In the fall of 2011, I completed my thesis for my public policy minor, entitled, “Finding a way to fund: Investigating small-amount federal funding methodologies.” My thesis built on the work I had done with the WISE program earlier that year, exploring options for federal provision of small-amount ($5,000 – $50,000) funding to early-stage development organizations. The paper explored five distinct funding methodologies – grants, debt loans, contests, crowdfunding and equity investment – through interviews with relevant experts and reviews of existing literature on the methodologies. Although there was insufficient quantitative evidence to draw a firm conclusion about an “optimal” method for funding the projects described above, primary conclusions included:
- Funding should be pursued through non-governmental agencies: The bureaucratic inflexibility of the federal government makes it ill-suited to funding small-scale projects with any degree of nimbleness. Funding for projects like these is better pursued through public-private partnerships or quasi-governmental organizations.
- Focus on crowdfunding: Of the five methodologies examined, crowdfunding was the most promising, due to its low overhead costs and effective selection mechanisms. However, current understanding of crowdfunding mechanics is weak at best, making it impossible to implement at the federal level. Future research efforts should focus on understanding crowdfunding, so it can be brought into the federal toolkit for future programs.
- More research into funding methodologies: One of the starkest conclusions of this project was that the current state of research into the comparative advantages of different funding methodologies is spotty at best: there is little quantitative data available, and what data does exist usually focuses on a limited subset of methodologies.