Crowd funding: A tool for non-profits developing new projects

The origin of the concept of crowd funding is attributed to 1997 efforts by fans who underwrote an entire U.S. tour for the British rock group Marillion. Fans of the band raised $60,000 with donations following a fan based internet campaign. More recently, the web based company Kickstarter elevated the original Marillion concept into a sophisticated model of raising funds for a variety of business ventures. At the Kickstarter site donations from the public are requested in return for gifts, memberships or pre-ordered products; however, donors are not given an interest of any kind in the venture. Another aspect of crowd funding is tied into the JOBS Act which allows for a wider pool of smaller investors with fewer restrictions. Crowd funding is a potential vehicle for non-profits to develop projects with the support of their donor base. As an example, a non-profit developing a renewable energy project may use crowd funding to appeal to supportors for donations in exchange for renewable energy certificates generated by the renewable energy facility. In states where the purchase of renewable energy certificates is not compulsory by utilities these certificates may not have much economic value but evidence an individual’s commitment to clean energy. This is one example of crowd funding as a potential tool for non-profits.

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