THE BLOG
01/05/2016 04:35 pm ET Updated Jan 05, 2017

The Empire Strikes Back! CrowdGranting is Giving Power Back to the People

There's a tremor in the force. Innovation is about to democratize philanthropy.

Crowdfunding, the online technology that transformed the field of fundraising, is about to disrupt America's grant-giving, and for leaders trying to change the world for the better, this change can't come fast enough.

In Detroit, America's silicon valley of social innovation, entrepreneur Chris Blauvelt has come up with a completely new way to raise over $3M in grants for social change and his model is about to go national.

Chris came up with the idea of leveraging online Crowdfunding models to solve Detroit's blight. When he first described it, no one got it. "Everyone kept saying that it sounds like Kickstarter or GoFundMe," Blauvelt remembers, when he entered a statewide social entrepreneur competition in 2013. "But I saw a whole new way to use Crowdfunding to flip grant-giving on its head"

His platform, Patronicity, went on to win and become the nation's first CrowdGranting site. Within two years, the site has processed over $3M in grants for local entities in MI, making it one of the leading social enterprises in the state.

Here's how it works. The model builds on the Crowdfunding concept of engaging donors online. Local community members identify a problem they see, such as a vacant lot, crumbling buildings or a poorly lit street. Citizens create a budget and project page, then send their plan of action to Patronicity for approval. And here's the twist: Patronicity partners with the State of Michigan who matches every dollar raised in the community.

Innovation and state government are two words that rarely go together, but the Michigan Economic Development Corporation (MEDC) took a big risk and partnered with Patronicity, and it paid off beyond expectations. Katharine Czarnecki, who pioneered the partnership at MEDC, is thrilled, "I was hoping for a 50-percent success rate, the fact that we have 97 percent is crazy."

Social entrepreneurs looking for a multiple "win-win solution" have a case study here. Citizen activists win when they are empowered to identify problems. Citizen donors win when they can vote with their dollars to solve problems. Community members win through a transparent granting process that rebuilds their area. The state wins as they identify problems quickly and gain citizen support to solve them without the need to hire a large paid staff to identify, approve and process grants.

Eric Schramm experienced the power of this initiative. As the Associate Director of Development and Alumni Relations at UM, he helped support a student effort to create a space to train community members in new areas, such as 3-D printing, welding, and computer training in one of Detroit's most isolated neighborhoods. The effort not only met the match, $25,000, but also reached far beyond at $31,700. The state match made the project possible with a total of $56,700 in funds raised. Schramm recognized the force of innovation, "I don't know where we would be if we had not held our campaign with Patronicity."

Patronicity's president, Ebrahim Varachia, credited with bringing this model to life, sums up the innovative genius of CrowdGranting: "No longer is the grant process solely the home of black box review committees, tedious paperwork, and high administrative costs that eat into the very dollars the grantor seeks to use to improve communities. Our innovation democratizes granting, helping organizations extend their reach while building goodwill in communities. We believe our model will reimagine philanthropy as we know it."

Philanthropy and grant-giving has long been the least innovative arena of social change. Now, it too is about to innovate through the CrowdGranting model pioneered by Patronicity, and other states and cities are calling the Detroit offices to seek their council. Varachia is already in conversations with three other states and individual philanthropists who want to double their giving dollars.

This innovation is literally putting the power of change back into the hands of the people. Patronicity's CrowdGranting is a much-needed "great disturbance in the force" for social change.

Rich Tafel is the President of Public Squared matching social entrepreneurs with impact investors based in Washington DC. He provided strategy and coaching to Michigan's Social Entrepreneur Challenge.