatically. In the same period, unemployment increased in other European countries, more or less following the EU average, besides Germany and Finland where unemployment decreased, respectively, from 7,8% to 5,2% and 10,3% to 8,2%. These rates assumed an impressive impact on youth unemployment. The April 2014 Eurostat report unveils that one month prior to the official census in unemployment in Portugal, Italy, Greece and Spain the figures were, respectively, 35,4%, 42,7%, 56,8% and 53,9%.

Poverty in Europe. Image (cc) Eutropian

Despite the brain drain (for example in Portugal the emigration numbers were higher than in the 60’s peak, when the country was living under a fascist regime and fighting several wars in its former colonies), this data shows the massive number of people with no jobs and more free time. If we add to this those people living from precarious labour, with low salaries or low pensions, we may find a number of people that are in need of support to barely survive. Always according to the Eurostat it is in Southern Europe that we find the countries with the largest part of the population in risk of poverty with Greece (36,0% in 2014) and Spain (29,2%) at the top of the ranking.

The Politics

In opposition to what is happening in almost all other parts of Europe, the nationalist and far right parties in Southern European countries are not fighting in order to win elections or lead the opposition towards EU policies. The Greek Golden Dawn, probably the most exuberant party, is far from winning national elections. On the other hand – in Italy, Greece and Spain – there are social movements and local activists gathered in so-called anti-systemic parties/political movements, all with different characteristics, but presenting themselves as the face for the change. Although Syriza – the only one of those parties that, until now, has won national elections – is being severely criticised for its acceptance of the very strong EU austerity policies against which it once was established, in Spain, civic movements won local elections in large cities with a diverse set of new public and city policies that are being implemented.
In Portugal, the massive demonstrations during the Troika’s official period of intervention, did not translate itself into a significant change in the architecture of national parties. However, despite the primacy of the coalition of right wing parties at the 2015 national elections, it did not achieve the majority of MPs to form the government. Instead of a right wing government, the Socialist Party was invested with the parliamentary support of the Left Block, the Communist Party and the Greens, under the agreement of progressively reversing the cuts on wages, pensions and the Social State. For the first time since 1974, when the long fascist dictatorship of Portugal was defeated, the Socialist Party is now leading the country, only backed by the left wing parties in the Parliament.

The State

Even though with different characteristics and at different levels, all these four countries have been witnessing the dismantling of the State. Privatisations of fundamental public sectors and the decrease of the public presence in economy have never been as evident as nowadays.
In Greece and Portugal the situation was extreme. The Troika’s program forced governments to quickly sell the most powerful and profitable public companies at low prices. On the other hand, the Welfare State has proven to became an Assistentialist State only programmed to act in desperate situations and not working on people’s emancipation from poverty. With the increase of sovereign debt, states have increasingly lost their independence in a process that inevitably damaged the democratic system. The “oxi” vote at the Greek referendum and the following reaction of the EU leadership, forcing on the Greek government an even more severe agreement, constitute a historical event we should never forget when analysing the growth of anti-EU feelings and the rising popularity of sovereignty movements among the working classes and poorest urban areas.

Esta es una plaza, self-organised garden in Madrid. Photo (cc) Eutropian

Self-organisation

Despite the high proportion of people unemployed and retired, people in Southern European countries do not have more time left to participate in common or community issues. Precarious and low-wage jobs, the insecurity of personal futures, longer daily commuting, or the family assistance of children and older people are some of the new issues that overload working days. These may be some of the reasons why people tend to participate more in initiatives that start from a will of reaction or resistance to a specific problem – either locally based or humanitarian – than from a global and theoretical ambition of structural and global societal change.
Whilst, on the one hand, PIGS are living under the described extreme economical pressure where people generally think the future will be worse then the present and focus their energies on everyday issues that require immediate responses, on the other hand, locally based self-organised initiatives are flourishing as a consequence of specific and local problems as illustrated by many examples:

Coop57 is a financial services co-op that started in Catalonia, emerging from workers’ fight to keep their jobs at Editorial Bruguera, during the 1980s. Over the last decade, the action of the cooperative spread all over Spain. Its main declared goal is to help the social transformation of economy and society, assuming that money and the Coop57 cannot do it on their own, but that they can play a role in helping people, organisations, collectives and groups that promote policies for investment and quality jobs in food and energy sovereignty, inclusion and spaces for culture and socialisation.

Sewing workshop in Largo Residencias, Lisbon. Photo (cc) Eutropian

Carrozzerie | n.o.t is a theatre space in Testaccio, a former working class neighbourhood in Rome – now in the process of gentrification. The space was renovated in 2013 and it hosts dance, theatre and performative projects of younger generations of artists. It defines itself as a space for slow time, courageous and far-sighted projects. Carrozzerie | n.o.t works in the same artistic areas as Largo Residências, in the Intendente neighbourhood of Lisbon. Until 2012, Intendente was seen as one of the most dangerous areas in the city centre and an area to be renewed on a large-scale urban operation. Largo Residências started in 2011, renting a building on the square, and assuming the goal to fight against the gentrification of the area. The cooperative that organises all of Largo’s activities is now running in the building a floor of artistic residences, a hostel, a café open in to the square and a massive cultural program developed with and for the inhabitants of the area. Portugal is a good example of the unbalanced states of civic initiatives, whose development depends on the political approaches of local governments. Whilst in Lisbon, these initiatives have been flourishing over the last few years, in Oporto they have been under attack by the former authoritarian and conservative mayor Rui Rio. Lisbon’s local government created a program (BIP/ZIP) that, each year, finances around 30 different projects in priority intervention neighbourhoods/areas (Largo Residências was also supported by this programme) At the same time, projects like “es.col.a,” held in a squatted school with a very important social and cultural program at Fontinha (one of the poorest areas of Oporto) have never had any political or financial support from the municipality: es.col.a was evicted and consequently eliminated by the municipality’s decision.

