Bill Text: NJ A3378 | 2014-2015 | Regular Session | Introduced
Bill Title: Establishes "Government Crowdfunding Act" to allow government entities to conduct fundraising for certain government projects.
Spectrum: Slight Partisan Bill (Democrat 6-3)
Status: (Introduced - Dead) 2014-06-09 - Introduced, Referred to Assembly State and Local Government Committee [A3378 Detail]
Download: New_Jersey-2014-A3378-Introduced.html
Sponsored by:
Assemblywoman BETTYLOU DECROCE
District 26 (Essex, Morris and Passaic)
Assemblyman DANIEL R. BENSON
District 14 (Mercer and Middlesex)
SYNOPSIS
Establishes "Government Crowdfunding Act" to allow government entities to conduct fundraising for certain government projects.
CURRENT VERSION OF TEXT
As introduced.
An Act establishing the "Government Crowdfunding Act" to authorize government entities to conduct fundraising for certain government projects and supplementing P.L.1948, c. 92 (C. 52:18A-1 et seq.).
Be It Enacted by the Senate and General Assembly of the State of New Jersey:
1. This act shall be known and may be cited as the "Government Crowdfunding Act."
2. As used in this act, P.L. , c. (C. ) (pending before the Legislature as this bill):
a. "Crowdfunding" means the practice of raising funds for a project by soliciting money from a large number of individuals using the Internet.
b. Government entity" means 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.
3. A government entity is hereby authorized to conduct fundraising for certain government projects using crowdfunding in accordance with the provisions of the "Government Crowdfunding Act," P.L. , c. (C. ) (pending before the Legislature as this bill). The government entity undertaking a crowdfunding project for the first time shall 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 each subsequent project, the government entity shall develop project proposals, evaluate such proposals, and select successful proposals for crowdfunding as provided in this section.
a. The government entity shall develop a project proposal containing the project's description, the public purpose of the project, the funding amount required, plans for project development and completion, and other information as the government entity deems necessary.
b. The government entity shall also develop and implement a process for:
(1) evaluating proposed projects, their suitability for crowdfunding, and chances of success;
(2) selecting projects that will move forward in the crowdfunding effort;
(3) implementing a crowdfunding effort, which shall conclude at the end of the time limit established for raising the project's target funding amount;
(4) disbursing funds raised through the crowdfunding effort for allocation to project implementation and development, or as otherwise provided under subsection c. of this section; and
(5) evaluating and documenting the outcome of the crowdfunding effort with respect to each project that received funding.
c. The government entity shall develop and implement the necessary process to conduct the crowdfunding effort authorized under this section. In developing and implementing the process, the government entity shall evaluate crowdfunding websites and their respective companies. Two funding models may be available for use, one designated as donor-based and one as investor-based. Under the donor-based model, project funds shall 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 shall 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 shall 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. A donor-based crowdfunding effort shall specify that, if the target funding amount is not reached, the funds raised will be allocated to the government entity's department or agency in charge of the project for funding another project. An investor-based crowdfunding effort shall specify that, if the target funding amount is not reached, the funds raised will be returned to the investors interest-free. With respect to each project approved for crowdfunding, the government entity shall develop the necessary legal disclaimers, agreements, or information to be provided to donors or investors, as the case may be, and shall fulfill all of the financial commitments it enters into as a condition of receiving funds.
d. Nothing in the provisions of the "Government Crowdfunding Act," P.L. , c. (C. ) (pending before the Legislature as this bill), shall be interpreted to limit the ability of the government entity to fund any project using multiple sources of funding, including but not limited to funds wholly or partially raised through crowdfunding, developer contributions, or grants.
4. The revenues raised by a local government entity through crowdfunding as provided under the "Government Crowdfunding Act," P.L. , c. (C. ) (pending before the Legislature as this bill), shall be included in the local government entity's budget in accordance with the process established under N.J.S.40A:4-39, and shall be subject to an annual audit under N.J.S.40A:5-4.
5. This act shall take effect immediately.
STATEMENT
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.
