With an ongoing crisis like the spread of Ebola, it’s natural to want to reach out and try to help stop the disease and help victims. One way that individuals or organizations might do that is to set up crowdfunding sites and collect donations.
If you’re thinking of donating to an Ebola-related appeal on a crowdfunding site, what assurance do you have that it’s genuine? BBB Wise Giving Alliance notes that crowdfunding websites call for varying degrees of information in order for appeals to be set up, and may take fund raising pages down when questions are raised that can’t be substantiated. However, those requirements alone won’t prevent all fraud.
In 2007, BBB in Cincinnati reported that one crowdfunding website claiming to collect donations for a big impact never substantiated its claims. Several years later the site ceased operations.
And after a Boston Marathon bombing suspect was found hiding in a boat when arrested, the boat was damaged by gunfire. “More than one campaign was started to help the boat owner buy a new boat even though the owner had nothing to do with these campaigns,” says BBB Wise Giving Alliance.
If you are thinking of donating through a crowdfunding site, BBB offers these tips to “Give, but give wisely.”
- Charities can be checked. Crowdfunding sites by charities that have 501(c)(3) tax-exempt status can be checked lots of ways including visiting the charity’s website, reviewing financial statements, and going to organizations such as BBB Wise Giving Alliance for information.
- Give to individuals you know. Charity projects posted by individuals are more challenging to verify. Crowdfunding sites have some requirements to post but can’t screen out all fraud. It’s safest to give to individuals you know personally who are contacting you to support their project.
- Projects that share updates have greater transparency. If a project provides periodic updates of its progress, expenditures, and accomplishments, this provides more assurance that the funds are going where the fund raiser says they are.
- Don’t assume your donation is deductible. If you are funding a project that is run by an individual instead of a charity, the funding you provide may not be deductible as a charitable donation for federal income tax purposes.
- Be especially careful after a disaster or tragedy. Con artists strike while the emotional iron is hot. As a result, be especially on guard when reacting to headlines about hardships and injuries after a disaster or tragedy. Organizations raising funds should get permission from the families to use either the names of the victims or any photos of them. Some fund raisers for victims of shootings in Colorado and Newtown, CT, didn’t do this and were criticized by victim’s families.
- Read the fine print. Crowdfunding sites vary in their privacy policies, under what conditions donations will be refunded (if at all), and whether the donor or the project organizer will be charged for site administrative costs and credit card fees.
- Specialized crowdfunding sites may be more adept. If a crowdfunding site specializes in a particular kind of crowdfunding activity such as medical funding, school projects, etc., it’s more likely they will have experience to spot problems. A site that allows any type of crowdfunding activity may result in more challenging oversight hurdles.