Time for Crowdfunding Reforms

V.2, N.52

Members of the Crowdfunding Professional Association’s policy committee recently descended on Washington, DC, to convince regulators and legislators to overhaul the rules governing investment crowdfunding. Our first article is a summary of their important recommendations.

Among the suggestions that drew our attention:

• Stop requiring startup companies to engage in nonsensical and expensive audits when no operating data yet exists.

• Waive the GAAP requirement for financials from early-stage and smaller businesses (as the Small Business Administration does for its borrowers).

• Liberalize advertising rules for companies using investment crowdfunding and allow them to mention the terms (e.g., the interest rate being paid).

• Require portals to issue simplified and standardized term sheets for investors.

• Allow investment funds run by nonprofits to use crowdfunding to raise capital.

• Award crowdfunding investors tax credits up to $1-2K per year.

From my perspective, these ideas are too modest. For example, I would argue that all small, community-based funds should be able to use investment crowdfunding and that tax credits for small business investments should be higher. But it’s the start of a constructive dialogue on Capitol Hill.

Also, in this issue of The Main Street Journal, you’ll find articles on the following:

• Ownify is a terrific new company based in Raleigh-Durham, NC, that allows outside investors to help renters become homeowners.

• Seattle architect Mark Hinshaw argues that cities should enact policies that make empty commercial spaces more available to small retailers and craft manufacturers.

• The Institute for Local Self-Reliance just published a compendium of replicable models for community solar projects and recommendations for supportive state and local policy reforms.

• An analysis of crowdfunding offerings by Kingscrowd suggests that the appropriate interest rate to compensate investors for risk should be 10-11%, and revenue-sharing deals should be paying at least 1.5 times the investment.

• The Evergreen Cooperative Laundry in Cleveland, one of the pioneers in developing a network of worker cooperatives, is expanding its staff and facilities.

Finally, we welcome sponsors for each issue of The Main Street Journal. If you are interested, please reach out!

~ Michael Shuman, Publisher

NEWS

• CfPA Policy Positions, Crowdfunding Professional Association (May 20)

• Can a Fractional Ownership Model Help Renters Become Owners?, Thesis Driven (July 10)

• Supporting Local Businesses as a Path Forward, Next City (July 10)

• Overcoming Barriers to Local Clean Energy Ownership, Institute for Local Self-Reliance (July 10)

• Are Current Debt and Revenue-Share Interest Rates Fair for Investors?, Kingscrowd (June 22)

• Evergreen Cooperative Laundry Expands, Evergreen Cooperatives (June 21)

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Thank you to this issue’s sponsor:

Independents Month celebrates Indie Locals (independent and locally owned businesses) and entrepreneurship. Learn more!

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Jump to a Section:

✔️ News from NC3

✔️ Partner News & Voices

✔️ Events

✔️ Jobs Board

✔️ Asks

WHAT YOU MISSED IN LAST WEEK’S MSJ EXTRA!

SPONSOR CORNER

The National Coalition for Community Capital (NC3) is dedicated to educating, advocating, and activating community capital—and serves as MSJ's fiscal sponsor. Thank you for being a part of a growing movement! Contact NC3 for support integrating local investing in your work: info@nc3now.org.

NC3 UPDATES AND ANNOUNCEMENTS

• NC3 was invited to participate in an "Investing for Well-Being Design Team" hosted and empowered by the NY Federal Reserve on May 28. Initiated by David Erickson, SVP of the Federal Reserve Bank of NY, the team is one of over a dozen teams tasked with designing an economy that works for everyone. The team of nearly 50 from across the country spent the day listening to expert panels and in workgroups addressing specific structures and processes designed to identify how we can transform our health and social services systems to finance and reward equitable health and well-being outcomes. Noting that community and personal wealth are the most accurate predictors of good health, the team included experts from the impact investing world, philanthropy, medical professionals, and community advocates. Our NC3 team included Pablo Bravo, a recent addition to NC3's board and an expert in health care finance and CDFIs, Brian Beckon, one of NC3's co-founders and an attorney for PathLight Law, and Chris Miller, also an NC3 co-founder and current board chair. NC3 has been asked to join the design team, and language introduced by NC3 around community empowerment and wealth building was added to the working document. 

PARTNER NEWS & VOICES

• Community Wealth Building: Transforming Local Economies, American Independent Business Alliance (July 14)

• Australian Support for Oxford Symposium on Employee Ownership, Employee Ownership Australia (July 10)

• Highlights of SuperCrowdChicago, Superpowers for Good (July 3)

• TOPA Needs Capital to Succeed, Shelterforce (July 2)

• I Just Hit Send: Founder to Future, Abrams + Angell (June 25)

NEW INVESTMENT OPPORTUNITIES

Our complete list of recently posted investment opportunities has moved to MSJ Extra! As a teaser, here is an offering from our list. (Please note that our listing of these opportunities is not an endorsement. Remember that all investments are risky, so click on the hyperlinks and read all the details carefully before investing.)

