Crowdfunding – Opportunity or Danger?

Think Philanthropically

Recent events have caused everyone to become more aware of the phenomenon of crowdfunding. Many of us participate in giving to people outside standard philanthropic channels. This can include things as diverse as the purchase of Girl Guide cookies or making a cash donation to an individual with a red kettle outside a grocery store at Christmas. Technology and the realities of social media have simply added greater variety, but they have also elevated the potential for nefarious fundraising to flourish.

It is virtually impossible in our digital world to avoid being solicited by someone who offers us an opportunity to “help them out financially” by donating at a crowdfunding site. The offer can be somewhat random, or it could involve someone we know who is promoting a cause championed by an acquaintance they know.

All one needs to do is conduct a rapid survey of the most popular crowdfunding platforms to see the variety of seemingly worthwhile causes that are actively appealing for donations. A crowdfunding site has become a relatively effective way to let people know about a need. The most popular sites have dozens of categories as diverse as funding for costly therapies, paying for essential travel, contributing to educational opportunities, financing environmental projects or advancing political causes. Anyone can set up one of these donation pages and promote it, and that is where the potential for danger lurks.

We might see a social media post with a link to a story that tugs at our heartstrings. We can also be presented with something that appeals to our sense of justice or that aligns with a particular political cause. With a few clicks a donation can be made with ease. Unfortunately, well disguised fraudulent operators have also discovered the ease and utility of these platforms. There may be thousands of legitimate needs but there are also a variety of opportunistic scammers who make use of the technology to obtain funds. So how can we avoid being the victim of a crowdfunding scam? Here are two suggestions:

1. Make sure you know the person who will receive and steward the funds. If you know the person, or can verify the integrity of the person, you can usually validate the information being presented. When there is any doubt or concern about precisely who is leading the effort it is best to say “no thanks”.

2. Verify the legitimacy of the cause. It is important to ensure that there is an actual need and that donations will, in fact, be applied to that need. Donating to help pay funeral costs may be a noble thing – but your donation may be lining the pockets of others if the deceased has already pre-paid all the funeral expenses.

You can do good things by donating to a cause you care about. Crowdfunding platforms are particularly helpful in emergency situations where legitimate assistance can be channeled quickly to address compelling needs. My suggestion is that all of us should ensure that we donate prudently. Focus on organizations or people you know and trust. You can use your money to do good. It doesn’t matter if you can afford to give twenty dollars or twenty million dollars. The opportunity to make a difference is available to all of us every day. Let’s ensure that we make the most of it!

Sam Watts is the CEO of Welcome Hall Mission  www.welcomehallmission.com.  He is also the author of Good Work…Done Better www.goodworkdonebetter.com