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Wednesday, August 22, 2018

Crowdfunding After a Crisis: Here’s What You Need to Know

In the wake of a tragedy or crisis we all have that knee-jerk reaction to want to help. We see heartbreak or destruction and want to act. In recent years, crowdfunding campaigns have become an increasingly popular way to do that. Campaigns have been started by individuals, community groups, large organizations, and corporations to help families, neighborhoods, and cities cope with loss and rebuild.

In the wake of Hurricane Harvey, CrowdRise by GoFundMe, a popular crowdfunding platform, raised and released more than $65 million to help victims of the storm rebuild and recover. As this means of fundraising continues to expand, here’s what you need to know before you give...

Before you give to a crowdfunding campaign, consider these 4 things:

How did you hear about the campaign?

Who mentioned the fundraiser to you -- a friend, family member, or another trusted source? Why do they feel passionately about it? Is the mission or beneficiary of the campaign something or someone you want to support?

Following a tragedy or disaster, lots of crowdfunding campaigns pop up and spread over social media. This doesn’t mean these campaigns are not legitimate, but you may want to do some extra digging to decide whether or not the campaign is the best place to offer your support.

Who is the campaign supporting?

Before you give, be sure you understand who will be handling and managing the funds. If the campaign is benefitting an individual their name should be included. We often recommend being sure this is someone you know or a connection through a family member, friend, or someone in your network.

If the campaign is raising funds for an organization’s program or initiative, the charity’s name should be listed. Make sure you are comfortable with the individual or organization that will be collecting and managing the donations.

If the campaign is supporting an organization, is it tax-exempt?

Many crowdfunding campaigns are not sponsored by nonprofit organizations, and that’s okay. That doesn’t mean the campaign is not legitimate, but it may mean that your contribution is not tax-exempt.

If an organization is listed as the beneficiary, you can use Charity Navigator to check out the charity before you give and confirm their tax-exempt status. You can also use these tips to learn more about the charity and campaign before you give.

What will your donation do?

Before you give make sure you understand what the campaign is raising support for. In the wake of a disaster, a fundraiser may be raising general support to purchase things like food, clothing, and constructions supplies. Whatever the purpose, make sure you understand how your donation will be used. And, make sure the purpose resonates with you. You want to feel good about your donation!

Remember, a crowdfunding campaign is not a red flag. There are lots of great campaigns raising money for important causes. But, you do want to connect to the cause or beneficiary, understand who is managing the funds and how they will be used. And, when possible, use Charity Navigator to do a little extra research to help you feel even more confident about your gift!

Take a look at our Hurricane Harvey Anniversary Report to learn how crowdfunding was used to benefit victims of the storm.

Written by Ashley Post, Communications Manager at Charity Navigator.

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