The practice of crowdfunding involves raising small amounts from a large number of people, generally via the Internet. This type of fundraising, whether by businesses or individuals, has been largely unregulated, but that will soon change.
Security and Exchange Commission (SEC) rules regulating crowdfunding will take effect in May of this year. The rules will require fundraising portals (such as gofundme.com) to register with the SEC and become members of the Financial Institution Regulation Authority (FINRA).
Under the new rules, companies may raise up to $1 million dollars in a twelve-month period through crowdfunding. Individual investors are allowed to invest up to 10 percent of their annual income or net worth, if both are more than $100,000 (otherwise the limit is 5 percent) in crowdfunding offerings over twelve months.