Navarinou park, a self-organised garden in Athens. Photo (cc) Eutropian

The consequences of austerity were the most severe in the Greek context,. where state structures were partially destroyed. Nowadays, local and national governments tend to be involved with citizen initiatives even though with almost no resources, since the funds are all being directed towards structural or emergency goals. Almost everywhere in Greece, the exodus of refugees to Central Europe appears to be one of the most important challenges of the present and near future. Mostly addressing people who aim at crossing the country, EU policies has turned Greece into Europe’s buffer country before nationalist walls. Even though the walking routes are not passing through Athens, when I visited them last July, both the Elionas and Piraeus camps – the first one organised by the government, the second set up informally by a local citizen initiative (now, apparently dismantled) – accommodated thousands of people, waiting. In these camps, local or national governments are not receiving any direct support from EU funds for refugees.

Parco delle Energie, self-organised sports facility in Rome. Photo (cc) Eutropian

Probably more than other PIGS countries, Italy has already had, since the 1980-90s, a very strong and politicised structure of self-organised movements and local citizen initiatives. During the last decades, those initiatives worked as a kind of a blow-off to political institutional collapse. However, the lack of strong national networks and, probably, the missing ambition to upscale local initiatives has prevented the initial energies from unfolding.

Despite the deception of the June 2016 national elections, Spain, where the networks of citizen initiatives and protests created strong networks, now face their second stage: disputing power. Local movements that emerged from the 15M movement succeeded in winning elections in the most important cities in Spain – Madrid, Barcelona or Valencia. Even though Podemos. in coalition with other political forces, did not achieve the expected share of votes at the last elections, city governments are already networking, organising new forms of decision-making and empowering citizenship initiatives. However, it is still too soon to measure the results of these new cooperations. A country or a society in crisis is not a “time of opportunities“ as we often hear when stock markets are translated into real life. From what I could see and live, during the last years in these four countries, crises are thrilling times of resistance, but also desperate moments of destruction. The decisive question for these initiatives is how to move from the idea of resistance, within this society frame, towards construction. This will be the only way to step forward from precariousness to resilience.

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This publication is an output of the Interactive Cities URBACT network that explored how digital, social media and user generated content can improve today´s urban management in European cities, whatever size. This challenge has been tackled in two ways.

This challenge has been tackled in two ways. Firstly, as an opportunity to redefine and deepen the concept of citizenship and civic engagement today, providing a path to spark cohesion, commonalities and shared value as well as increasing sense of place. In other words, making the most of the new channels to revisit the relationship between the individual and the local community in the digital era. Secondly, as a way to improve the quality of public services, in terms of efficiency and transparency, and even widen the current service chart provided by local authorities.

Download ebook from Cooperative City site

How the city of Ghent uses open data to increase the economic development and how the Interactive Cities network foster the participation and improve the exchange of ideas and best practices among partners – an interview with Thomas Lecompte. Interactive Cities’ final Conference in Genoa 11-13 April. 2018 Interactive Cities is an URBACT Action and Planning Network on the use of social media to foster interaction between cities and citizens categories. The network operated during 2015 and 2018 thanks to the support of the URBACT program with ERDF funding and was composed by the cities of Genoa (Lead Partner), Alba Iulia, CLLD Lisbon, EDC Debrecen, Ghent, Murcia, Palermo, Semaest Paris, Tartu and Varna. Find more information at: Interactive Cities

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Goteo is a complex entity, how would you describe yourselves?

Smart Citizen kit – campaign run on Goteo. Image (c) Goteo

Goteo is a collective that tries to promote participation and collaboration between institutions and citizens. With the Goteo platform, we help create stories through tools, merge them together and grow them; on the other hand, we also generate communities around initiatives. We work on bringing together individuals and public institutions to “collaborate forward,” for example, by opening up the institutional processes of participation or distributing funding evenly and in a more participatory way. We also track different organisational and development systems, including new funding models. More precisely, Goteo is a platform for crowdfunding campaigns, but it is not limited to funding: it also involves crowdsourcing. We do not only help our partners in acquiring the funds to carry a project on, but also in collecting non-economic contributions that a community can help with, and in sharing open-sourced collective benefits for the community, allowing projects to be replicated, reused, disseminated, or even improved or copied for further uses.

What makes the platform specific?

What is unique about Goteo is that we push for open source resources, collective initiatives, and we promote sharing collective benefits after a project passes through our crowdfunding campaign. We ask campaign promoters to publish their digital resources in an open source way once the campaign is over. It means sharing open source licenses, whether it’s a code or a design, a manual or any kind of file that shows the project. It is important for us to think of how this process contributes to the city and to the urban movement of gathering collective resources: we believe that it is an interesting way of putting clusters in movement.

Why so much emphasis on open-source?

We think that when you ask for support from a community, you should give something back. If you are an artist asking for funding for a CD, you should publish your CD with a creative common license or other free licenses afterwards, and give it back to the community. By doing so, we are also helping expand knowledge and provide access to free knowledge at a time when many forces are trying to enclose knowledge. The pressure on knowledge is similar to the pressure on social centres that are trying to resist enclosure.

Isn’t open source a constraint for the projects that run campaigns on your platform?

We really trust that the more open your project becomes, the more it attracts, the more it creates and the bigger it grows. That’s why we always push for the open licensing of the products and projects we support, and their outcomes – and that’s also why our platform itself is open source. You can download and copy the code of our platform, and have your own crowdfunding platform, use it, share it, improve it. We call this crowdfunding with crowd impact and crowd benefits. Goteo in Spanish means “leak”, and that’s how a campaign grows successful, drop by drop. Like the way you irrigate a garden: we understand that a way of funding collectively means that every drop adds to whatever you need to complete the watering of your garden.

