Unlike most commercial investment opportunities, Neighborhood Crowdfunding models are available to community members with lower incomes or net worth (nonaccredited investors) who do not typically profit from real estate development or small business finance. Some projects go beyond inviting residents to participate in the project’s financing and also invite them to function in a governing role.
Neighborhood Crowdfunding models go by many names. There are neighborhood real estate investment trusts such as Nico where local investors collectively own a portfolio of local properties; investment cooperatives such as the NorthEast Investment Cooperative where Minnesota residents collectively buy, rehab, and manage properties; democratic investment funds such as The Boston Ujima Project where a community-governed source of capital lends to small businesses owned by people of color; and community investment trusts.
Most models require investors to live within a certain geographic area. Investment sizes and frequencies vary. Sometimes investors make only a one-time investment, while other projects call for small monthly contributions with minimum investments as low as $10 a month.