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Convenient but susceptible to fraud: Why it makes sense to regulate charitable crowdfunding

<p>Within 24 hours of <a rel="noopener" href="https://theconversation.com/why-the-southern-us-is-prone-to-december-tornadoes-173643" target="_blank">devastating tornadoes striking six states</a> in December 2021, Kentucky Gov. Andy Beshear launched the <a rel="noopener" href="https://secure.kentucky.gov/formservices/Finance/WKYRelief" target="_blank">Team Western Kentucky Tornado Relief Fund</a>. That the leader of the state this disaster hit hardest would immediately tap into <a rel="noopener" href="https://www.councilofnonprofits.org/tools-resources/crowdfunding-nonprofits" target="_blank">crowdfunded charity</a> – raising money from the public directly – to complement relief dollars from official sources should come as no surprise.</p> <p>Crowdfunded donations have become a key source of disaster assistance – and often raise significant sums. In 2017, for example, football star J.J. Watt quickly raised more than $40 million help people affected by <a rel="noopener" href="https://www.houstontexans.com/news/j-j-watt-foundation-announces-hurricane-harvey-recap-and-2018-19-plans" target="_blank">Hurricane Harvey</a>. Following a series of Australian wildfires, entertainer Celeste Barber made a public appeal that eventually raised more than AU$50 million for the <a rel="noopener" href="https://eprints.qut.edu.au/200554" target="_blank">New South Wales Rural Fire Service &amp; Brigades Donation Fund</a>. And to date, the CDC Foundation has raised more than $51 million to support its “<a rel="noopener" href="https://give4cdcf.org/?utm_source=CDCF&amp;utm_medium=web&amp;utm_campaign=combat-coronavirus" target="_blank">Crush COVID</a>” campaign.</p> <p>What’s not to like about this new way to raise funds for a good cause? Well, as long as there has been charitable fundraising there has been the <a rel="noopener" href="https://theconversation.com/how-donors-can-help-make-nonprofits-more-accountable-85927" target="_blank">potential for scams</a>.</p> <p>As a <a rel="noopener" href="https://scholar.google.com/citations?user=uplx-M8AAAAJ&amp;hl=en&amp;oi=ao" target="_blank">law professor who studies the regulation of charities</a>, as well as a lawyer who has represented numerous charities and donors in legal disputes, I’ve seen that two aspects of charitable crowdfunding make it particularly vulnerable to fraud.</p> <p><strong>Sometimes it turns out to be crowd-frauding</strong></p> <p>In late 2017, a New Jersey couple posted an inspiring story on GoFundMe. A homeless veteran, they said, had come to the wife’s rescue after she ran out of gas on a highway exit ramp. Their “<a rel="noopener" href="https://abc7ny.com/homeless-hero-gofundme-money-stolen-from-man-john-bobbitt-gofund-me-go-fund/4690185/" target="_blank">Paying it Forward</a>” campaign raised more than $400,000 to help the veteran.</p> <p>Heartwarming, right? Trouble is, it was a lie. All three of the people involved in this trickery eventually <a rel="noopener" href="https://www.inquirer.com/news/mark-damico-johnny-bobbitt-kate-mcclure-gofundme-guilty-20211122.html" target="_blank">pleaded guilty to federal charges</a> of “<a rel="noopener" href="https://www.dicindiolaw.com/what-constitutes-theft-by-deception/" target="_blank">theft by deception</a>.”</p> <p>Fraudulent crowdfunding can also prey on political sentiments rather than just exploiting sympathy.</p> <p>In 2020, <a rel="noopener" href="https://www.justice.gov/usao-sdny/pr/leaders-we-build-wall-online-fundraising-campaign-charged-defrauding-hundreds-thousands" target="_blank">federal prosecutors charged</a> former senior Trump adviser Steve Bannon and three others with defrauding thousands of donors to a crowdfunding campaign for <a rel="noopener" href="https://theconversation.com/why-steve-bannon-faces-fraud-charges-4-questions-answered-144834" target="_blank">building portions of a wall</a> along the U.S. border with Mexico. Bannon and his partners allegedly instead used some of the funds raised to compensate themselves and pay for personal expenses.</p> <p>Although then-President <a rel="noopener" href="https://www.cnbc.com/2021/01/19/trump-pardons-expected-day-before-biden-inauguration.html" target="_blank">Donald J. Trump pardoned Bannon</a> in advance of any trial, the former White House aide still <a rel="noopener" href="https://www.forbes.com/sites/alisondurkee/2021/05/25/steve-bannon-officially-cleared-of-federal-charges-after-trump-pardon---but-this-state-probe-still-looms/?sh=1a58e95657c4" target="_blank">faces possible state charges</a>.</p> <p><strong>Reasons for vulnerability</strong></p> <p>Making a special website isn’t necessary to raise charitable funds this way. Some 45 million people donated to or created a fundraiser using Facebook from 2015 to 2020, raising over <a rel="noopener" href="https://about.fb.com/news/2019/09/2-billion-for-causes/" target="_blank">$3 billion for charities</a>, according the company.</p> <p>And crowdfunding efforts can help people without <a rel="noopener" href="https://www.irs.gov/taxtopics/tc506" target="_blank">technically counting as tax-deductible charity</a>. <a rel="noopener" href="https://www.gofundme.com/" target="_blank">GoFundMe</a>, a popular charitable crowdfunding platform, lets people raise funds for both personal needs, such as covering medical expenses, and for specific charities of all kinds.