The prize-winning city

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By Jo Flatt

What do canned goods, margarine, fire extinguishers and the first non-stop flight from New York to Paris all have in common? They were all innovations resulting from contests, an old concept that has roared back in style like vintage fashion. Prize contests refer to the practice of crowdsourcing new ideas, strategies or products from networks outside the traditional range of experts - whether across geographies, companies, industries, sectors or disciplines. In the search for the next prize winner - anyone can be an expert.

While prize contests have grown in popularity over the last few years, what’s particularly remarkable is the range of solutions that are being sought. A quick look at Challenge.gov, an online platform to centralize all the prize competitions run across the 50 US federal government agencies shows a remarkable range of opportunities for non-traditional experts to engage in solving complex problems. On the website, one can find contests for 3D printable small robots to assist in bomb disposal, to the balancing of dead weight on Mars, or randomized control trials for criminal justice problems. Issues and challenges that one never thought were public information are now being showcased for anyone to explore, transforming the big black box of government to be accessible and relatable.

And Challenge.gov is not the only example. Prize contests are being used across private and philanthropic sectors as well. The uptake of prizes has been so great that a wide range of intermediary organizations have popped up to both support development of prize campaigns and connect the ‘solutions seekers’ with the ‘problem solvers’. One such intermediary, InnoCentive, has a problem solver network of over 300,ooo individuals who actively participate in prize based solution development.

So, why are organizations heading down this road? Call it recognition of limitations or hopes of new horizons, as today’s challenges become increasingly complex, institutions are wanting to look elsewhere for new kinds of solutions. In times of fiscal austerity, prizes can also be cheaper than traditional request for proposal (RFP) processes since the solution seeker only pays for success. Prizes can also bring attention to new markets, issues or areas of opportunity by attracting investment and attention to otherwise overlooked industries. The success garnered from a prize contest can make unlikely ideas suddenly more attractive, bringing the good ones closer to implementation and commercialization.

Prizes can also spur cross sector collaboration and the sharing of knowledge between industries. A study completed by the Harvard Business School, Copenhagen Business School and InnoCentive, evaluated the trends of crowdsourced innovation solutions by looking at 166 scientific problems across industries, firms and countries between 2001 and 2005. It showed that most of the winning ideas came from problem solvers whose fields of expertise were furthest away from the problem. This conclusion turns the traditional frame of expertise on its head. No longer must we depend exclusively on astrophysicists to think about astrophysics, with the right level of creativity, dedication and teamwork anyone can take a shot at developing a good idea!

So what does this mean for cities?

As shocking as it may seem, Canadian municipalities have very few ways of making money. Aside from property taxes and user fees - there isn’t much else that cities can do for dollars, which may seem rather ironic given that the majority of Canadians resides in cities. Prize contests, however offer one way of financing creative problem solving for some of the biggest challenges faced by cities. And, rather than just paying companies to develop solutions, contests are encouraging investment in local residents.

Prizes also illustrate a growing a desire to change the dynamics of power in urban governance, by shifting the way that we understand expertise and how we access great ideas. Designing the most successful public space, bike share program or waste management system all require significant insights into the realm of behaviors, needs, and fears of the daily user. And often, it’s the people themselves who are best at knowing what will work – so why not let them be the experts?

A cautionary note:

While prize and contests may seem like a simple strategy for innovative solutions – it’s important to remember that not all problems are created equal - and many complex issues cannot be solved with a contest. The first thing to determine is whether the challenge presented can benefit from a prize format, why has it not yet been solved before and what structural or systemic barriers are getting in the way?

Another key concern about the prize process is selection and implementation - who is choosing the winners and how are their ideas being applied? Every idea still needs work to refine, customize and ensure local receptivity. We can’t assume that all crowdsourced ideas are good ones – the idea may fall flat on its face, even if it won the contest.

Building great cities is no small feat. It is a deliberate process that requires ambitious goals, experimentation, and even more importantly, a commitment to bringing new faces, perspectives and voices to the table. And with no beaten road to follow, we must be open to the full range of strategies or approaches to get there. Prizes are but one arrow in our quiver as city builders and engaged residents. If we continue to complement this innovative practice with other unique strategies, processes and collaborations, we may just uncover that next best city minded thing.

Useful links

  • Interested in running a challenge prize? Check out Challenge Prizes: A practice guide by Perrie Ballantyne at the Nesta Centre for Challenge Prizes.
  • Did you know that the City of Toronto ran a challenge prize earlier this year? See the 2014 NXT City Prize and learn about the winning idea (of over 120 submissions!), Yonge Redux.

