Put your money where your heart is: Two new groups challenge St. Louisans to step up
This article first appeared in the St. Louis Beacon, Jan. 30, 2013 - If you’re not happy with things in St. Louis, a a growing trend of grassroots community development-meets crowdfunding-meets social media may mean more opportunities actually to do something about it. Two new groups with very different approaches and very different purposes are edging closer to being fully operational.
Though they’re going about it in their own ways, the people behind both have some things in common, too. They have no plans to quit their day jobs. They are not counting on the government to improve their neighborhoods, and both think that, given some options, people will show up and do it themselves.
“The places that we live our lives, these communities that we raise our kids in, matter tremendously,” says Karl Guenther, with InveSTL. “We want to give people the opportunity to invest in them.”
Let's hear it for the doers
The social experiment that led to OverFundIt went something like this: Travis Sheridan’s business partner, Irma Olguin Jr., ended her month with a $1,000 surplus.
“Which I guess is a good problem to have,” he says.
So she wrote on her personal blog that she was looking for someone with a great idea to whom she could give that $1,000. It couldn’t be to pay off debt or take a cruise. It had to be something to make a difference. Friends liked the idea and started kicking in $50 here and there, and soon the pot grew to $2,500, though only the original $1,000 was publicized.
Sabrina Famellos had a small shop in Fresno, Calif., where she made luxury wholesale yarn and fibers. She wanted to buy a piece of equipment to help her increase efficiency.
“She ended up getting $2,500,” Sheridan says, and today, Famellos' business, Anzula, is going strong, with a second warehouse space and her products going all over the United States and Canada.
The whole thing got Sheridan thinking. What if there was a platform for crowdfunding, not ideas, but people who got stuff done?
“Because in every community there are people that just get stuff done on a regular basis.”
Sheridan and his business partner conducted the experiment a second time. Again the money donated doubled, and they were able to over-fund a project. If they could create a way to skip the middle man, he thought, keep administrative costs as low as possible and fund the people doing the actual work, what kind of impact could that have?
So OverFundIt was born and exists now in a beta phase. Sheridan and his two co-creators hope the project will officially begin in the next month in both St. Louis and Fresno and they’ve already begun collecting proposals (about 20 so far).
Here’s how it works: People submit ideas, and OverFundIt will run 10 of them a month. The budget for the project should be low. They’re not trying to raise $100,000, Sheridan says.
“We want a lot of small hits and base runners.”
People also only have two weeks to raise the funds. If ideas are good, they’ll get funded quickly, and if they stay out too long, it gets noisy, he says.
“We also don’t want the doer to become a spammer.”
Also, the doers (OverFundIt’s name for the people who get stuff done and therefore get a chance to raise money) have to apply OverFundIt’s formula to what they’re doing, laying out in their proposals how they’ll make the equation of action, impact and evidence work.
People who want to give can do so conditionally, meaning they’ll only pony up their $100 if people from their personal networks also pony up $100. And that’s how the projects end up being overfunded, says Sheridan, who works at a biotech incubator.
It’s free to submit ideas, only fully funded ideas get their funding and for those that do, OverFundIt takes 1.9 percent.
There’s also an accountability component with the last two steps of the process, called “doing and did.” The doing phase happens when the project starts happening and the doer gives progress reports, and the did phase includes verification surveys, updates and ratings by those who funded it.
Sheridan sees two main challenges for OverFundIt at this point. One, just creating the technology to build the platform, which his partners in Fresno are working on now, and two, having people realize that OverFundIt isn’t Kickstarter. Among the differences, OverFundIt's emphasis is on the doer, not the project itself. There's a short window of time to make it work. And less money goes to OverFundIt (Kickstart takes 5 percent).
Sheridan hopes that the low-dollar amount and the gaming nature of the funding will also help the platform stand out, and would be happy if 40 percent of the projects got funded.
“We want to look back and fund 100 programs this year,” he says.
That’s 50 in St. Louis and 50 in Fresno.
If that happened, he says, “we would definitely move the needle in each community.”
Gift for the next generation
Where OverFundIt is fast-moving and dynamic, InveSTL is looking down the long road and down the block.
The project came out of work Guenther did at his day job, where he works at the Public Policy Research Center at the University of Missouri, St. Louis. In a study Guenther helped conduct about the nonprofit and community development community across the state, a glaring gap appeared at the neighborhood level.
He and a few other young professional friends started talking, and crowdfunding and giving circle approaches came up. The funds for those, however, tend to be project-based.
Guenther wanted to raise money, get people engaged in their own neighborhoods, and see community development and action.
“And act on the love for St. Louis and act on the pride for this place,” he says.
Unlike other crowdfunding groups, they’re not doing anything until they raise $10,000.
After that, they’ll grant out 25 percent of the money, but the other 75 percent will remain in the fund to help establish a long-lasting and self-sustaining organization to help better the neighborhoods of St. Louis.
Right now, InveSTL is between 25 and 50 percent of its goal, Guenther says, and once people give $100, they’ll earn a voice in helping engage with and voting for the top five grant applications for that funding cycle.
InveSTL is different, too, in their whole-circle approach. You can give money online, but you can also attend “Know Your Neighbors” events in local neighborhoods and join in online conversations on Facebook and Twitter.
Guenther hopes InveSTL will reach their $10,000 goal and be ready to start accepting proposals for grants in late spring or early summer.
Some challenges for InveSTL could be in their different approach, Guenther says. In traditional crowd-funding, there’s usually a specific project.
“We’re asking people to fund possibility and to stay engaged throughout that,” he says.
Seeds of giving
For Sheridan, the wave of crowd-funding really got started during President Barack Obama’s first election in 2008, when Obama’s team used technology to raise small amounts of money that helped result in a total pot of $750 million after 21 months.
“That has really set the stage for us and we’re just building off the energy.”
That energy may appeal specifically to younger people, who are willing to offer up $50 or $100 but don’t have the $500 or $1,000 for big fundraising events.
One of InveSTL’s founding partners is the Greater St. Louis Community Foundation, and for director of community partnerships Diane Drollinger, these new groups offer an entry point for young people who want to impact their communities.
“As I watch it, I think that this is a perfect way for young donors to get engaged and have an impact,” she says.
And groups like hers will be watching to see how these new models do, and possibly adjusting their own fundraising strategies.
“It really could be a game-changer,” she says. “I’m looking forward to the next decade to see how this all shakes out.”
Sean Thomas, executive director of Old North St. Louis Restoration Group, is watching, too. Old North was the site of a “Meet Your Neighbors” event for InveSTL.
“I think so much energy is focused on the big foundation level and the big corporate donor level,” he says.
What’s needed is people who live in a place, or care about a place, who want to make it better however they can. Groups like InveSTL and OverFundIt could make things happen that otherwise wouldn’t, he says. At the very least, it helps people with ideas share their ideas, see if they resonate and if they’ll work.
And it could change the way we think about investment and community development.
“It’s a way of democratizing investment,” Thomas says, putting the work of caring for and bettering a community into the hands of the people who live there, “not just the developers who build then move on.”
That’s what happened to Famellos, who has the guinea pig project that led to OverFundIt. Today, she has five full-time employees and thinks people are getting excited about these new platforms as a way to help real people in their own communities.
“It’s just a sign of the times,” she says.
Both InveSTL and OverFundIt will officially go live in the next few months. Then, they’ll be asking for people with ideas, for people with money, and for people who are ready to stop talking and start doing.
“If you want change in your neighborhood, you need to role up your sleeves and go out and plant a garden yourself,” Sheridan says, “or help someone plant a garden, or give someone money to plant a garden, and go out and enjoy it.”