Not long ago, a playwright looking for capitol to produce his play invited Facebook friends to a site where they could safely contribute. Until that moment, I was unaware such sites existed. Apparently they do, places where someone can make a modest donation to a dream. The process is called Crowdfunding. (“Crowdfunding Tries to Grow Up,” by Michal Lev-Ram and Kurt Wagner, Fortune, May 20, 2013. pg. 40)
I know something about raising money for the performing arts. For two years, I volunteered with a start-up ballet company to do just that. Though contributions were tax deductible, I don’t recall being overwhelmed by them. That’s why I found it hard to understand how, with no incentive, Crowdfunding would work. I almost became teary-eyed when I discovered that there were many who would give and their numbers grew in the vastness of the internet.
Given the success of Crowdfunding, a new idea has been promulgated. As I write, the Security and Exchange Commission (SEC) is considering rule changes to allow these gifts to become investments, making the givers mini-venture capitalists. It’s a little bit like playing the penny stocks. With a few dollars, the possibility exists for a financial return, even a big one, depending on the project. But just like penny stocks, the opportunity for gains also poses a risk. I’m not teary-eyed enough to believe that spoilers aren’t already rubbing their hands together as they follow the flow of potential new money.
My guess is that the Securities and Exchange Commission will give the green light to min-venture capitalism. Not to do so might seem un-American. But when cash follows a dream, there will also be nightmares. Let the giver beware.
(Courtesy of ohioleonlaw.blogsport.com)