MSU Extension

In 2014, the Michigan Economic Development Corporation (MEDC) launched “Public Spaces, Community Places”. It is the first state sponsored grants program that pairs crowdfunding with community development. 

The MEDC partnered with Patronicity to revolutionize the way grants are applied for, evaluated and approved. Through the Public Spaces, Community Places grant process, projects that qualify receive matching dollars to those crowdfunded.

According to data provided by Patronicity between June 2014 and September 2015, forty-nine projects were activated with forty-seven attaining their goal; one project is still active, leaving one project that did not meet their goal. The initial $1,461,000 granted during this time frame produced $1,787,354 in crowdfunding donations and $10,858,777 in private investment. The return on investment for this program is an outstanding 9.65 percent!

Ingrid Ault, MSU Extension Community Development Educator interviewed Patronicity co-founder Ebrahim Varachia who explains it this way: “[the MEDC] is looking to expand the program as it has been wildly successful. Grantors are looking for community members to propose projects, as donations are viewed as more meaningful.”

Patronicity vets the projects to determine if they meet basic qualifications. Projects must be within a city that has a traditional downtown and be community oriented. Other factors that play into the success of a project include having a good project team, a well-organized process, team members that have done outreach before who have a good reputation, and the project is well supported in the community as evidenced by early  interest in pledging support for the project.

These factors are all considerations, but the MEDC doesn’t base a project on whether they believe it will be successful or not. “We don’t reject a project based on potential success, we reject if they don’t qualify for the grant,” noted Varachia. Besides, ultimately it is the community that is the final review committee by whether the project is supported with donations or not.

The MEDC used year one as the pilot year to learn what worked, what didn’t work, and how to improve the program. They are pleased with the outcome of the program for two basic reasons; the investment was vetted and affirmed by the public, and the streamlined process was much more efficient. Traditionally, grant writing can be tedious and time consuming with long wait times to learn if you are successful, unlike this program that promises a 72 hour turnaround time. The streamlined grant process is an asset as it cuts costs, saves time, increases impact, and the publicity generated from the project befits all parties.

Once projects are approved, Patronicity steps in to act as a personal coach. Varachia notes, “Patronicity provides the project team with best practices, but it is kind of like riding a bike. The first time you do it you are going to fail. To help prevent that, Patronicity serves as a personal coach. We are the training wheels from beginning to end.”

Crowdfunding is not an easy process and the personal coaching helps grantee seekers achieve success. The matching funds help to incentivize the donors to contribute and the ‘all or nothing’ model helps to determine a realistic goal, as the match is pending on you hitting or exceeding that goal.

Varachia adds, “In crowdfunding, to raise $100,000 is very, very difficult. Especially when the average is around $5,000 to $7,000 per campaign, so not setting realistic goals is one of the biggest reasons for failure. Planning for your audience and what they are capable of is key to program success.”

Since inception, small changes have been made to tweak the program. In the beginning any entity could apply for the matching grant program. That has changed to only allow a municipality or a non-profit access to these funds. Due to the success of the program the maximum amount to match has been lowered from $100,000 to $50,000.

Varachia explains, “We ran through money really quickly. Lowering the amount allowed more communities to participate in this program. And frankly, we found that this type of model works out better for these types of micro grants.”

With all of the success this model has shown, others have been paying attention. Massachusetts is already interested and engaged in conversations. And a city in California and the state of Arkansas has also expressed interest in learning more. Now that Patronicity has begun to make outreach, they are hearing from other interested parties. Patronicity expects to replicate this model in other organizations.

Mr. Varachia declared, “This is proof that the program worked and that it was well received.” 

Other articles in this series:

• The MEDC and Patronicity’s Public Spaces, Community Places completes successful first year: Part 1