5 Tips to Avoid Being Scammed When Donating through Crowdfunding Sites

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Have you ever been approached by students in uniform along Orchard Road, seeking a small donation towards a charitable cause? Now imagine that instead of walking along Orchard Road, you are browsing the Internet. Here, student volunteers are replaced by crowdfunding platforms, which similarly seek donations from you.

The rise of crowdfunding platforms serves as another avenue for fundraisers, organised by both charitable organisations and individuals, to launch campaigns to seek donations online. Online fundraising has grown in frequency and popularity as well: according to a survey by the National Volunteer & Philanthropy Centre, 28% of Singaporeans donated online in 2016, an increase from just 8% in 2014.

However, the increased usage of crowdfunding platforms also invites the potential for abuse. Scammers take advantage of the trust and confidence that donors place in these platforms to earn a personal profit. Hence, it is important for you be aware of the potential warning signs of a fraudulent fundraiser.

Here are 5 tips on preventing yourself from being a victim of an online fundraising scam:

1. Find Out More About the Campaign

Do background research on the beneficiary: who is the recipient of the funds? What is the recipient’s medical condition/financial situation? Is there any inconsistent information? Also, check if the beneficiary is trying to ride off a legitimate cause by posing as someone else.

Inquire about the campaign itself: has the campaign met its target amount of donations? Sometimes, even after the targeted amount of donations has been met, some fundraisers might leave their campaigns online and use the excess donations for personal gain. For the avoidance of doubt, contact the fundraiser to ask what will happen where the amount of donations have exceeded the campaign’s goal.

2. Find Out More About the Fundraiser

For fundraisers conducted by an individual, conduct a profile and background check on the individual. Some things to take note of include:

  • Whether the individual is from Singapore
  • What relationship the individual has with the beneficiary

In addition, contact the fundraiser and ask questions where necessary for clarification. Generally, if a fundraiser is unresponsive to any queries that you might have, or provides vague and unclear answers, the more likely that it is a scam.

For fundraisers conducted by an organisation, find out how many beneficiaries the organisation hosts, and look out for any past charitable work. Similarly, be wary of fundraisers that attempt to imitate established charities. They may deceive you into believing that you are contributing to a legitimate cause.

If the organisation claims to be a local charity, verify that it has been registered with the Ministry of Culture, Community and Youth (MCCY). You can do so by doing a search for it on the MCCY’s Charity Portal.

3. Research on How the Funds Raised will be Used

Find out how the funds will be used after they have been raised, and how the beneficiary will receive the donation (e.g. in monetary form or in the form of goods or services).

Also, ask about the proportion of funds that will go towards the beneficiary. In an ideal scenario, we would expect the full amount of our donation to go towards the beneficiary, but this may not be the case. Sometimes, a percentage of the donation will go towards administrative and processing fees.

The lower the percentage of your donation that goes towards the beneficiary, the warier you should be.

4. Pay Attention to the Terms and Conditions of Your Donation

Check for any fine print relating to the campaign that might be found on the crowdfunding platform. These are commonly found in the Frequently Asked Questions (FAQ) section of the website and could be binding on you even though you are unaware of them.

Sometimes, this fine print contains information on administrative fees, or even sets out the proportion of the funds donated that will go towards the beneficiary. Furthermore, the donation page could be set up to automatically add tips to your donation unless you opt out. Therefore, it is important to read, go through, and understand what you are committing to.

Most importantly, before donating, check the final dollar amount that will be charged to your credit card, and verify that the amount you intend to donate corresponds with the amount actually to be donated.

5. Be Familiar with the Code of Practice for Online Charitable Fundraising

An industry Code of Practice for Online Charitable Fundraising was launched by the MCCY on 23 January 2018 with the aim of ensuring transparency and accountability of funds raised online.

Parties intending to raise funds on crowdfunding platforms which have committed to the Code will now be required to declare that they are aware of Singapore’s fundraising laws and will abide by these laws when raising funds.

The Code also requires crowdfunding platforms which adopt the Code to allow visitors to freely access information such as:

  • Regular updates on the funds raised while a campaign is still active
  • Total amount of funds raised after a campaign has ended
  • Records of donations received
  • Past, present and ongoing campaigns on their platforms

All this information is vital in determining the legitimacy of fundraisers and helping us make well-informed choices as to whether to donate or not.

“To avoid being scammed, donors are encouraged to check the Charity Portal to ensure that the crowdfunding platform conducting a charitable fundraising event complies with the Code,” said lawyer Koh C-u Pinn.

“This is because the platform would then have the responsibility to do initial assessments of the fundraising event, and declare its service fee for its crowdfunding of the donations. Scam-type platforms that do not comply with the Code will not be registered on the Charity Portal, so donations via such unlisted portals are potentially dangerous and apt to be misused.”

The list of crowdfunding platforms that have adopted the Code can be found on the Charity Portal here. Major crowdfunding platforms Give.asia, Giving.sg, Ray of Hope Initiative and SimplyGiving have already committed to adopting the Code.

It is natural for humans to feel compassion towards others who are less fortunate. There is also the feeling of satisfaction when you can make a difference with your contribution. Regrettably, it is a shame that some people are abusing these platforms for personal gain, depriving those who are truly in need as well as deterring willing donors.

Fortunately, with greater transparency and information on online crowdfunding available now, we will be better able to donate not just with an open heart, but also greater peace of mind.