How do the events you organise connect to the crowdfunding activities?

We believe that open knowledge creates more open knowledge, this is why we conduct workshops and bring together communities to cross-feed each other. Over 2000 people have come to our workshops, from many different countries and contexts: some apply the new ideas they gathered to urbanism, some to culture management, others to technology as well as many other fields. When you add layers to a project or invite different ideas to engage in dialogue with their counterparts, you can grow together and create more successful projects.

We always ask if crowdfunding is compatible with crowd benefits. People who prepare crowdfunding campaigns, ask us, “Do you think this is viable, do you think this feasible, do you think I can go through with it or is it something that is not going to be successful?” When we assess the project, we look for two ways of rewarding, not only the individuals who support the project, but also the community.
We divide rewards into two different groups: one consists of individual rewards, referring to when a person supports the project with 20 euros, and receives a postcard, a copy of your disk or participation in your workshop. The other refers to collective incentives that are more important for us, to push the community to support a project and add social importance to it. When something feels important and adds value to society, it is likely that more people will support and engage with it.

How do you define crowd benefits?

When we consider a project, we always ask promoters about their own experience, details, facts and issues of their projects that can help them conduct their projects in a better way. We ask about their needs. Of course, all projects in the fields of culture, urbanism and architecture need money. If there are no financial resources available, we look for alternative ways to support the project. We also ask about the tasks to be carried out, the infrastructures that they own, can count on or need and an outline of the materials needed for the project. Based on these, we assess what rewards one is able to give back to the community. Collective benefits can be digital archives, manual guides, codes, apps, websites or designs that can be downloaded, copied and adapted to the needs.

How can you help projects?

When gathering a group of people around a project, some might donate money while others might have important contributions that are not of a monetary nature. We promote our partners to also share their non-monetary needs in their communities. Projects often need a van to move things, or a translation. We have a feature on our platform to exchange these possible means of cooperation. We feel that when people get together and get to know each other and their projects, it is also easier to engage them and create community through social networks.

On average, around 200 people support each project, with contributions that range from 20 euros to 1500 or with their skills. 70% of our crowdfunding campaigns are successful, and one of every three donors does not want anything in return, they are donating because they value the project. We believe it is possible to talk about the culture of generosity in a world where we are constantly told that we have to be individuals, and we have to make it ourselves, be self-made men. We believe instead that the culture of generosity is really at our core, in our heart.

How do you define how much money is obtainable with a crowdfunding campaign?

Spain in Flames – campaign run on Goteo. Image (c) Goteo

We always establish two different budget goals for campaigns: there is a minimum which we consider the project needs just to kickstart, and then there is an optimum budget that could take the project further. We do respect the numbers identified by the promoters themselves, because they know more than anyone else about their needs and the costs in their local contexts, but we keep an eye on budget requests to make sure that what they ask for is clear and the plan is coherent. We suggest to keep the projected budgets at the right scale and advise initiators to make their budgets transparent and modular: if a project needs 10.000 euros, what budget categories does it include? Once initiators understand their own budget better, they often realise that some their needs can be covered with existing infrastructure or non-monetary contributions. Another criteria for projecting budget is an initiative’s capacity of social outreach: if an organisation has never disseminated anything in social media, or the initiator is an individual with limited online engagement, it might be better to keep the projected budget low. To this, we add another specific layer of knowledge about what different people from random places can do in areas that are not necessarily on our minds, for instance, in rural areas. We are generally very much focused on cities, but there are interesting initiatives in rural areas that contribute to the commons.

What is your experience about campaigns that addressed development or construction projects?

We had several campaigns in the fields of urbanism and architecture: they give us insights on how to facilitate different behaviours in urban and rural areas and how to share knowledge among communities that were previously not in touch. For instance, La Fabrika de Toda la Vida is an initiative using a former cement factory in Extremadura, not far from the Portuguese border: they financed their start-up phase, the rebuilding of a part of an enormous factory, with a successful crowdfunding campaign through Goteo, they raised 133% of their minimum budget. Their offer to give back to society was the building itself: they turned it into an open space that anyone can use and suggest activities for.

Another example is the Instituto Do It Yourself: it is a knowledge hub, an infrastructure that helps people exchange knowledge in a peripheral neighbourhood of Madrid. The Institute was started in 2013; it is a nice example of a free knowledge resource, established with the help of a campaign we launched together. There are also journalism projects we supported that are closely linked with urbanism. For instance, Goteo supported a campaign for a research on land use in Galicia, Northern Spain, where wildfires are closely connected to speculation: the devastation caused by wildfires usually opens the way for changing land use and building more profitable buildings on formerly agricultural land. Another project is the Smart Citizen Kit, built with open-source Arduino hardware to be installed in your home. The kit monitors air quality and sends data to a centralised device that collects data from different parts of a city.

The Social Coin – campaign run on Goteo. Image (c) Goteo

How do your campaigns contribute to the creation of a more collaborative tissue of community initiatives?

Processes through our platform turn out to be barometers of what a more collaborative and ethical society could become through implementing more open source collaborative processes and programs. For instance, some projects deal with cooperation in a larger sense. One of the initiatives produced a set of coins, kind of tokens, for collectives, companies of big groups to measure their collaborations: a way to visualise a chain of favours, to highlight how non-monetary contributions and collaborations function within a team or among several teams.

What are the overall results of the platform?

In six years, we collected over 5,7 million euros altogether, with an average contribution of 50 euros, and with over 496,000 euros in match funding. At stats.goteo.org, the platform has open data about our campaigns: it shows tendencies, categories, money collected for each project, and the time it takes a project to collect the necessary funding. We also developed an app with which people can freely use the data. Tracking accountability is very important for us: the more we know about a project we support, the more vigilant we can be in what they do, and also receive better outcomes from them.