• Griffin & Gargoyle (Lake Geneva, WI) - Honeycomb Credit: Establishing a small-scale immersive amusement venue that celebrates the region’s connection to the Dungeons & Dragons game.

NOTABLE NEW RESOURCES

• Community Capital Live: Lisa Nutter of Community Impact Investments, The Main Street Journal (July 17)

• The Crowdfunding Genome: A Comprehensive Analysis of Startup Ecosystems, Crowdfund Capital Advisors (July 8)

• Multi-Stakeholder Cooperatives, Shareable (July 2)

MSJ EVENTS

• Community Capital Live: Betty Francisco and Aliana Piñeiro of Boston Impact Initiative - Virtual Event: July 31, at 2 pm ET

MORE EVENTS

• Next Economy MBA Q&A Session - Virtual Event: July 23 at 3 pm ET

• How to Sell Your Business to Your Employees - Virtual Event: July 24 at 3 pm ET

• Oxford Symposium on Employee Ownership - In-Person Event (UK): August 6 - 9

ICYMI

• MSJ Highlights: Quarter Two, The Main Street Journal

• How Small Businesses Can Raise Capital from the Crowd, American Independent Business Alliance

• Employee Ownership Equity Summit Highlights, Project Equity

JOBS BOARD

• Boston Impact Initiative: Impact Investing Education Programs Director

• Common Future: Controller, Fund Development Manager, and Impact Investments Manager

• Healthcare Anchor Network: Impact Purchasing & Place-Based Investing Program Associate

• Honeycomb Credit: Director of Strategic Finance, Community Development Finance, and Strategic Planning

• Mission Driven Finance: Fund Management and Client Services Director

• New Majority Capital: Program Manager, Program Coordinator, and more

• Project Equity: Head of Finance and Administration and Manager of the Project Management Office

ASKS

We introduce a new section called “Asks” in this issue. If you or your community has a project on local investment that needs help, please let us know. We invite our readers to assist each other.

• Jenny Kassan (Opportunity Main Street) is looking for accredited investors to support building a Community Investment Hub in Baltimore. Contact jenny@opportunitymainstreet.com for more information.

• Wendy Wasserman, a wonderful communications expert and strategic thinker (and one of the people we turned to when launching The Main Street Journal), is looking for small businesses or organizations facing communications challenges that may need a little extra help or support. Contact her at wendy.wasserman@gmail.com if this is you.

IF YOU LIKE THE MAIN STREET JOURNAL…

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BECOME A MAIN STREET CHAMPION

Have you always wanted to start a local investment club? A website of local investment offerings in your community? A local investment study group?

Whatever your interest or ambition, we invite you to “go public” to help others in your region find you, scheme with you, and start a local investment movement in your community. We aim to identify dozens, then hundreds, then thousands of Main Street Champions like you in every corner of the globe. Together, we can move our hard-earned savings from Wall Street to Main Street into our own communities. Fill out the intake survey below to join this growing cohort!

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SOME OF MSJ’s VINTAGE ISSUES

• Independence Requires Healthy Independents

• World Localization Day

• Free to Choose… ESG

• The Growing Danger of Crowdfunding Monopolies

About The Main Street Journal

The Main Street Journal aims to catalyze the movement of $50 trillion from Wall Street to Main Street to facilitate economic development and economic justice. It’s sponsored by the National Coalition for Community Capital, with grants from the Heron Foundation, Wallace Global Foundation, and the Bondi Foundation. We welcome feedback about everything, from our design to content. Please send ideas to Jen Risley at jen@main-street-journal.com. 

Our Team:

• Michael Shuman – Publisher

• Jen Risley - Editor

• Jessica Landman - Strategic Advisor

PARTNERS

Abrams+Angell | American Independent Business Alliance | Candide Group | Capital for Change | Capital Institute | Community-Vision Solutions | Council Fire | Crowdfund Better | Crowdfund Capital Advisors | Democracy Collaborative | Exit to Community Collective | Fair Food Network | Impact Finance Center | ImpactPHL | Initiative for Local Capital | Institute for Local Self-Reliance | The Kassan Group | Mission Driven Finance | National Coalition for Community Capital | Natural Investments | Neighborhood Associates | Neighborhood Economics | New Majority Capital | Next Egg | Nonprofit Quarterly | Ownership America | Ownership Matters | Partnership for Southern Equity | PathLight Law | Project Equity | Project for Public Spaces | Prospera Partners | Raise Green | Revalue | Rising Tide Capital | Schumacher Center for a New Economics | Shelterforce | Slow Money | SOCAP | Sun Valley Institute for Resilience | The Super Crowd Inc. | Transform Finance | Uwharrie Bank | Village Well | Zebras Unite

We welcome any nonprofit or for-profit committed to local investment as a partner. If your organization is interested, please contact Jen Risley at jen@main-street-journal.com.