Social fundraising is becoming more and more popular as an investment method. Thanks to such activities everyone of us can become an investor. We therefore gain the possibility to influence our surroundings in a tangible way. Crowd funding might be used to finance an undertaking of any kind - even projects for office spaces.
Profits from crowd funding?
Crowd funding is a modern way to finance projects. Via Internet, a very large group of interested people gathers small amounts of money, and together they can afford to finance a particular enterprise.
A characteristic feature of these campaigns is that everyone, even someone who can only offer a small amount, can become a co-investor and can gain certain profits from it, not to mention the prestige and improvement of self-esteem. The profits include discounts, bonuses and other profits from the project.
Crowd funding and group purchasing
There is a problem with crowd funding - we often associate it with group purchasing or collecting money. However, you definitely cannot lump these three different activities in one pot. When it comes to real estate industry, there's a significant difference first of all between group purchasing and social fundraising. With group purchasing of real estate, an investor becomes the only owner of property (be it residential or commercial property). Thanks to wholesale purchase of such spaces, we can enjoy better conditions of the deal. The property developer sells not one, but a few places at one time, so both parties are satisfied: the seller and the buyer.
In case of social fundraising, the property investor is able to spend much less money on a given project. Thanks to organized communication (mainly making use of the Internet), it is possible to gather a big numer of interested people, and in this way, even if they invest only a little, it is possible for everyone to make a contribution to a bigger project. Social fundraising of an office block seems to be an interesting idea. Such an investor could gain profits from office space lease proportional to his or her contribution. It isn't difficult to think of other profits for the fundraiser. The possibility to use conference rooms, workig rooms or even a copy machine could be interesting options in this type of enterprise.
An example from Colombia
A flagship example of using social fundraising is the BD Bacata project, a hotel built in Bogota. This building, the highest one in Colombia, has been financed by more than 3000 interested people, who have invested about 145 mln USD in a project worth about 240 mln USD. Today they can enjoy the status of owners of particular parts of the building. The monies have been collected via Internet. The campaign was supported by advertising in media, especially electronical media. In the advertisement a figure of a co-investor was presented as a person who arouses interest and respect whenever he appears in a public place.
A Polish initiative
Wheras the project in Colombia is a hotel, it turns out that it also possible to finance office spaces by use of crowd funding.This was the idea of people who created the crowdfunders.pl portal. The aim of the web page is to initiate ideas and gather people interested in financing such projects. If the transaction proceeds, a suitable financial institution would supervise it. Although the service is just starting up, the first idea to use social fundraising is already known. Currently, a project for purchasing of an office block Hamilton May in Bratysłwska street, in Kraków (or a floor in this building) is being analysed. In this case, the fundraisers would gain profits from space lease. In order to take part in such a deal, it is enough to contribute 100 PLN. However, as Łukasz Luzar, the initiator of the Polish portal says: Purchase of a square metre in an office block is an interesting alternative to bank deposits, bonds and investment funds. On the one hand, we do not have guaranteed rate of return, as it depends on the space leased at a given time and on the maintenance fee, but on the other hand, the market value of our share might go up all the time, depending on the location of the real estate and tenants' interest in accommodation. In times when central banks print additional money, this definitely is a way to protect yourself from inflation, which basically cannot be given by bank deposit or bonds. While enrolling, the users of the service crowdfunders.pl declare sums ranging from a few hundred up to 50 thousand PLN. In case of a project for an office block purchase, I could imagine sums ranging from 5 to 15 thousand PLN. This is more or less as much as I am going to invest myself in a particular project.
Legal barriers
Crowd funding is becoming more and more popular, but organisations such as Polskie Towarzystwo Crowdfundingu and Fundacja Republikańska are raising alarm. According to the members of these organisations, draft amendment to the Act on public collections might pose a threat to the development of association initiatives. Under the provisions of the amendment, each public meeting where funds (and not cash, as it has been described so far) shall be collected, must obtain permission from the authorities. Such provision may mean that it will be necessary to ask an appropriate minister for permission before any crowd funding campaign can be started.
Prospects for crowd funding
Crowd funding isn't well known in Poland yet. It is difficult to say how it could get adapted here. The truth is, in spite of media disputes about civil society, we often forget about such forms of activity. Łukasz Luzar says: I expect that by the end of the year we should hear about the first project successfully completed with help of this idea. Will it really happen? We can only wait and keep an eye on the interest of the society.