Do public institutions play any role in your campaigns?

It is an important issue. Some people would say, “All right, crowdfunding is nice, and so are the collective benefits, but we are exploiting our families, our friends, communities and ourselves just to extract more money from them for our projects. Isn’t it a bit contradictory, doesn’t it promote the notion of ‘Big Society’ advocated by conservative ideologues?” We’re aware of this and work on attracting private and public money, to balance contributions to the projects we support: we work on many of our funding processes with private companies as well as with different local and regional public administrations and universities.

From crowdfunding to crowdadvocacy guidebook. Image (c) Goteo

In the past years, we have been working with various public administrations, and they would agree to add some budget to specific calls, match funding a set of campaigns selected by an open panel including public officials and our team with 10,000 or 96,000 euros. These are projects that go through crowdfunding campaigns, but public institutions double the amount given by citizens; so for each euro made through crowdfunding, the administration offers another euro. It is a way to open the process of decision-making: there are initiatives that institutions would not fund without collective support.

La Fabrika de Toda la Vida for instance, was also supported by the regional government’s match funding. At the time, the conservative government of the Estremadura region would probably have not understood what it meant to restore a former factory in a village; but with the support shown to the project by other institutions, the citizens and us, they realised that it was intelligent to invest in a project like this.

Our cooperation with public institutions is not exclusively monetary. Lately we have been working with public institutions, for instance with different municipalities in Barcelona and elsewhere, on how they are developing their participatory processes, their policy-making, and on how they can engage their citizens and promote more open and meaningful decision-making processes. This is a horizon that we have: we are looking for growing alliances between public and private actors to raise funding for citizen projects, soon at a much larger scale than today.

This text in an excerpt from the book Funding the Cooperative City: Community finance and the economy of civic spaces. Figures have been updated in February 2018 to reflect Goteo’s progress.

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“Giving everyone an active stake in a project makes a more sustainable funding model”

What was the need that brought Spacehive to existence and how did it situate itself to existing crowdfunding platforms?

Aaron O’Dowling-Keane: The organisation came about in 2012 because the founder and CEO Chris Gourley, a journalist at the time covering planning and architecture within London, saw a real need in the market for something that facilitated a bottom-up transformation, civic participation in urban planning. With this in mind, he set up Spacehive. The very first Spacehive project was the Glyncoch centre in Wales which raised £700,000 out of a £730,000 target. They had six weeks to hit the remainder of their target or they would have lost all the money they raised so far. They thought they had exhausted all their options and were incredibly stressed. At this point Spacehive intervened, offered them help in crowdfunding and introduced them to a couple of big grants to get the community participation going. Glyncoch had the highest unemployment in the UK. People could not afford to pay for this community centre themselves otherwise they would have done it already. Of course it is not about contributions of large amounts of money but about lot of people showing that they are interested by voting with their wallets. They set up the campaign, got everyone involved in the project team to go around door to door, explain the project, get a couple of pounds or whatever people could give and put it in the bucket. With that they were able to go to local businesses and say:”look, a couple of hundred people have all given to something they are really passionate about; if you, as a local business, can also show that you support this, and help fill the needs of the community, they would be very grateful and you will get an amazing return on this of investment.” Once they got the local businesses involved, the next step was to talk to the chains and corporates. They told them “there is a really active community, with businesses and citizens involved, show that you too are also part of this community!” Within six weeks they managed to raise the extra £30,000 mainly from individuals and a number of organisations that came together to make it happen. That was the very first Spacehive project: it showed how people coming together can positively change their space and the community is able control how their resources are being used.

How much did this experience condition the modalities of further work? How did it establish the way the organisation started working?

The most important part was the proof of concept: for a long time we did not know how to get these different fractions working together. A large part of what we do is working with councils as well as corporates as otherwise they tend to work in isolation. So they would put all their energy resources into making one project and then they would move on. Whereas if they were able to combine their resources, giving everyone an active stake in making the project happen, it would become a more sustainable funding model. This way people feel they have more ownership over what is happening in their communities. So in Glyncoch the most important thing was that all these fractions came together and actually made this project happen.

How did you define civic crowdfunding at the time? How did you establish the boundaries of where Spacehive would work?

The truth is we are constantly refining our definition of civic crowdfunding. It means different things to different people, most often the financing of community or shared spaces. There is a real need for it because crowdfunding had already started working in terms of a kick starter in the consumer space, technology and there was a need to use that technology to change the way people were using money and facilitating change within the public arena.

How do you select the projects that you support? What are the selection criteria?

We have eligibility guidelines. The most important thing is that the proposed project has to be available for the community to use, it has to be in a public space or have public access. It is any shared space, it can be managed privately or publicly but it has to be open to everybody.

Do you check if the applicants’ claims are true?

One of the unique features of Spacehive is that we have a verification process from a third party service called Locality. Anyone who uploads a project to our site and wants to pitch at the fundraising stage has to go through this process. It checks whether what the applicants say is true, if they have the appropriate permissions, whether the people or the contractors are already on board.

Many of the projects that go for funding on your site are about very expensive processes. How can you help initiatives with match funding or other kinds of support?

There are two things there. Buildings are just one part of the projects, we also support live events and any temporary or permanent structures that would transform space. What crowdfunding is often used for is not to pay for the entire renovation of a building but to show proof of interest. It works by building up the money for match funding and show grant makers that there is active interest in the community to make the project happen.

Whether it’s a playground or a small part of a greater project, they would crowdfund for that part. Where we come in the project is that we have a whole bunch of partners, grant makers of all shapes and sizes, who are actively looking for projects in their specific areas of interest and so we match them intelligently. So if you came along with a project about creating green spaces and you uploaded it to our website we would then encourage you to pitch that to all the different grant funders who are interested in funding green space.

Who are the grant makers and institutions you work with?