Author: Jo Flatt works as a Senior Project Manager at Evergreen Cityworks and Consultant at The Next Practice, specializing in the fields of urban sustainability and change management strategies to support innovation across sectors.

Photo credit: Photo courtesy of the city of Marietta.

Voices of New Economies: Sean Geobey

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This blog is part of the 'Voices of New Economies' series within Cities for People - an experiment in advancing the movement toward urban resilience and livability through connecting innovation networks. This Voices series is collectively curated by One Earth and The Canadian CED Network. We are launching Voices of New Economies as part of New Economy Week 2014, hosted by the New Economy Coalition. Throughout this week, a series of 5 questions guide our exploration of what it would take to build the economy we need - one that works for people, place, and planet.

Today’s Voices story responds to the fifth and final question in the New Economy Week series: How can we support neighborhoods, cities, towns, and regions as the fertile ground for the kind of economy we need?

Voices of New Economies - An Interview with Sean Geobey

By Nabeel Ahmed

When Sean Geobey was in university, he helped start up a community capacity building nonprofit. It introduced him to the challenges of how social service organizations financed their work, a question Voices_Sean Goebey_Piche has grappled with in his doctoral research at the University of Waterloo and the Waterloo Institute of Social Innovation and Resilience. His work on social finance looks at alternative funding models and how they can transform the social sector, private markets, and governments that encourage more inclusive, democratic, and real-wealth creating activities.

For Sean, real wealth comes from the things that allow us to better express ourselves; things that allow for individual talents and interests to flourish in a way that doesn't harm other people's capacity to do the same. That wealth, he says, comes from our capacity to invest materially, socially, and and intellectually in the creation of institutions and infrastructure that support collective efforts to try and make the world a better place.

What are some key elements of new economies?

"It's important, here, to take stock of the new economies we are drifting into and guide them towards the new economies we desire (which may have elements of the 'old' economies as well).

Increasingly, real wealth is being diminished by the commodification of human inputs and creativity. This is a world of increased automation, designed more by bits and data rather than the creation of actual goods and services. It is a globalized world, not just economically but also socially and culturally. There has been a troubling shift towards institutions that are fundamentally unaccountable to the general public and community; corporate actors that act with impunity across borders present a real challenge for the remaining democratic institutions to channel productive capacity towards broader positive impacts rather than just shareholders.

Despite the discontents, more flexibility does hold an incredible amount of promise, and technological advances can increase material well-being and creative potential.

Ultimately, new, resilient economies that better serve people will require a revitalization of democratic people-controlled institutions, from governments, to finance, to worker organizations, to company ownership and control. It means a better understanding of local environments and the increasing variety of people in them, learning from past institutions while creating new ones, in ways that can leverage advances in technology."

How can we support neighborhoods, cities, towns, and regions as the fertile ground for the kind of economy we need?

"At the local level, we have a real opportunity to revive and modernize this idea of a mutual aid driven society that was prevalent in the late 19th century.This includes the credit union sector, cooperatives, and craft unions, creating opportunities for people to support each other's work around the world. Such organizations can maintain autonomy while working together at a global scale, which large multinational corporations and the financial sector do quite well, but older models of mutual aid have historically struggled with.

This is where social finance comes in. Just as the prevalence of sophisticated, globalized financial tools has helped the modern economy develop, a more human-oriented way of social, economic, and ecological prosperity can come from getting regular people engaged with finance to help develop their own communities and support the work of like-minded people wherever they may be.

The credit union sector, for example, has been pushing for innovation in local economic development through various means, including the creation of community bonds. These are small investments created by nonprofits and social sector organizations, mostly administered by credit unions, that allow organizations without traditional access to debt financing to convert erstwhile donors into more substantial supporters in the form of a loan. This allows social sector organizations with real capital and assets to leverage value in a way they have not been able to do so previously.

Crowdfunding is the most obvious technology-driven social finance innovation, emerging in the last decade to allow an unprecedented global flow of capital from ordinary people. It has been particularly transformative in turning retail consumers into financiers; in the entertainment, music, film and video game industries, the pre-purchase model has allowed new people to produce interesting ideas and tell new stories that were impossible a few decades ago. As a pre-purchaser, you effectively give a loan to a producer, which completely changes the relationship between consumers and producers."

Through tapping into both local and global social finance tools, individuals can transform institutions to be more inclusive of people's creativity and fundamental dignity.

 

Social Finance and Cities

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How can we bring the ingredients of social finance, which is about how to do good with money, to the work of building better cities in Canada?

Cities for People is cooking up a feast of articles on the intersection of social finance and cities. Here's a taste of what you can expect over the next few months.

