Friday, October 4, 2013

Researchers: Can Scholarship be Crowdfunded?

A group of economists turns to an unusual source for funding: strangers.

For many research projects the first step is often getting funding, typically from academic grant-making organizations. But applying can be time consuming, funding can be slow to materialize, and the process is not always as flexible as a scholar might want.

So when a group of economists wanted to begin a study on rural Uganda last February they turned to an unusual source for funds: total strangers. The three academics leading the research — assistant professors of finance Brett Green and William Fuchs (both PhD graduates of Stanford Graduate School of Business) and professor of business administration David I. Levine, now all at UC Berkeley — decided to try crowdfunding their project on Indiegogo, a site used for all kinds of projects worldwide. “We were curious: could this work for academic research? The idea was that we would go online, get people interested in our work, and raise money at the same time,” says Green. “It seemed like a way to get people thinking about issues that they otherwise wouldn’t have known about.”

Academic research projects are fairly new to the world of crowdfunding. New platforms geared towards raising funds for research include sites like GeekFunder and Microryza. Rather than getting a T-shirt or poster as they might on Kickstarter, funders are kept up to date on the progress of research.

Green and his colleagues posted their campaign, “Light the Future for Rural Ugandans,” with a goal of raising $20,000. Although they didn’t reach their goal, the campaign did raise $16,650, about $10,000 of which came in during one weekend, after a post about the project on the Freakonomics blog. “That’s when it got exciting,” says Green. “We were actually surprised at how much we raised. We had 165 funders on Indiegogo, including three very generous donations from people we didn’t know.” The publicity the campaign received after that post brought in other donations — outside of Indiegogo — which ultimately pushed them over the $20,000 goal.

It’s likely the trio raised as much as they did because their research project was easy to explain to an audience of non-economists. Rural Ugandans typically don’t have electricity to light their homes, instead spending a sizable chunk of their income on kerosene to fuel lamps that give off dim light, pollute the air, and cause fires. Solar lamps are a more efficient and safer alternative. A $20 lamp lasts about 3 years and can provide light and charge a cell phone at the same time. (Most rural Ugandans have a cell phone.) Yet families are reluctant to choose the solar lamp over the kerosene lamp, so Green and his colleagues developed a model they hope will change that.

Rural sales people are given two lamps to sell, with the option to buy future lamps at a price that is lower than what they will charge customers. “This essentially gives them vendor financing,” says Green. “Hopefully they will come back and buy more lamps, keep selling, and grow, supplementing their income and bringing cleaner, more efficient light to Ugandan households.”

But there are challenges. Local sales people don’t have the money to invest in inventory and aren’t sure the lamps will even work, let alone sell. “The question we need to answer is if solar lights are so great, what’s preventing this market from taking off?” asks Green. “If we give people lamps, how do we get them to sell those lamps and then come back and reinvest in more? We are looking to see the key factors that inhibit these markets and if we can overcome them.” Green and his colleagues are conducting the project with Kemigisha Vastinah, an economist and a team leader at CIRCODU, the Center for Integrated Research and Community Development in Uganda. (She worked with David Levine previously on a project to get rural Ugandans to buy more efficient cook stoves.)

The project has about $90,000 in grants and crowdfunding now — largely to buy solar lamps and train sales vendors — and pilot studies have been underway for the last year, involving about 100 women who have each been given 2 solar lamps to sell. It’s still in the early days — the project will soon scale up — and it’s hard to know how effective this sales model will be, but Green thinks it’s a good one. “We think it can work no matter what the goal, whether it’s distribution of malaria nets, water filters, cook stoves, or solar lamps,” he says. “Whatever it is, rather than just giving it away to everyone, we think this is a more sustainable way of getting products out there and adopted.”