Crowdfunding: It’s not a grant … or is it?

University research is almost exclusively funded on a “grants” model. In this model, the principle investigator (PI) sends a proposal to somewhere like the National Institutes of Health or the National Science Foundation. These large funding bodies review proposals a few times a year using a peer-review process, and a small (very small!) percentage of the proposals will be granted funding. The funding body sends the money directly to the University, which takes a cut to cover “indirect” costs like facility and equipment maintenance, library access, and other things that are necessary for research but not attributable to any one specific research project. The University then puts the remainder of the money into a fund that the PI can draw from to pay personnel and buy supplies. The funding body wants to know that the research dollars are being used appropriately. Having a specific fund for each project allows the University and the PI to keep track of how the money is spent and, presumably, show that it was spent well.

In contrast, the “Athlete’s Foot in Worms?” project, which officially started research this week, is a crowdfunded project. Crowdfunding currently lacks the accountability of the traditional grants system. The PI posts a proposal on-line using a crowdfunding platform that takes care of accepting money from funders and paying the PI  (the SciFund project I participated in used RocketHub). And then … nothing happens. When my research was funded, RocketHub took its cut, sent me a check, and said “congratulations”. They will not be checking up on me to make sure that I sent my funders their thank-you gifts. They will not be asking for  a progress report. If I spend the money on a vacation instead of lab supplies, they wouldn’t know and probably couldn’t do much about it even if they did.

What keeps me firmly in the Pacific Northwest, rather than Bermuda, isn’t RocketHub. Rather, it’s the contract I’ve made with the people who contributed through the RocketHub site: Take this money; make this project happen; honor your obligations with your thank-you gifts and by keeping us updated as the research progresses. If you do, we might fund another of your projects in the future. We might tell our friends and family that you’re worth supporting. If you don’t, you are losing some serious street cred. Some of us know you. Some of us are related to you. Don’t let us down.

This internal monologue, while extremely effective for me at least, does not fit into the University funding system. So, here’s what happened to the crowdfunding money: Rockethub sent me a check. I gave the money to the University. The University very kindly did NOT take a cut (no indirect costs were removed for the “Athlete’s Foot in Worms?” project), and they set up a fund for me to use the money. It’s a little more complicated than paying for everything myself, especially when it comes to transportation costs. However, it means that my paid undergraduate and my two volunteers are covered for liabilities. It also means that I am setting up crowdfunding at this institution as a funding mechanism that will have accountability. I think that’s probably a good thing.
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3 responses to “Crowdfunding: It’s not a grant … or is it?

  1. Peg Achterman

    Excellent summary Rebecca — I will be sharing with others!

  2. So you’re using the institution for two things: its accounting department, and its legal department.

    Those are both worth it, especially if they don’t take a cut! But the lesson for people who don’t have equally helpful institutions is that you’ll need to spend some money to pay for those things, and spend some time finding people to do those jobs.

    It’s amusing to realise that “accountability” and “accounting” are from the same route, and when you say that the funding mechanism will have accountability — you *literally* mean accountability — you mean accounting. You mean that there will be accounts kept.

    Frankly, everyone should keep accounts; it’s a lot like keeping proper contemporaneous research notebooks, fulfilling the parallel role.

  3. Yes, I think it will be interesting to see how other institutions deal with crowdfunding, particularly for projects that are larger-scale (and more money!).
    And I agree – the accounting part is important for all research projects!

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