A Crowdfunding Cooperative obtains money from members then lends it to other members for a given purpose. The members receive benefits not money in return. It replaces money loan repayments, with repayments in goods and services. The longer the loan is outstanding, the more goods and services received.
Crowdfunding removes the cost of interest and eliminates the cost of inflation. The returns in goods and services are defined when the loan is made and remain the same throughout the life of the loan. With money repayments, the value of money changes day by day, and these costs express themselves as interest and inflation.
For loans, for any time greater than zero, Crowdfunding always results in a lower cost loan. But, the cost savings are little for short-term loans and become evident when the loans are over several years.
The details of any Crowdfunding project will vary depending on the needs of the investors, the existing arrangements for funding, the political situation, and the needs of both lenders and borrowers. It means Cooperatives are tailorable to be large or small and to cover any investment for any purpose.
Crowdfunding Cooperatives leave existing operational systems in place. For example, a Water Authority can implement Crowdfunding by replacing existing loans with Crowdfunding Loans with no change to the operations of the Water Authority. A housing co-op can replace traditional loans with Crowd Funding Loans and not alter the functions of the housing co-op.
Each situation is unique, and each Crowdfunding Co-op is also unique.
Any existing lending body can replace their loans with Crowdfunded loans, but the change destroys the main reason for its existence and meets with resistance. Lending institutions exist because there is a market in money. Crowdfunding Loans removes the need for a money market.
Within borrowing bodies, centralised budget allocation units are no longer required. Budget allocation within an organisation performs the same function as a money market. Replacing money loans with Crowdfunded loans distributes control within any organisation. This change in the organisational power structure is disruptive as it removes much of the need for the budget cycle.
However, most resistance to the idea of Crowdfunding Loans comes from the economics, financial and political professions. Removing the need for centralised control of the allocation of money changes the skill set required within organisations. The change from centralised control through money distribution to decentralised collaborative control in functional units will take years to achieve and will only happen gradually.
In the meantime, Crowd Funding Co-ops can change money loans to collaborative loans one loan at a time.