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  • NJ A291
  • Establishes "Government Crowdfunding Act" to allow government entities to conduct fundraising for certain government projects.
Introduced
(1/27/2016)
In Committee
(1/27/2016)
Crossed OverPassedSignedDead/Failed/Vetoed
2016-2017 Regular Session
This bill establishes the "Government Crowdfunding Act" to allow State and local government entities to conduct fundraising for certain government projects using crowdfunding. The bill defines "crowdfunding" as the practice of raising funds for a project by soliciting money from a large number of individuals using Internet platforms. "Government entities" that could use crowdfunding include the State, a county, a municipality, and any agency, department, office, commission, committee, district, board, authority, or other instrumentality thereof, including public institutions of higher education. Through platforms such as Kickstarter and Indiegogo, entrepreneurial individuals and organizations have been able to publicize their projects and raise funds from multiple donors or investors for a small percentage of the funds raised. While crowdfunding may raise small amounts when compared to the size of State and local government budgets, it allows for viable projects to build a community of support around them. The crowdfunding effort established under the bill could become a model for government to decide what projects are worthy of funding from taxpayer sources in the future with very specific parameters and project benchmarks. Crowdfunding represents a creative funding source for projects that might otherwise never get off the ground or, in the case of government projects, be costly to taxpayers. Also, under investor-based crowdfunding, and using our system of capitalism, an average person can invest in a project and receive repayment with interest. Finally, crowdfunding can become a successful example of a public-private partnership, and can help advance New Jersey as a State where people want to work and live. Under the bill, the government entity undertaking a crowdfunding project for the first time would only initiate one such project as a pilot project, and if successful, may take on multiple crowdfunding projects in the future only if the first project is fully funded. For the first and subsequent projects, a government entity would develop and implement a process for evaluating and selecting proposed projects; implementing the crowdfunding effort; disbursing the funds raised; and evaluating and documenting the outcome of each crowdfunding effort. The bill provides for both donor-based and investor-based crowdfunding models. Under the donor-based model, project funds would be crowdfunded with donations submitted by donors who will not receive any payment, remuneration, or interest from the project. Under the investor-based model, project funds would be crowdfunded with investments submitted by investors who will receive a payment, remuneration, or interest at a future date directly derived from the project once it is completed. Each website used for a crowdfunding effort would designate a time limit for raising the target funding amount for the particular project, and specify how the funds raised will be distributed if the target funding amount is not reached during the designated time limit. When the target funding amount is not reached, funds raised through a donor-based crowdfunding effort would be allocated to the government entity's department or agency in charge of the project for funding another project, and funds raised through an investor-based crowdfunding effort would be returned to the investors interest-free.
Not specified
Introduced, Referred to Assembly State and Local Government Committee  (on 1/27/2016)
 
 

Date Chamber Action Description
1/27/2016 A Introduced, Referred to Assembly State and Local Government Committee
Date Motion Yea Nay Other
None specified