We work a number of corporate partners, councils and grant funders, for instance, the Esme Fairbarn Foundation, one of the UK’s biggest grant funding bodies but we also work with businesses such as Barclays and their Lifeskills programme. They specifically fund programmes with young creators, ages 16 to 25 and they actively promote the skills you build from actually crowdfunding a project.

We also work with the Hyde Group, a property developer looking to build up community cohesion. By using Spacehive they are able to give their residents a platform where they can share their ideas, engage their community and build up a cohesion and neighbourly spirit which is often lacking in big cities like London. All these different organisations use Spacehive in different ways but ultimately their power is that by building up these ecosystems of different partners the projects get funded much faster with a much wider group of stakeholders.

When it comes to municipalities, there are building regulations, planning codes, long term development strategies: how do you make sure that the project you support comply with these frameworks?

All projects have to upload their planning permissions in advance. The great thing about working with the different councils is that if there is a project that is interested in a certain space and they are looking to engage the council, this is a great way of building up their relationship by putting a project in the site as an idea, building up support and use that as an activist route to get the council involved at an early stage.

What are the rewards you offer to the people who donate to the campaigns?

With civic crowdfunding the reward is the project itself. You can say most of the funders are quite ‘selfish’ in that they put money in the projects because they want to enjoy it or they want others to enjoy it. The projects might also offer additional rewards, but generally it is not what motivates people to get involved. Community cafés might offer food or drinks, they might invite you to a party to celebrate successes, or in other projects they might write your name on a part of the pledging wall but ultimately people pledge because they want to be part of something. We do not promote equity-based crowdfunding. In terms of rewards it is on a project by project basis but generally the project itself is the reward.

There was a debate a few years ago around Brickstarter. Some people said “we are already paying tax, why should we also contribute our own money towards the public good?” How do you see your role in relation with the public sector?

I think it is a complimentary role.The joy of the crowdfunding model is that if people see something and they want to pay, they can, and if they don’t want to pay they don’t have to. What the crowdfunding aspect does is that it allows people to vote with their wallets for what they want to see in their area so it is not replacing what the council services and what the government taxes are paying for. Demand is increasing and budgets are decreasing in the government sector so this is a way to actively say how they want to prioritise government spending and get a whole bunch of other partners involved.

Where do you see the field of civic crowdfunding evolving in five or ten years? What are the limitations of civic crowdfunding in shaping the city?

The boundaries are unlimited, you can do anything with civic crowdfunding. It is growing in terms of the public’s recognition of how different people in different places engage. But crowdfunding is not going to replace planning. You will still need investors, but crowdfunding plays a part by getting people to have a say and creating that bottom-up democratisation of choosing what is important and how you want your city to grow. Actually we were listed with the GLA (Greater London Authority) as one of the top ten world innovations in government earlier this year and it is really interesting to see the other projects, to see what other countries are focusing on in terms of how government is engaging with a community. That is so powerful, getting citizens, getting councils and businesses into the same platform and talking about what they want to see happen.

How do you think the civic crowdfunding models can compete with very large speculative investment that is dominating cities especially London? Do you see this creating more spatial justice in terms of property development or at least the development of public spaces?

What people really like about the model is transparency: that they can see all the different partners. It means there is some kind of ownership and responsibility during the project delivery. On the other side, it puts the onus of responsibility on the project developer and project delivery manager to answer back to all the people who funded it. It is very empowering and that is what we are looking to do. To empower citizens to take control and play an active part in the areas where they live and civic crowdfunding allows them to do that.

Interview with Aaron O’Dowling-Keane on 26 July 2016

All images from Spacehive.com

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By Jan Mazur

This article is an excerpt from the book Funding the Cooperative City: Community Finance and the Economy of Civic Spaces

Crowdfunding has emerged as a relatively innovative, Internet-enabled way of financing projects, startups and small and medium enterprises (SMEs), especially in their early-stages. In the EU, where most of the financing for companies comes primarily from banks and not capital markets, it has been burdensome and limiting to seek bank financing for startups and SMEs. Most startups and many SMEs lack relevant operating history and track record, cash flow or collateral to secure bank loans. Angel investors and venture capital funds are an option, but they usually cover specific segments of the startup and SME market. Nevertheless, any finance provider may strongly benefit from the risk reduction based on crowd validation, as the product or service information becomes distributed to large amounts of people who may “crowd validate” them by backing their crowdfunding campaigns. Contrary to their inability to raise required capital, the economic significance and impact of SMEs is greater than their size; they are one of the main vehicles for the creation and dissemination of innovation, and their potential to exploit synergies is usually very strong.

Breakdown of the European alternative finance market by model, 2014. Image (c) EC

Crowdfunding, defined as “a collective effort of many individuals who network and pool their resources to support efforts initiated by other people or organisations”, belongs to the domain of finance-providing activities. Its specific mutations can be unregulated, regulated, or exempted from the regulation, depending on multiple criteria and elements of these activities. Crowdfunding is typically performed on online crowdfunding platforms, which offers intermediate support for projects or companies by individuals (crowd) who wish to support them. On a more general level, we typically recognise (i) donation-based, (ii) reward-based, and (iii) investment-based (including equity-based and lending-based) crowdfunding platforms, whereas the level of regulatory attention naturally increases with the increase of risks and the amount of money provided individually and sought cumulatively. However, the regulation tailor-made for crowdfunding does not exist on the EU level, though some EU legislation may apply to financial relations within equity-based and lending-based crowdfunding. National legislations of certain countries specifically regulating crowdfunding do exist, yet the industry significantly lacks the authority that would provide EU-wide standards and fortify the public trust towards the platforms, which would allow especially investment-based crowdfunding to go mainstream.

