Shared Community Investing

Discussion

Jenny Kassan;

"A group of community residents in Port Townsend, Washington, started an organization called LION (Local Investing Opportunity Network). Taking advantage of the law in Washington which says private offerings to a limited number of non-wealthy people are okay, LION brings together community residents looking to invest locally with local entrepreneurs. LION doesn’t vet the businesses or provide any of the legal documents needed to make an investment; it simply brings the parties together in a way that is legal under Washington securities laws. This model is spreading to other states. Wisconsin recently set up a LION.

Under California law, LION-like groups are not allowed. Under California’s private offering rules, no offering of securities can be made without “a relationship consisting of personal or business contacts of a nature and duration such as would enable a reasonably prudent purchaser to be aware of the character, business acumen, and general business and financial circumstances of the person with whom such relationship exists.” In other words, unlike in Washington, there must be a substantial pre-existing relationship before any investment opportunity can be discussed.

Some local nonprofits in the Oakland, California area have created a Community Capital Working Group – a forum where residents of the area can strategize about how to encourage more local investing within the law.

Finally, Sustainable Economies Law Center, a nonprofit that I co-direct with Janelle Orsi, is working on changing the state and federal law to exempt very small investments from the securities laws. You can read about our efforts at crowdfundinglaw.com ...

It’s important to be aware of securities laws, but don't be intimidated by them. The movement to make it easier for small businesses to raise capital from their communities is growing. A new book called Locavesting was just published and congressional hearings on the issue have been held." (http://www.shareable.net/blog/shared-financing-of-community-based-businesses)