Thursday, July 19, 2012
Being the Executive Director of the National Crowdfunding Association is a great privilege. It is a very rewarding and enjoyable experience, though also highly time consuming, stressful at times and certainly challenging. But I love it. It is the PEOPLE who make it so amazing. I just got off the phone with yet another new member of the NLCFA who is looking to get involved on a committee or initiative and help shape this industry. That kind of conversation happens at least twice a day.
For so many of us it isn't about being ahead of the curve, it is about creating the curve. In order to do that, we need a great team of people with hopefully different skill sets and knowledge, and all willing to do the work. And we do. Thus we are greatly benefited by our deep bench of eager volunteers.
I came across the below blog entry today, The 6 People You Need in Your Corner, by Jessica Hagy, on FORBES. (Original posted here.) I couldn't agree more. It helps tremendously when we realize what kind of volunteer we are, but also to recognize the unique strengths offered by people with characteristics other than our own.
Where do you fit in these six? I don't think any of us are only one of them, all of them, or none of them. We are mixes, mutts of several of them. But the key is to know who you are, what the organization can look to you to bring to the 'curve making' party. (I know I am an Instigator, mixed with a Cheerleader, Connector and Example.) What are you? We need and welcome all types. I hope you have people with mixes of these six characteristics on your company/firm team too. If you don't, seek them out. Some of us are more of a pain than others, but all are vitally important.
Monday, July 16, 2012
Saturday, July 7, 2012
This blog originally appeared here.
By Doug Rand, Senior Policy Advisor, White House Office of Science and Technology Policy.
Earlier this month, the White House hosted a briefing for the American Sustainable Business Council, a national network serving social enterprises from early-stage startups to established success stories, like Patagonia and Ben & Jerry’s. Senior White House staff took time to meet with chief executives and thought leaders, such as Seventh Generation founder Jeffrey Hollender and Stonyfield Farms pioneer Gary Hirshberg, to discuss many aspects of the President’s agenda to support overall economic growth, including the Impact Economy.
As part of the conversation, the discussion focused on the Jumpstart Our Business Startups (JOBS) Act. The JOBS Act is a bipartisan bill signed by the President into law in April that will allow small businesses and startups to raise capital from investors more efficiently, leading to faster growth and hiring.
One of the key features of the JOBS Act is to enable “crowdfunding” – letting companies raise up to $1 million in small increments from many investors. As the President said, this is “a potential game changer”:
Right now, you can only turn to a limited group of investors -- including banks and wealthy individuals -- to get funding. Laws that are nearly eight decades old make it impossible for others to invest. But a lot has changed in 80 years, and it’s time our laws did as well. Because of this bill, start-ups and small business will now have access to a big, new pool of potential investors -- namely, the American people. For the first time, ordinary Americans will be able to go online and invest in entrepreneurs that they believe in.
In many ways, nonprofits and social enterprises are already adept at raising money through crowdfunding – think of donation-based tools like Network for Good or zero-interest microfinance platforms like Kiva. What the JOBS Act will do is allow micro-investors to purchase a stake in the venture.
Many social enterprises already have benefited from donation-based crowdfunding platforms, and they are looking forward this new opportunity to attract impact-minded investors. Two such companies guest-posted on the White House blog, and their founders attended the JOBS Act signing ceremony: Stockbox Grocersbuilds tiny grocery stores in urban “food deserts,” while LuminAID Lab manufactures solar-powered lights for disaster relief. Both companies stress the power of crowdfunding to connect social enterprises with their communities and customers.
At a time when nonprofits are struggling for revenue, as charitable donations have slowed and government budgets are tight, the social sector needs to find new strategies to attract resources. The Obama Administration has taken some important steps toward this end, developing policies and programs to unlock capital and to increase investment. For example, the Administration launched the Social Innovation Fund to provide growth capital to high impact nonprofits. In two years, it has catalyzed nearly $400 million toward communities’ solutions. The Treasury Department recently updated the example Program Related Investments, providing guidance that should facilitate the flow of impact investing from foundations and philanthropists to support businesses and nonprofits pursuing charitable purposes.
Building on this momentum, crowdfunding offers tremendous promise. Some believe that it has the potential to revitalize underserved communities by improving access to capital for small businesses. As the leader of a major group representing Main Street microenterprises recently wrote, “Given the tremendous demand for credit among microbusinesses and entrepreneurs, crowdfunding offers real promise for underserved business entrepreneurs and may allow the organizations that serve them the ability to reach even deeper into the entrepreneurial community.”
To be clear, investment-based crowdfunding is not legal just yet. Congress required the Securities and Exchange Commission (SEC) to write new rules of the road for crowdfunding, which will be finalized in 2013. Some open questions include the following:
- Any company raising money through crowdfunding must use an SEC-regulated intermediary. How should these intermediaries be required to educate investors, safeguard investor privacy, reduce the risk of fraud, and ensure other investor protections?
- In any given year, investors are limited in the total amount they can invest across all crowdfunding investments (5% of annual income or net worth if less than $100,000, or 10% of annual income or net worth if greater than $100,000). How should intermediaries be required to verify that investors stay within these limits?
- What disclosures should be required of the companies raising money through crowdfunding, above and beyond those spelled out by Congress?
The SEC has invited members of the public to submit comments to inform their rulemaking. These comments could include considerations unique to social enterprises, along with those investors willing to trade some financial return for greater social or environmental benefits.
Tuesday, July 3, 2012
The SEC has announced that it will hold an open meeting to consider rules to eliminate the prohibition on general solicitation in offerings made under Regulation D under the Securities Act of 1933. http://www.sec.gov/news/openmeetings/2012/ssamtg082212.htm
Since this is the first of the real deadlines under the JOBS Act – the SEC was required to “revise its rules” in this area within 90 days from April 5 -- some have asked whether the delay in taking action has negative implications for the timing of crowdfunding rules. The answer is “not necessarily.” Regulation D sits within a web of inter-related rules, and its provisions cannot be changed without affecting many of those other rules.
For example, the SEC is also directed to permit general solicitation in Rule 144A offerings. Most Rule 144A offerings include a Regulation S component. Regulation S prohibits “directed selling efforts.” Directed selling efforts are very similar to but not exactly like general solicitation (and present their own policy issues). If general solicitation is permitted but directed selling efforts are still prohibited, the resulting confusion could adversely affect international markets. And there are similar issues with respect to a number of other rules.