Introducing social finance

Social finance is an approach to mobilizing private capital that delivers both a social as well as economic return. It is an umbrella term that covers the various tools and models of achieving a positive social impact with private, public and social capital and financial innovation. As a way of leveraging the market and advancing economies to serve the interests of people and build shared prosperity, it fits right in the New Economies stream. (Learn more about Cities for People's New Economies theme with this introductory blog post.)

There are many applications of this simple idea: strategic philanthropy, loans for non-profits, investments in social-purpose businesses, microfinance, green bonds, socially responsible investments, and social procurement, to name but a few.

Recent research indicates that over $10.6bn was invested around the world in social finance in 2013, with approximately $46bn in assets under management (JP Morgan and Global Impact Investing Network, 2014). In Canada alone, an estimated $5.3bn is available in social finance assets under management (Purpose Capital and MaRS Centre for Impact Investing, 2014).

It may already be apparent that social finance is a very broad field, something that weaves through all the work that we do. This blog series focuses on the intersection of social finance and cities - exploring how social finance addresses some of our greatest urban challenges and opportunities, including reducing inequality.  Here are some of the questions that guide our inquiry:

Identification: Who are the private and philanthropic funders that are investing in cities? Where are the social entrepreneurs who care about the urban future? What kinds of models have been tried, and where?

We will explore examples such as the new Ours to Own campaign from the Calvert Social Investment Foundation, which supports crowdfunding for businesses in specific cities in America. A Canadian example is Vancity’s Community Branch Grants program, in which branches make small grants to local initiatives. Another is the federally endowed Green Municipal Fund, which supports municipal environmental projects.

Opportunities: Which sectors present the greatest opportunities for sustainable urban prosperity and social finance, and which organizations are best positioned to identify and make the most of them?

Is it possible to make blended value investments in water and waste? Does the sharing economy represent a growing niche - how do we finance tool libraries and collaborative consumption to shift away from a culture of ownership? Recently, the Reinvestment Fund announced a commitment to bring $100m to healthy food businesses in underserved communities, with a significant serving of data analysis to support a better focus.

Challenges: Is it possible to develop a strong investment pipeline and portfolio with a limited geographic scope? What are the barriers faced by non-profits and social enterprises focusing on cities?

How can we support impact investing in supportive housing? How can locavesting best contribute to the local economy? Can every city in Canada adopt a sustainable purchasing policy, like Edmonton?

Social finance and impact investing is rooted in the idea that every investment has a social and environmental impact. In Canada, this has manifested itself in many different ways, from the social economy in Quebec to socially responsible and impact investing initiatives from major banks. Foundations have both supported a social finance ecosystem and explored mission-related investing, while credit unions tap into their community roots and flex their corporate social responsibility muscle.

Canada is also a country in which more than 80% of the population lives in cities, as well as a legacy of thinking about them, from trendsetters like Jane Jacobs to leaders such as the Global City Indicators Facility. There's a clear opportunity for driving investments in urban areas to reward us both financially and socially for generations to come.

Join us as we highlight and discuss the challenges and opportunities around funding work that has ‘better cities’ baked into it, and please share your recipes for better place-based good. We look forward to your contributions.

To learn more about social finance and impact investing, the Guide to Social Finance is a great entry point, while Impact Investing in Canada: State of the Nation is the most comprehensive and recent report on the field.

Bite-sized question #1: Does this mean that what happens outside cities doesn’t matter?

Absolutely not. However, the twin phenomena of rural-urban migration and urbanization necessitate a serious effort at marshaling social finance for cities. In addition, most ‘development’ dollars, especially outside major urban clusters, are already targeted towards improving rural livelihoods and communities.

Bite-sized question #2: Is this all new? How come no one thought of this before?

Social finance has a long history and draws upon initiatives around the world. Its current popularity represents a framing that has helped catalyze the sector and usher in an innovative new approach. As Arthur Wood noted, citing the Medici-fueled Renaissance, “money can make you rich and powerful but philanthropy can make you immortal.”

Photo credit: ecstaticist on Flickr

2014 Social Finance Forum: Building markets that matter

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The leading conference on social finance and impact investing in Canada is coming back this November.

Hosted by the MaRS Centre for Impact Investing, the 2014 Social Finance Forum: Building markets that matter will welcome over 300 attendees and 65 speakers from across Canada and the world to Toronto for workshops, pitch fairs, the Social Finance Awards, and more.

What: 2014 Social Finance Forum: Building markets that matter
Where: MaRS Discovery District, 101 College Street, Toronto, ON
When: November 6, and 7, 2014

See the invitation at SocialFinance.ca or head over to the Social Finance Forum website for all the details. A limited number of early-bird tickets are available right now.

Photo credit: MaRS Discovery District