TOOLS, INCENTIVES, AND BEST PRACTICES Other real estate-based crowdfunding companies— Sharestates, Realty Mogul, and RealtyShares—have followed FundRise’s model. Their model has also been adapted to attract investment in specific types of businesses, like restaurants (FoodStart), apps (Appsplit), and music production (PledgeMusic). Power2Give, which focuses on crowdfunding for arts-related nonprofit organizations, began as a crowdfunding service for Broward County, Florida, but has now expanded nationally. It receives support from the Ford Foundation, Bank of America, the Doris Duke Charitable Foundation, and the John S. and James L. Knight Foundation. The Jumpstart Our Business Startups (JOBS) Act, signed into law by President Obama in 2012, has made it easier for small businesses to raise capital from customers, neighborhood residents, and other supporters. Previously, only “accredited investors” (those who earn more than $200,000 annually or have a net worth of $1 million or more) could invest in privately held businesses. With the passage of the JOBS Act, nonaccredited investors can invest a maximum of 10 percent of their income or net worth annually.
CO-OPS Co-operatives are member-owned businesses that provide products and services the members desire. By using the pooled buying power of their members, co-ops can negotiate lower prices with suppliers and use their collective voice to require that suppliers meet members’ criteria. Because their goal is to meet members’ needs, rather than to generate profits for shareholders, co-ops can adapt their products and services to the specific preferences of their members. Several national or international retailers and service providers are actually co-ops, such as the Ace and TruValue hardware stores, the National Automotive Parts Association (NAPA), the International
Grocers Association (IGA), REI (Recreational Equipment, Inc.), and the Best Western hotel chain. At the local level, coop businesses can fill market gaps that national chains might overlook or whose risk level might be too great, making the co-op business model a good fit for grocery stores and variety stores in particular, especially in small towns or in lowerincome communities where profit potential might not meet a national retail chains’ expectations. Co-op members’ annual membership fees are treated as equity to help finance the co-op’s ongoing operation. Depending on how profitable a co-op is in a given year, it may pay dividends to members. Co-ops are managed by boards of directors elected from the membership.
INCENTIVES FOR HIGHPRIORITY BUSINESSES The most successful business development programs for older downtowns and neighborhood commercial centers have been those that develop a list of high-priority businesses, then incentivize skilled entrepreneurs to launch these businesses. Some of the most effective tools include forgivable loans, deferred loan repayment (particularly for businesses with capital-intensive startup costs), and incentive grants. • Forgivable Loans: Forgivable loans can be a highly effective tool for attracting high-priority businesses. They provide small businesses with working capital and they provide the grantor with some degree of control over store hours, store location, and other business practices. • Incentives for High-Priority Businesses with CapitalIntensive Startup Costs: High start-up costs impede development of restaurants and some other types of businesses. For example, restaurants need kitchen cooking equipment and dining room furnishings, both of which
91 Prince George’s County Competitive Retail Market Strategic Action Plan