When it comes to donation-based crowdfunding, from the legal point of view, we typically understand the relations between projects/companies seeking finance and their backers who provide finance for certain non-monetary rewards as a donor contract without any material reward (other than “a good feeling”). Donor-based crowdfunding platforms nowadays enable fundraising for non-profit and charity contributions and projects, but also for education and scientific research. Reward-based crowdfunding is more complex, though the applicable regulation is also quite unrestrictive. Under the reward-based crowdfunding scheme, financial contribution is exchanged for current or future (conditional) goods or services on a platform, which supports and enables the exchange. The business model of these platforms is based on charging a fee in the amount of a few percentage points of the crowdfunded amount. Reward-based crowdfunding normally does not fall within specific financial regulations as the relationships established by the crowdfunding system are usually considered to be basic civil and business-to-consumer relationships. The regulatory requirements are typically low for these platforms and no special approvals are required, except for the regular trade/business licensing.

Typologies of crowdfunding. Image (cc) Eutropian

There are two main models of investment-based crowdfunding: (i) equity-based, and (ii) lending-based crowdfunding, whereas there are also hybrid forms of crowdfunding models based on revenue sharing, profit-sharing or subordinated loans, just as there are hybrid forms of finance. To generalise the regulatory patterns of these crowdfunding models is not an easy task, as the models vary significantly from country to country where national legislations apply. Moreover, these models are also strongly dependent on the corporate structure and the underlying security or instrument that is being traded or issued against the financial investment. However, certain broad generalisations may be drawn; equity-based crowdfunding may fall within the scope of several EU directives. Each of the investment-based models involve monetary motivation, be it an interest, share of profit/revenue, or exit value, but can also involve other motivations, especially in more locally-oriented and social entrepreneurship-oriented crowdfunding platforms. In equity-based crowdfunding, investors invest money into projects or companies in return for a part of their existing or newly issued equity, which may take different forms, such as stocks (securities), or shares, depending on the corporate form of the target company. It is also permissible to issue various classes of stocks, so the stocks may not always possess typical shareholder’s rights, such as voting rights, but only a share on profits.

Crowdfunding companies are typically startups and small and medium sized companies, which tend to choose private capital company forms or even partnerships. Private limited companies are usually cheaper to run, offer flexibility and shield shareholders with limited liability, which makes them a top choice for starting companies. However, these company forms may not be permitted to raise funds from a large amount of investors and are in general not suited to do so. Transferability of shares may also be limiting and limited in the case of private companies, so it disincentives potential investors.

Bulb in Town crowdfunding platform. Image (c) Bulb in Town

Investment-based crowdfunding campaigns are regulated by national regulations and the Prospectus Directive that requires that Member States shall not allow any offer of securities to be made to the public without prior publication of the prospectus. The obligation for companies to publish a prospectus is related to offers of securities with the total amount of investments of at least 5 million EUR (over a period of 12 months), with specific exemptions depending on the number and qualifications of investors and the size of securities.

Crowdfunding campaigns are typically not aimed at qualified investors only. On the contrary, crowdfunding targets large amounts of mostly unqualified investors for individually smaller considerations, often in thousands of euros per investor, yet the typical campaigns run from hundreds of thousands to several millions of euros in total. Empirical evidence suggests that most of these exceptions would not exempt the company from publishing a prospectus based on the Prospectus Directive. Yet, some Member States choose a specific form of regulation of this obligation, as the publishing of a full prospectus may be quite burdensome for startups and small (medium) enterprises: in France small-scale transactions only require a light-prospectus, in Germany, all authorised crowdfunding offerings with a maximum of 10.000 EUR individual investor contribution and a maximum 1 million EUR total investment are exempt from prospectus publishing. On the other hand, in Slovakia the same regime applies for offers between 100.000 EUR to 5 million EUR as for the large offers of 5 million EUR and above. It is advisable to create a specific, crowdfunding- and SMEs-friendly legal regime for middle-range offers, if not directly harmonised on the EU level, than at least on the national level.

Goteo crowdfunding platform. Image (c) Goteo

Some of the services of crowdfunding platforms (the sale and purchase of the financial instruments on behalf of investors) could be regulated by the Markets in financial instruments directive (MiFID), which harmonises the provision of investment services to professional and non-professional clients by investment firms. In the meanwhile, some of the instruments issued by the crowdfunding companies (such as shares in privately held companies) may not be considered financial instruments under MiFID, i.e. transferable securities, and thereby should not be affected by the directive. From the perspective of the platform, it may be beneficial to be a regulated investment services provider, as the MiFID-authorised platform can benefit from the EU passport rule, which allows them to offer services in other Member States. However, this may be very much dependent on the various national company law regimes, which classify the shares of these companies as transferable securities or not. Once authorised, the platform may not be able to conduct any other business than the authorised and regulated. This may lead to unserviced segments of the market with companies issuing different classes of shares, which is hardly desirable. Moreover, being a MiFID-authorised platform poses a relatively large regulatory burden with subsequent costs, which may be impossible to bear by platforms with campaign traffic below a certain threshold.

Lending-based crowdfunding tends to have a looser regulation than the equity-based one, even though it is more relevant in terms of the market size. In certain jurisdictions, authorisation to provide the platform services may be required. The regulation involves information obligations to investors, clear risk representation, but also minimum capital requirements of platforms and resolution plans. Lending-based crowdfunding represents basically two major groups of unsecured loans: (i) peer-to-peer, where consumers offer each other consumer loans, and (ii) peer-to-business, where businesses borrow from multiple lenders. Interestingly, new forms of secured loans start to develop, such as real estate mortgages and developments.

