Crowdfunding Now!

Although the primary purpose of crowdfunding is to help project starters raise money from the crowd, it often provides its own funding procedures. For example, Kickstarter uses an “All or Nothing” method which allows project starters to receive the funds raised only if the crowdfunding campaign reaches it's goal. On the other hand, GoFundMe allows crowdfunding project sponsors to choose between receiving money only once they reach the goal amount or receiving every single contribution from every single backer.  Choosing the right platform depends on the characteristic of the project, but people should aware of the tax issues that come with each method. An "All or Nothing" (AON) strategy is the most frequently used in crowdfunding. This requires project starters set a funding goal prior to launching. They will be able to receive money only if they can confirm the success of the project. After this confirmation, the raised money is transferred to the project creator&#

The items below are from an article on what causes small business failures. I have repurposed it to show how crowdfunding addresses these issues and how we use these factors in evaluating potential crowdfunding campaigns. "Inadequate Financing" Clearly, crowdfunding addresses this issue. "Amount of Effort Exerted:  The single most important factor in determining who succeeds and who doesn't is simply the amount of effort exerted. If you aren't ready and willing to work - and work hard - being an entrepreneur is probably not for you." While we don't believe that effort expended is the single most important factor, crowdfunding is hard. If you will not work hard on it, and work smart, then you will not do well. "Lack of Planning:  Another fact rarely considered is that the majority of new businesses fail within a few years mostly due simply to poor planning or no planning at all." You have to plan your crowdfunding ca

If you are raising money via crowdfunding, do you need to pay taxes? The tricky question is how do you define income from a crowdfunding campaign? You might try to define income as a donation in order to avoid paying taxes. Unfortunately, I don't think this works. Any money derived from an investment effort leading to the delivery of a commercial product is typically taxable, since Federal and State entities see this revenue as ‘income.’ As a result, any ‘project’ in this category is going to be levied at prevailing tax rates, whether it is offered as art, technology, or manufactured goods. No matter you want to manufacture a bike, make a movie, or create a video game, you need to pay taxes. The only exception is Non-Profit (NP) or Non-Government Organization (NGO), and you need to get recognition from the IRS for these. Of course, taxes are based on income. The cost of reward fulfillment can be considered an expense. My suggestion is to recognize the cost of reward fulfillme

A start-up using crowd funding to create a product is different from a normal company. The start-up has cash inflows from donations but does not have a product, yet. In this situation, we recommend using completed-contract method to recognize revenue. Under this way of thinking, we assume the start-up is akin to a project or a long-term contract. The crowdfunding company will find it difficult to estimate the revenue from crowdfunders and, hence, the cost of rewards or perks. Under International Financial Reporting Standards (IFRS) and GAAP guidelines, if the firm cannot reliably measure the outcome of the project, revenue should be recognized based on contract costs. These costs should be expensed when incurred. Profit is recognized only at the completion of the project. In summary, for crowdfunding companies, revenue, expense, and profit are recognized only when the crowdfunded product is actually manufactured. 1 For example, assume that AAA Corp. wants to manufacture bicyc

The committees assigned to this bill sent it to the House or Senate as a whole for consideration on May 22, 2014.

The election results from Eric Cantor's district are welcome news for crowdfunding advocates. Mr. Cantor's defeat affects crowdfunding in several ways. First, the race is on for a new chairman of the House Financial Services committee. This is critical, given the delay in the implementation of the JOBS Act. One of the candidates for the Chair is Patrick McHenry, the author of the JOBS Act. Secondly, Mr. McHenry has another bill in the House, HR 4565 , that will raise the crowdfunding limit from $1 million to $5 million. The election makes it more likely that this bill will get out of committee, to the full House and onto the Senate. Finally, Mr. Cantor was, according to Politico, a key Wall Street ally, and we know Wall Street is not happy with the potential crowdfunding has to loosen their stranglehold on start-up financing. "Many lobbyists on K Street whose clients include major financial institutions consider Cantor a go to member in leadership on policy debate

According to Indiegogo, " Lazer Team by Rooster Teeth " raised $1 million in 52 hours from 14,000+ fans/contributors. What makes this campaign special? 1. Prelaunch. "Rooster Teeth is making its first feature length movie..." and, given that they raised this much cash in a very short period, they spent some time preparing their prelaunch activities. 2. Track record. They are an online video company and had valuable online community building experience from past projects: "Red vs Blue, the web's longest running series Achievement Hunter, a group of charismatic gaming scamps The RT Podcast, focusing on current events and accurate science RWBY, the world's newest anime sensation." It is this experience which set the stage for their success. As they said on their campaign page: "We have always made the most of our resources and made some of the best quality content on the Internet over the past 11 years. We are going to do this on a

June 14, 2014. 4:30pm. Watha Daniel Library. June 18, 2014. 12:30pm. Petworth Library. June 27, 2014. 5:30pm. WeWork Wonder Bread.

Total raised on Kickstarter: $1,149,549,280 Number of successful campaigns: 63,052 Average dollar amt: $18,231.77 Total raised on Kickstarter: $1,149,549,280 Number of supporters: 6,329,762 Average amt per supporter: $181.61 Total raised on Kickstarter: $1,149,549,280 Number of pledges: 15,626,785 Average amt per pledge: $73.56

So first Fundrise raises $31Million for real estate crowdfunding.  Now Realty Mogul, a real estate crowdfunding platform, responds quickly with a rare opportunity to be a part of a $31.8 million project in the exclusive Georgetown neighborhood of Washington DC. #crowdfundrealestate Realty Mogul, along with   JOSS Realty Partners ( "JOSS" ) , is introducing the Georgetown Plaza to the crowdfunding world. This 150,097 square foot   Class B office building is  located on Wisconsin Avenue, Washington DC's major north-south artery and half a mile north of Georgetown University's main campus and Georgetown University Hospital. The primary objective of this investment crowdfunding campaign is to acquire, lease-up, and reposition the office building before reselling. In this crowdfunding transaction, Realty Mogul investors will hold a partnership equity stake in Realty Mogul 19, LLC.   Realty Mogul 19, LLC will subsequently invest in 2233 Wisconsin NY Member L

We note with interest the recent Kickstarter campaign by LeVar Burton for Reading Rainbow . According to one news report, "Reading Rainbow, the PBS children’s program hosted by LeVar Burton that debuted in 1983 and went off the air in 2006,upset many with its departure. But Burton, who also executive produced the program, has managed to keep the project alive in some form or another in the time since. He launched the show as an app in 2012. And now his new venture is to take Reading Rainbow’s large digital library of books and videos to classrooms nationwide for free. But to do so Burton needs capital. So the Star Trek actor turned to Kickstarter to raise money. He launched his campaign last Wednesday to raise $1 million to launch his PBS children’s series online. Although Burton had allotted 35 days to raise the money, within 24 hours he had reached his goal." Bravo! Why was this campaign so successful? Well, it linked to two well known media properties, Reading Rain