</p> <p>Being fast and cheap to operate makes charitable crowdfunding ideal in some ways, not others. More traditional fundraising campaigns that rely on mailings and phone calls are time-consuming to establish. In contrast, it’s possible to set up a new campaign on GoFundMe that is then visible both nationally and internationally within a few minutes.</p> <p>In the wake of a highly publicized disaster, when many people are <a rel="noopener" href="https://theconversation.com/how-to-select-a-disaster-relief-charity-83928" target="_blank">looking for a quick way to help</a>, everyone – even governors – will want to move fast. Opportunities for fraud are perhaps at their peak.</p> <p>Compounding this problem: Laws governing charitable fundraising do not clearly apply to campaign organizers and crowdfunding platforms. As I detail in an article <a rel="noopener" href="https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3686612" target="_blank">soon to be published in the Indiana Law Journal</a>, state legislatures wrote those laws decades ago, when charities raised money either directly or using paid solicitors. As a result, those laws do not usually apply to individuals who voluntarily raise money for individuals or charities to which they have no formal ties. Nor do they apply to the recently emerged platforms where people crowdfund for causes.</p> <p><strong>California takes aim</strong></p> <p>So far, there’s no regulation taking shape to address these issues at the federal level.</p> <p>California became the first state to pass legislation specifically targeting charitable crowdfunding when Gov. Gavin Newson signed Assembly Bill No. 488 into law in October 2021. The measure, which will not <a rel="noopener" href="https://leginfo.legislature.ca.gov/faces/billNavClient.xhtml?bill_id=202120220AB488" target="_blank">take effect until Jan. 1, 2023</a>, requires both charities raising funds online and platforms hosting campaigns for specific charities to register and file regular reports with the state’s <a rel="noopener" href="https://oag.ca.gov/charities" target="_blank">Registry of Charitable Trusts</a>.</p> <p>The new law will also require these charities and platforms to make certain public disclosures and receipts, as needed. It will also require platforms to promptly distribute donations to the designated charities and obtain a charity’s written consent before soliciting funds for its benefit – with some exceptions.</p> <p>In my view, California’s new law is a good first effort.</p> <p>It places the burden of compliance on the charities themselves and the handful of online platforms engaged in this work, not on the numerous individuals who start campaigns. But it remains to be seen whether the registration, reporting, disclosure and other requirements will create enough transparency and accountability to sufficiently deter fraud without over burdening legitimate charities and platforms.</p> <p>I appreciate the difficult task legislators face in striking a balance that avoids both over- and underregulation. Lawmakers do not want to overregulate charitable crowdfunding to the point that generous individuals and legitimate charities shy away from launching campaigns because of the legal burdens of doing so.</p> <p>That is, all new laws and regulations, in addition to discouraging crowdfunding fraud, ought to encourage generosity.</p> <p>At the same time, lawmakers want to regulate charitable crowdfunding enough to ensure that all or almost all funds raised go the individuals and charities that the donors intend to support. Time will tell whether California and the states that follow its example have struck the right balance.<!-- Below is The Conversation's page counter tag. Please DO NOT REMOVE. --><img style="border: none !important; box-shadow: none !important; margin: 0 !important; max-height: 1px !important; max-width: 1px !important; min-height: 1px !important; min-width: 1px !important; opacity: 0 !important; outline: none !important; padding: 0 !important; text-shadow: none !important;" src="https://counter.theconversation.com/content/172029/count.gif?distributor=republish-lightbox-basic" alt="The Conversation" width="1" height="1" /><!-- End of code. If you don't see any code above, please get new code from the Advanced tab after you click the republish button. The page counter does not collect any personal data. More info: https://theconversation.com/republishing-guidelines --></p> <p><em><a rel="noopener" href="https://theconversation.com/profiles/lloyd-hitoshi-mayer-1148002" target="_blank">Lloyd Hitoshi Mayer</a>, Professor of Law, <a rel="noopener" href="https://theconversation.com/institutions/university-of-notre-dame-990" target="_blank">University of Notre Dame</a></em></p> <p><em>This article is republished from <a rel="noopener" href="https://theconversation.com" target="_blank">The Conversation</a> under a Creative Commons license. Read the <a rel="noopener" href="https://theconversation.com/convenient-but-susceptible-to-fraud-why-it-makes-sense-to-regulate-charitable-crowdfunding-172029" target="_blank">original article</a>.</em></p> <p><em>Image: Getty Images</em></p>

