Crowd Funding looks like a great way to help out small businesses. Yes, it is a little like begging for change. But wouldn't you rather put $10.00 in the hands of a possible entrepreneur who would probably create jobs, then to hand it to a person on the street, who may or may not use it for the greater good?
Growthink has a great presentation on this type of funding here: http://goo.gl/Mungg Be forewarned, he's will try to sell you something about 3/4 of the way through his presentation, but it might be worth it if you are an information junkie like I am. As he points out Crowd funding
is by far the best idea in funding that has come along in 50 years.
Imagine if Congress would let you take a tax deduction for donating
money like this. It could reinvigorate the economy even further. But alas, Congress has different plans and in my opinion is clueless to the new era of funding.
Congress has a proposal called the CROWDFUND act, and is part of the Entrepreneur Access to Capital Act. They are trying to legislate the crowd funding and this will be effective in January of 2013. This part of the JOBS act is really useless for what Crowd Funding is. Running a small public company in the past, I could raise $1 million a year. But in general, I could only have 35 unaccredited investors and unlimited accredited investors. See http://www.sec.gov/answers/rule504.htm for a definition of accredited vs. unaccredited. OK, so the CROWDFUND act now allows 2,000 unaccredited investors, but limits the amount they may invest as a percentage of their net worth or income.
Congress is so out of touch, it blows me away. Most of the companies/individuals seeking funding don't have the resources to be able to satisfy the regulations imposed upon them for this. The regulations help in a very small way, as now companies that want to do raise money this way, can now offer returns on investment to a bigger group of investors. This is not "Crowd Funding". Crowd Funding is individuals/small groups of entrepreneurs basically panhandling for funds to start a project.
Let's hope that the law doesn't effect the true benefits of Crowd Funding. They way I see it Crowd Funding could be a great benefit to the economy and create lots of jobs. But if Congress is going to try and regulate Crowd Funding (especially the donation form), this would be akin to telling the Red Cross that it can only accept money up to a certain amount from individuals and $1 million a year. I don't think that is what Congress had in mind and it really shows that the act is pretty useless for true "Crowd Funding"
A few friends and I started a project on Kickstarter because I like the Crowd Funding model. You can see it here: http://kck.st/IhTOfg. And yes, this is me with "hat in hand" asking for a donation to help build a business and save the economy. You've probably given to other charity, doing so here will probably generate productive members of society with jobs, who by the way will pay taxes and help the economy as well! And if we get enough people to donate $10.00 it can get funded.