[Grant] Cidade Democratica

This blog post is a summary of a $202,500 grant from Omidyar Network to Cidade Democratica to continue developing their open innovation platform and business model. This information is also available in IATI-compliant XML.

Amount of grant: Up to USD $202,500

Date that grant agreement was signed: September 28, 2012

Description:

Omidyar Network has given Instituto Seva, the parent organization of Cidade Democratica, a grant of up to USD $202,500 over three years to further develop their open civic innovation platform and to refine their business model in order to become financially self-sustainable in the future. The grant is tied to matching funds in order to encourage more earned income from municipal government clients, and is dependent on the fulfillment of impact metrics which are defined below.

Context:

“The wisdom of the crowds” is one of those vapid marketing slogans for which I have very little patience. In the contexts where it is applied “the crowd” usually refers to a fairly small group of 20 – 100 dedicated stakeholders and “wisdom” is often shorthand for specific, iterative proposals to improve particular processes. Even in massive participatory communities like Wikipedia, Reddit and Kickstarter, the 90-9-1 principle — where roughly 10% of a community does all of the work — still holds true.

If we remove the veneer of PR speak, however, what we’re left with is fairly obvious. Trial by jury assumes that a group of citizens can come to a better decision than a single expert judge. A public corporation or non-profit organization must have a board of directors because the collective deliberation of diverse actors tends to be better than the unilateral decisions of a single person (even if Mark Zuckerberg doesn’t agree). Representative democracy itself assumes that the best way to meet the needs of a vast, diverse population is by involving them in the decision-making process. The psychology behind why groups often make better decisions than individuals is explored in depth in Daniel Kahneman’s Thinking, Fast and Slow (essentially, we all suffer from various cognitive biases and collective collaboration helps surface and cancel out those biases).

The process of consulting large groups of people to help innovate new ideas, processes and products has been dubbed “open innovation,” and it’s far from new. In his latest book, Future Perfect, Steven Johnson dedicates a chapter to the history of open innovation, starting with the formation in 1754 by William Shipley of the “Premium Society,” which later became the Royal Society of Arts (RSA). Today the RSA has more than 27,000 fellows from 70 countries, but in 1754 it started out as a group of 10 elites that decided to offer cash prizes to anyone who could develop solutions to the pressing problems of the day including the discovery of cobalt and the cultivation of madder. The point of the prizes was to offer a relatively small subsidy to kickstart a new sector that requires a lot of high risk experimentation. As Johnson puts it: “The subscribers funding the RSA premiums were simply perceiving potential value before the private sector managed to. After 1775, the madder plant didn’t need the RSA’s help; the textile market was more than able to keep the plant in circulation. In 1754, it just needed a kick start.”

Fast forward 250 years and open innovation has become a maturing sector in the US and UK with with major players including OpenIDEO and InnoCentive (also an Omidyar Network investee), and OmniCompete (acquired by InnoCentive in February 2012). Most open innovation platforms, such as Dell’s IdeaStorm are focused on the private sector, though InnoCentive has made a priority of attracting public sector clients and OmniCompete was recently hired by the city government of Regina, Canada to facilitate a challenge that seeks ideas related to sustainable urban planning.

Cidade Democratica is the first and only open innovation platform designed for Brazilian users and municipal governments. So far, Cidade Democratica has depended on project-based sponsorships and grants to fund its development, which has enabled it to add new functionality in an ad-hoc fashion and take on three paying municipal clients. With Omidyar Network’s support, Cidade Democratica will be able to consolidate its product and strengthen its business development in order to grow the number of municipal clients and its social impact.

For more information on Cidade Democratica’s past, model and impact, I recommend the case study by Manuella Maia Ribeiro at the Technology for Transparency Network and another case study by the Transparency Policy Project.

If you are looking for end-of-the-year opportunities for charitable giving, Cidade Democratica is currently crowd-funding a project to involve residents of Sao Paulo’s Pompeii district in the local municipal planning process.

Impact metrics and matching funds:

  • Cumulative monthly unique visitors to Cidade Democratica at end of three-year grant period: 250,000
  • Number of total registered users at end of three-year grant period: 196,000
  • Number of submitted proposals with at least 100 “activities” at end of grant period: 4,180
  • Number of challenges sponsored by paying clients at end of grant period: 14
  • Number of blog posts that describe the context, obstacles, media coverage and outcomes of each challenge: 28

$107,500 of the grant will be provided over three years unconditionally. $95,000 of the grant is dependent on matching 1:1 funding that will match earned revenue from paying clients for the Digital City platform. The grant was structured this way to incentivize earned revenue and to encourage Cidade Democratica’s financial sustainability.

Final thoughts:

There has been a lot of enthusiasm around the use of open innovation platforms to increase civic participation and bring bottom-up innovation to government. But so far, the results from early attempts have been modest.

Two years ago, the city of Austin, Texas contracted Granicus to expand their community engagement beyond phone calls and community hearings:

Traditionally, the City hosts in-person community hearings to gather public input on policy and programs. These face-to-face interactions are extremely valuable, however, only small segment of their population would show up. “We needed to make the civic engagement process more accessible to people who couldn’t or wouldn’t get involved before,” said Doug Matthews, Chief Communications Director for the City of Austin. “Empowering citizens with an easier way to voice their opinions and ideas through the web became a top priority,” added Matthews.

With Granicus’ help, the city launched SpeakUpAustin, which we are told resulted in more than 420 proposals from over 1,100 residents. Of those 420 proposals, more than 50 were put into action and 18 of them have been completed. It all sounds great — and it probably is — but if you scroll through the proposals on the website, there is very little interaction, no responses from government employees, and just a handful of users are responsible for the vast majority of proposals.

Those same dynamics seem to also hold true on MindMixer, a civic startup that has raised $2 million in venture investment and works with 125 government organizations, including the city of San Francisco, to build community engagement via their online platform.

There are many risks with this grant. First, we don’t know if Cidade Democratica will be able to facilitate the level of engagement that represents even 1% of a city’s population. Second, even if the website can attract significant participation, we don’t know if the municipal government clients will prove to be responsive and implement suggestions made by users. Finally, even if governments do respond to suggestions made by a significant percentage of a city’s population, there is a danger that the digital divide will pull government resources and attention to those areas that are most connected rather than those that have the greatest need for government services. In a previous post I have discussed how middle class civic participation can contribute to social exclusion.

So, given all of the above risks and concerns, why support Cidade Democratica’s further development? Because they are a very thoughtful group of individuals who have already had some important successes with the platform in the past, and they have a clear vision for what they want to achieve in the future, always with a focus on increasing community engagement and social inclusion. Compared to many of our other grants, this is a relatively small amount of money to support some high risk experimentation and to see what comes of it.

If you have any questions or concerns about this grant, please leave a comment below or email me at dsasaki@omidyar.com.

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