Crowdfunding your Writing Projects

Freelance writing is one way to pay the bills as you work on a bigger project – say, writing a book or a screenplay. With steady freelance work, you might be able to scrape together enough cash to get by, but this may hardly allow you to put anything aside to fund your project. If this generally describes your situation, you owe it to yourself to find out about crowdfunding as a source of funds. Crowdfunding has been around for several years, and has worked on a donation principle – an average person donates some money to your project in return for a token thank-you gift. T-shirts, CDs, autographed photos, etc. are the standard rewards for donating to a project. Websites like Kickstarter provide a means to publicize your project and collect donations. Until this year, the donation model was the standard way to crowdfund, and projects were usually limited to artistic endeavors.

In 2012, the Jumpstart our Business Startups (JOBS) Act was signed into law, allowing business crowdfunding: investments to supplement the donation funding model. Business crowdfunding is meant for private small businesses and startups. It differs from the donation model in several ways:

  1. In return for an investment, which can be of any size up to certain income and total caps, an investor receives restricted equity or debt securities. These securities can be sold after a one-year holding period.
  2. A company can raise up to $1 million a year without an initial public offering, as long as the number of investors remains below 2,500.
  3. You solicit you offering through licensed business crowdfunding portals (websites), which will start popping up in 2013, after the Securities and Exchange Commission finishes making rules. You are free to market you offering to the general public, but the transactions must flow through a portal or a licensed broker.
  4. You don’t have to be rich (“accredited”) to participate, which opens up a huge new funding source to entrepreneurs.

If you’re thinking: “Well, that’s great, but as a professional writer, I’m more likely to stick to donation crowdfunding”. True enough. However, some of you may have thought about widening the scope of your activities:

  • Starting a literary bookstore in an under-served location.
  • Organizing a writers’/poets’ co-op that sponsors public events.
  • Introducing a magazine or journal dedicated to the writing scene in your region, perhaps featuring literary criticism, original pieces, etc.
  • Launching a small firm offering writing courses for adults or perhaps private tutoring to students.
  • Create a for-profit blogging or article-writing service with a stable of fellow freelance writers.

In other words, if you live in the world of writing, there are many avenues for you to explore. The JOBS Act has made it a little easier to raise the cash necessary to fund your exploration.

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Copyright 2012 Eric Bank, Freelance Writer

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