Civic Crowdfunding guidebook published by Spacehive. Image (c) Spacehive

From the viewpoint of community-led urban development projects, the most important sector of crowdfunding is civic crowdfunding. Typical legal structures of civic initiatives tend to be either non-formal or loosely associated around non-profit civic associations (associating persons) and foundations (associating funds), or mixed for- and non-profit legal forms of social enterprises or cooperatives. All types of crowdfunding can be used to some extent by civic initiatives. Non-profit associations and foundations have historically drawn from wide amounts of donors through charity campaigns or collections, which have fared well in the Internet-enabled environment of donation-based crowdfunding. Interestingly, some platforms, such as Spacehive, have been able to cooperate with municipalities, which matching funds to successful crowdfunding campaigns. Yet investment-based crowdfunding requires a revenue-generating activity, which is to be crowdfunded for and which either pays back the loan with interest or generates profit for investors. Moreover, equity-based crowdfunding requires a legal form, which is allowed to issue subscribable shares; therefore non-profit associations or foundations would not be a well-functioning legal form for typical equity-based crowdfunding. Various legal forms have different features and governance structures, for instance cooperatives may favour a more democratic approach to decision-making and profit distribution. On the other hand certain forms put the amount of capital contributions of shareholders first when it comes to decision-making. Nevertheless, traditional company forms can usually be adjusted to fit the needs of civic-oriented crowdfunding, i.e. “civic-adjusted company.”

Investment-based crowdfunding may be a good form of finance for social enterprises and cooperatives, as, in the absence of social banking, regular banking may pose barriers too high in accessing finance. However, banks may perceive crowdfunded companies positively, as they increase their equity, as is also evidenced by the Bulb In Town case. From a business perspective, local crowdfunding campaigns may also draw substantial benefits from the fact that shareholders are potentially significant stakeholders (and vice versa) and consumers of goods and services of the crowdfunded project; the interests of shareholders and stakeholders are aligned.

In conclusion, any regulation must take into consideration elementary risks that investors or lenders face. They need to have access to clear and accurate information on the borrowers or invested companies. Regulators advise crowdfunding platforms to maintain strong engagement of investors and allow them to exchange opinions and discuss the projects openly on the platform. The investors must be well-informed on the project or company they consider investing in and the risks they face: risk of capital loss, risk of dilution, limited possibilities of liquidating an investment and limited information and track record to base the decision on. The platforms may be prone to conflicts of interest due to their business model, which is based mostly on charging fees for successful campaigns. Investors may also over-estimate the due diligence carried out by the platform. It is in the long-term interest of the platforms to make sure and review whether their investors understand the risks of the crowdfunding investments and restrain their investments into a well-built portfolio.

Even though the crowdfunding is a very promising source of alternative finance, the regulation currently available is clearly not suited for it yet. Crowdfunding regulation, currently at the EU and many Member States level as a by-product of existing legislation, should acknowledge that crowdfunding is not defined by a specific form of company shares (securities), but rather by its specific nature. The overall amount of crowdfunding campaigns usually does not exceed a few million euros. Investors are usually dozens of individual and mostly non-professional investors investing thousands or tens of thousands of euros. As crowdfunding in general does not pose a systemic risk, it poses a consumer finance risk, especially the risks of frauds, deceptive campaigns, or embezzlement of finance from the company etc. These risks must be addressed in order to set a level playing field for the platforms and set professional standards. Thorough due diligence of campaigning companies serves the investors, companies, platforms and the market and society equally, as it safeguards against frauds and unsound business plans. It is advisable that countries adopt rules for crowdfunding platforms in order to better manage the expectations of all the parties.

Some proposals could include a lighter regime of prospectus obligations for companies publicly offering stocks worth 100.000 to 5 million euros, specifically if individual investments do not exceed larger amounts; requirements on transparency of the platforms regarding individual campaigns (including investors’ discussions on these campaigns), platform rules, legal terms and conditions of individual campaigns, conflicts of interest; requirements on information obligations of the platforms regarding the risks of the investments in general and advisory to mitigate them (including obligation to limit individual investments into a single company and investor’s portfolio rules), risks of individual campaigns, minimal due diligence requirements for platforms; specific EU-wide rules to allow platforms offer shares of companies to non-professional investors for limited investments regardless of the legal form of companies; guidance on solving conflicts of interest of platforms.

Photo by Medialab Prado

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“Our ambition is to bring properties into collective ownership and use”

This interview is an excerpt from the book Funding the Cooperative City: Community Finance and the Economy of Civic Spaces

In what context did you begin to work on Stad in de Maak?

This is an initiative that started from – and currently thrives in – the afterlife of the current financial crisis. A crisis that started out with toxic debts and real-estate speculations, emblematically bringing down Lehman Brothers on September 15, 2008. Amidst the unfolding of this crisis, the non-for profit housing developer Havensteder bought these two buildings where we are today with the idea of demolishing and redeveloping them. At that time, in 2009, this probably still looked like a viable plan but that did not last very long. When the mortgage crisis hit the market in the Netherlands a little bit later in 2010, for real-estate owners, the world in which they operated suddenly changed.

For instance, the value of real-estate started to drop. As a result, they had buildings that in their accounting books were still listed at the pre-crisis value, while their actual value in the real-estate market had diminished significantly, which brought them into financial trouble. At the same time, during the years leading up to this financial crisis, the group of non-for-profit developers, to which Havensteder belongs, would move away from their core mission of providing affordable housing towards other products with a higher return on investment. The government also encouraged them to experiment to yield more return, which could then be invested into housing. During the crisis however, these risky operations started turning against them, resulting in financial deficiencies of billions of Euros. For instance, one of these non-for-profit housing developers, Vestia in Rotterdam, embarked in derivatives for almost 10 billion Euros, something that went terribly wrong. All the non-for-profit housing developers had to come together to rescue the ones which were about to go bust, which made a huge dent in their financial reserves. To add insult to injury, they were subsequently forced to make contributions to the state budget, because the government also found itself in trouble due to the financial crisis. As a result, the investment budget of these developers withered away.

