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The team from Charity Navigator, the nation's largest independent charity evaluator and leading donor advocate, shares their thoughts on emerging nonprofit-sector issues and offers tips to better inform your intelligent giving decisions.

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Friday, March 2, 2018

Should You Donate to that Crowdfunding Campaign?

These days, crowdfunding campaigns are everywhere. Small charities use them to raise funds for a specific project or need. Friends use them to spread the word about a charity they’re passionate about. And they often pop up in the wake of disaster to raise money for victims or unexpected costs. They all seem like worthwhile and important causes, but how can you know whether or not a campaign is legitimate? We’re sharing a few tips to help you decide if you should support that campaign.

How did you hear about the campaign?

Ask this question first. Who mentioned this campaign to you? Did you hear it through a friend, family member, or another trusted source? What’s their connection to the campaign and why are the passionate about it? Does it resonate with you?

If you didn’t hear about it from a friend or family member, how did you hear about it? And, is the campaign something relevant to your philanthropic interests? Following a disaster, for example, lots of crowdfunding campaigns pop up and are spread over social media. This doesn’t mean these campaigns are not legitimate, however it may mean you want to do some extra digging to decide whether or not this is the best place to offer your support.

Who is it supporting?

Before you give make sure you understand who is handling the funds. It may be an individual, group, or organization. If the campaign is supporting an individual or an individual’s project it makes sense that their name would be included. If the campaign is raising money for an organization’s initiative, their name should be included. Make sure you are comfortable with who will be collecting and managing the donations.

Is the organization tax-exempt?

Many crowdfunding campaigns are not sponsored non-profit organizations. That’s okay! That doesn’t mean the campaign isn’t legitimate, however it may mean that your donation may not be tax-exempt.

If an organization is provided, you can use www.charitynavigator.org to check out the organization before you give and confirm their tax-exempt status. You can also use these tips to ask more about the campaign from the organization before you donate.

What will your donation do?

Understand what the campaign is raising support for. Perhaps it’s an initiative for your favorite local animal shelter. Or maybe it’s raising funds to support a local school group to go on a class trip. Whatever the purpose make sure you understand what your donation will be used for. And, make sure it resonates with you. You want to feel good about your gift!

The most important thing is to feel comfortable about making a donation. A crowdfunding campaign is not a red flag--there are lots of great campaigns raising money for an important causes. But you do want to connect to the cause, understand who is collecting and managing the funds, and how your donation will be used before you donate. When possible, use Charity Navigator to do more research before you make your gift.

As a 501 (c) (3) organization itself, Charity Navigator depends on public support to help donors make informed choices. Please consider investing in the future of Charity Navigator by making a donation today.  Donate now >>

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