Mansfield in Nottinghamshire could become the first UK town to crowdfund its own free Wi-Fi service, using an online portal called Spacehive.

Crowdfunding is a financial version of the concept underpinning Wikipedia. The model works by taking small cash pledges from businesses, public bodies and ordinary members of the public, and using them to fund popular projects.

As well as raising money, crowdfunding can help to boost community engagement. Even though some people may only contribute a few pounds, every contribution represents a degree of 'buy-in' that accentuates their sense of ownership.

The model was pioneered by Kickstarter in the US, which has been used to fund hundreds of millions of dollars worth of creative projects, from new feature films to an Iraqi Shakespeare group who wanted to attend Oregon Shakespeare Festival.

Now Mansfield's business improvement district (BID) hopes to use crowdfunding to kickstart its own digital revolution, by creating a Wi-Fi hotspot that spans its entire town centre.

Using, a web platform devoted to civic improvement, BID hopes to persuade local businesses to crowdfund £38,000 for the digital overhaul.

This money will allow Mansfield District Council to install free Wi-Fi transmitters on lampposts across the town. Public spaces will also be adorned with QR codes, providing information on the latest shopping, offers, events and attractions, when scanned using a smartphone.

"The future vitality of our town centres depends on imaginative schemes like this - and crowdfunding is a smart way of raising the funds in cash-strapped times," said Chris Gourlay, founder of Spacehive.

"There's a lot of gloom mongering about the death of the high street but with local people and businesses clubbing together to deliver improvements like free Wi-Fi, keeping places vibrant can be remarkably affordable."

Sarah Nelson, manager of Mansfield BID, added that embracing the Internet could help drive up footfall and encourage more growth in local enterprise. This is in line with the government's aim to improve digital inclusion throughout the UK.

Mansfield has until 1 May 2013 to meet its target of £38,000. If the target is not met by that time, no money will exchange hands. At the time of writing, a total of £5,501 had been pledged by 21 funders.

Spacehive is supported by the Big Lottery Fund, BITC and the BPF and co-designed by Deloitte. The service, which has been live since March, maximises funding sources by allowing cash raised through the site to be combined with grants and other funding streams.

Spacehive also offers project management tools for public space initiatives. Each project is verified by independent partner organisations to ensure they are viable before they start funding.

The platform has previously helped fund the £760,000 construction of a community centre in Glyncoch, South Wales, and was also used to launched Ian Botham's Cage Cricket initiative, which will see an urban version of the sport brought to multi-use games areas in cities across the UK, starting in Portsmouth.

Commenting on the news, Martin Blackwell, chief executive of the Association of Town Centre Management, said the idea of crowdfunding digital infrastructure for communities could be "very powerful".