HB 1629

84(R) - 2015
House Investments & Financial Services
House Investments & Financial Services
Investment & Financial Services
Nonprofit Organizations

Vote Recommendation

  • Neutral
  • Neutral
  • Neutral
  • Negative
  • Negative


Eric Johnson

Bill Caption

Relating to crowdfunding portal regulation for the purpose of small business development.

Fiscal Notes

No significant fiscal implication to the State is anticipated.

Bill Analysis

HB 1629 would allow the Texas State Securities Board (SSB) to implement regulations concerning crowdfunding for certain nonprofit businesses. However, these regulations must:

  • Allow a nonprofit to list on its web portal security offerings by issuers;
  • Allow a nonprofit to list on its web portal securities without offering investment advice;
  • Allow a nonprofit to subcontract with a third party to operate its crowdfunding web portal;   
  • Establish limits on the security offerings of a nonprofit.  In other words, a nonprofit may only offer securities that are within its service area. 

Vote Recommendation Notes

The nonprofits that are of concern in this legislation are ones that are engaged in economic development, especially ones that receive government funding to encourage economic development. The author’s office maintains that this legislation would allow government money to be spent more efficiently.

Currently, the SSB has rules in place that apply to all crowdfunding portals. Additionally, crowdfunding is permitted in Texas only if it is done intrastate. This bill would exempt “small business development entities” from certain rules that all other crowdfunding sources must abide by. However, it would require that these entities only offer securities in their service area. This means that entities such as the Texas Veterans Commission could only give money to other veterans and no one else.

This bill does not align with our limited government principle and individual liberty principle because it protects government funded nonprofits from certain regulations that other entities must follow.

Moreover, government should not saddle itself with the responsibility of economic development. Doing so usually leads to undesirable unintended consequences. Finally we note that, economic development means the government picking winners and losers in the marketplace rather than setting up conditions that allow the free market to flourish under rules that apply equally to everyone.

For the reasons above, we oppose HB 1629. 

The Senate chamber sponsor is Senator West. 

Organizations Supporting

Texas Association of Business
Texas Impact