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What is Crowdfunding? It is a broad term and has multiple uses, but it is where a group of individuals independently decide that a project, a social cause or a small company is worth making a contribution or a loan to. If enough people come together to donate, the project gets funded and gets done. Typically, the project is described on the internet on a Crowdfunding platform created for the purpose. Crowdfunding gives the power to decide what is important and to get it done in the hands of individuals in the community. It gives people a chance to express their priorities by voting with their dollars — even small amounts.
Crowdfunding can also refer to the funding of a company by selling small amounts of equity to many investors. This form of crowdfunding has recently been supported by U.S. policymakers in the JOBS Act. The JOBS Act was signed into law by President Obama on April 5, 2012. The U.S. Securities and Exchange Commission has been given approximately 270 days to set forth specific rules and guidelines that enact this legislation, while also ensuring the protection of investors. So Crowdfunding will evolve to be even more useful in the future.
Why is Crowdfunding important for Pagosa Springs? So many of us have great ideas for community improvements and good causes, but we don’t necessarily see these being reflected in priorities or acted upon by local governments or other community organizations. Crowdfunding gives us the ability to propose our ideas and actually get funding if enough people buy in. It doesn’t matter whether it is sun shades for the swings at the park for the kids, picnic tables for Reservoir Hill, trail signage, bike racks for downtown, Destination Imagination trips or a capital purchase or program for a local non-profit. Any worthwhile project can be funded in this manner. The power of the many in our community can come together to fund projects we agree are important and meaningful and improve the quality of life for our citizens.
How does it work? Crowdfunding internet platforms allow individuals to create a project description, a before and after visualization, describe the amount of contributions needed, etc. and actually determine if there is enough interest in the community to fund it. The time frame for funding is limited, so the full amount needed must be raised during that time or the project is taken off-line and the money stays in the hands of the donors. The Crowdfunding website generally collects a fee if the project is funded.
Want to know more? Check the Too Late to Classify section in this week’s SUN.