How did housing developers react to this situation?

Building renovated by Stad in de Maak. Photo (cc) Eutropian

At that moment Havensteder found itself in a situation in which it could not any longer sustain part of its real-estate portfolio, so it had to focus on keeping the healthy parts. This means that there was suddenly no budget anymore for troublesome locations such as this one. In 2010, Havensteder made a quick-scan of the two buildings, with the help of two collectives from Rotterdam, Superuse Studio and Observatorium, to see what to do with these locations. It must be understood that within Havensteder this is seen as a controversial idea: why would they start investing in derelict places in times of crisis? There are other priorities. But there were also people within the organisation, who challenged this idea and wanted to protect the quality of the street and maintain the value of the assets, as they owned the majority of the buildings on the street. The commissioned quick-scan revealed that if Havensteder wanted to keep the buildings up and running, they would have to accept a loss of 60,000 Euros in the coming 8-10 years. That is actually not so much, even though it is in a period of crisis.

Following this, things slowed down, and it looked as if the study to revive the buildings would end up in a drawer. One of the people involved in the study, the artist Erik Jutten, took the initiative to push things further. He came up with an unconventional proposal: if Havensteder is willing to take the loss of 60.000 euros anyway over the period to come, why not take that loss entirely in day one instead? In this way, it can be handed over as an investment budget to a group of people that would take care of the two buildings and any remaining risks. In a certain way, this would allow us to ‘common’ the buildings with this group of people for a period of ten years, after which the properties would go back to the owner, if it was still there.

What role did you take in this process?

Meeting in front of the Growery. Photo (cc) Eutropian

Ana Džokić, Piet Vollaard and myself joined Erik and put this proposition together. Our common motivation in the beginning was mainly curiosity: to see if we could do things differently. We spent a lot of time going through the details, like the economic model we had to get in place. The big challenge was of course finding a way to manage the buildings for ten years without us defaulting on it. We figured that, if Havensteder was ready to put in 60,000 Euros, around 75% of it would have gone into contractor costs, therefore we proposed to execute half of that work ourselves instead of outsourcing it. By doing so, we could free up a substantial part of the budget – because we could do things ourselves cheaper than a contractor, but it would also allow us to schedule and prioritise works differently, as we needed to urgently divert money to make some of the spaces inhabitable and create a cash-flow through renting them out. This is because we have to pay the bills, we have to pay the insurances, we have to pay the taxes… And we basically had no money ourselves, so to prioritise works to create an economically sustainable cash-flow was very urgent for us.

How did the housing developer like these ideas?

New workspaces and housing. Photo (c) Stad in de Maak

For Havensteder it was a deal with an untested partner: we had never worked with them before. But it was interesting for them because they hardly had any financial risks, no contingencies, and no management costs any longer. We would take all of this upon us for the next 10 years. After that, we just give back the property with no further economic loss than the 60.000 they had already booked. And while we negotiated over a period of many months, some level of trust began to develop amongst all the parties involved.

In October of 2013, we signed the agreement. A month later, work on site began: the buildings were in ruin and we had to quickly make them inhabitable. We had gone through a huge excel sheet for months and months, but we did not have much experience with doing these sorts of things, so we took on things quite intuitively. Meanwhile, we have grown a handful of buildings, and a few principles have emerged.

How do the buildings function economically?

The principles of Stad in de Maak

First of all, we try to make each building a self-sustaining node (in economic, social and environmental terms) within a network. This is done to foster a more robust network, in which difficulties (or even the ‘collapse’ of one node) do not pose a threat to the viability of the overall network of buildings. In economic terms, this means that each building should generate enough resources to cover its own costs. In social terms, each building should take care of its own governance and use. In environmental terms, it should aim to become resource flow neutral (energy, water, etc.). We aim to create a common finance pool for the maintenance and expansion of this platform. All the inhabitants and users of the buildings, through payment for the right of usage, generate a (modest) flow of finance that contributes to this common finance pool. From this, the activities to sustain the platform (a baseline income for those responsible) are being financed. Given enough nodes in the network (scale), a revolving investment fund to expand the network could be created.

From the very beginning on, we have maintained a minimalist (or no-nonsense) approach to investments. If affordability is at the core, invest what is minimally necessary. For instance, by putting functional, rather than aesthetic concerns at the core. By re-using, upcycling, or working with donated materials. By improvising if the use span of a building is limited, as long as safety is not compromised. And by being prepared to lower the comfort threshold in exchange for lower existential pressures (usage fee).
While working on the first buildings, we discovered that it would be important to replace monetary flows with non-monetary alternatives, where possible. As both the inhabitants and users of buildings and the platform itself face a lack of mainstream money, part of the financial pressure can be diverted by conducting transactions in other ‘currencies’: worktime or materials, for instance.

How do the activities taking place in the buildings impact the neighbourhood?

Stad in de Maak process diagram. Image (c) Stad in de Maak

We try to bring community activity, but also production back into the buildings, into the streets, and into the neighbourhood. Some things are being tested right now, like a workshop. There is a community brewery starting up, a micro-cinema, a launderette, even some production of detergent … In the coming months there we will have a number of trials to see how we can create a neighbourhood economy. It is crucial to keep space open for such uses and experiments. Each building therefore, has a commons (“meent” in Dutch), accessible for social or productive undertakings. We decided to keep financial pressures away from these common spaces, and cover the costs to keep them open through a contribution from all the users.

We said straight from the beginning that City in the Making – with its current temporary use of buildings – is a sort of training condition for what is yet to come. For us, the next step is to go beyond this temporary exploitation of vacant properties. Now we can do this because there has been an economic crisis but this is not sustainable in the future. Our ambition is to take the properties out of the market, to make them available for affordable housing and work, and to bring them into collective ownership and use.

Interview with Marc Neelen on 26 May 2016

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