Assembly Republican Press Release -
‘Crowdfunding’ a different approach for public projects
Government entities in New Jersey may soon have a new mechanism at their disposal to raise private funds for projects that benefit the public thanks to legislation sponsored by Assemblywoman BettyLou DeCroce, R-Morris, Essex and Passaic.
“Crowdfunding” allows all governments entities, including the state, counties, municipalities, school boards and authorities to raise money via the internet or other direct solicitation vehicles for a variety of projects that governments are constrained from funding.
“These are tough economic times for many towns and school boards,” said DeCroce. “Crowdfunding offers an alternative to direct taxation to fund improvement projects that governments are unable to fund, but people want. I believe it can be a useful tool to help governments, civic groups and investors work together to make improvements that benefit the entire community without raising property taxes.”
DeCroce explained the need for the legislation, saying that there are many worthwhile projects in communities each year that do not get funded because of budget constraints or lack of community-wide support for a public expenditure. She cited projects such as bike paths, artificial turf and dog parks that crowdfunding could be used for.
“Each of these amenities has a constituency, but may not have the full support of the public if the funding had to go to a referendum,” explained DeCroce. “This measure gives governments and citizens an alternative funding method that doesn’t dip into taxpayers’ pockets.”
Crowdfunding is in use in several states and cities in the U.S., including Kansas City, Mo., which raised just under $420,000 to provide 90 shareable bikes at 12 sharing stations in the city’s downtown area. Another crowdfunding venture in the Boston area gave students iPads, Bluetooth headsets, and the training to use them.
In Portland, Oregon, the city is working on using crowdfunding to finance a world class bicycling park that will also be used for runners, picnickers, and others. The city does not have the money to develop the project, so the state Department of Transportation transferred a piece of vacant property to the city’s Parks & Recreation Bureau. A governor-appointed body, called Oregon Solutions, is using a crowdfunding website to obtain the initial capital. Although the finished project will cost millions, the campaign’s initial goal was to raise $100,000 to hire trail designers and landscape engineers to draft plans to eventually qualify for government and private grants, as well as obtain construction permits.
Cities in Europe are also turning to crowdfunding to supplement government financing. It is usually done with the assistance of a company that specializes in internet-based fundraising.
DeCroce’s legislation (A-3378) outlines the process governments must follow in New Jersey before starting a crowdfunding venture, including setting a specific fundraising target and implementing a time limit on the fundraising activity. Entities using crowdfunding for the first time must initiate a pilot project and, if successful, may take on multiple crowdfunding projects in the future.
Crowdfunding, according to DeCroce’s legislation, may be donor-based or investor- based. A donor-based effort shall specify that if the target funding amount is not reached, the funds will be allocated to the government entity in charge of the project for funding of another project.
In the case of investor-based crowdfunding initiatives, the money must be returned to the investors if the target goal is not reached.