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6 little things to do to be more charitable

<p>Okay, we get it we’re not all Bill Gates, but that doesn’t mean we can’t be charitable in our everyday lives. Here are some handy ways you can lend a hand to your fellow man and give up some of your time or money to make the world a better place for someone who needs it more.</p> <p><strong>6. Volunteer your time</strong></p> <p>While you might not have enough material funds to give up a huge some volunteering your time for a good cause is an effective and some would say just as meaningful gesture. There is a range of charities that you should check out who are always on the lookout for a helping hand.</p> <p><strong>5. Become a blood donor</strong></p> <p>If you’re not a blood donor maybe 2016 is the year you should consider taking it up. Did you know that what if you are an existing donor you can continue donating whole blood right up to your 81st birthday and new donors can start right up until they’re 71.</p> <p><strong>4. Clean out your closet</strong></p> <p>We often have so many clothes that we don’t know what to do with them, unfortunately other people aren’t so lucky. So if you’ve got a little bit of spare time use it as an opportunity to clean out your closet and think about donating your clothes to charity.</p> <p><strong>3. Register as an organ donor</strong></p> <p>When you’re gone you’re not really going to need them anyway. By registering as an organ donor you can ensure your bits and bobs will be put to a good cause when you leave this earth and may see you save several lives in the process of doing so.</p> <p><strong>2. Help a neighbour with chores</strong></p> <p>Okay so this might not be an actual charity perse, but it’s definitely worth going around to your neighbour’s house and helping them with chores from time to time. It’s also an idea to spend a bit of your time chatting or having a cup of tea as it can make a big difference.</p> <p><strong>1. Raise awareness</strong></p> <p>Not everyone has the means to donate to charity regularly, and a lot of the people who actually do may not even be aware of a cause that they would feel passionate about. By using social media and word of mouth to raise awareness you can make a big difference in the lives of people who need it most.</p> <p><strong>Related links:</strong></p> <p><span style="text-decoration: underline;"><em><strong><a href="http://www.oversixty.co.nz/finance/retirement-income/2015/11/building-a-financial-safety-net/">5 step guide for building a financial safety net</a></strong></em></span></p> <p><span style="text-decoration: underline;"><em><strong><a href="http://www.oversixty.co.nz/entertainment/technology/2016/01/how-to-spot-fake-apple-products/">How to spot fake Apple products</a></strong></em></span></p> <p><span style="text-decoration: underline;"><em><strong><a href="http://www.oversixty.co.nz/entertainment/technology/2015/12/google-write-emails-for-you/">Google can now write email replies for you</a></strong></em></span></p>

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10 extremely charitable celebrities

<p>It seems like all you ever read about celebrities these days is “fad diet-this” and “wardrobe malfunction-that”. But we think it’d be worthwhile focussing on the celebrities who are actually using their fame and fortune to do a little good.</p> <p>Scroll through the gallery above to find the 10 most-charitable over-60 celebrities.</p> <p><strong>10. Elton John</strong></p> <p>The British pianist has become something of a philanthropist, founding the Elton John AIDS foundation and associating himself with a range of charitable causes in his life.</p> <p><strong>9. Oprah Winfrey</strong></p> <p>Famous for working studio audiences into a frenzy with free cars, Oprah has founded a school and multiple charities including the Oprah Winfrey Operating Foundation.</p> <p><strong>8. Susan Sarandon</strong></p> <p>Aside from her history of donations, Susan Sarandon has been a passionate campaigner against the dangers of growing genetically modified corps, with an open letter in the Times.</p> <p><strong>7. Paul McCartney</strong></p> <p>Not content to just give the world some of the best music of all time, Paul McCartney has also spent a lot of time dedicated to ensuring the ethical treatment of animals with PETA.</p> <p><strong>8. Willie Nelson</strong></p> <p>The country music icon has pledged to a variety of causes from those related to animals and farm aid to charities concerned with treating addiction and substance abuse.</p> <p><strong>6. Whoopi Goldberg</strong></p> <p>The comedian and television host has dedicated time and money to a variety of causes including those associated with family/parent support, homelessness and refugees.</p> <p><strong>5. Betty White</strong></p> <p>The lovable actress is revered worldwide but her charitable efforts tend to go under the radar. Betty White has made significant contributions to causes related to animals.</p> <p><strong>4. Morgan Freeman</strong></p> <p>One of the most iconic actors to grace the silver screen, Morgan Freeman has dedicated his time and money to a variety of different causes including the Make-A-Wish Foundation.  </p> <p><strong>3. Gary Sinise</strong></p> <p>The Forrest Gump star is associated with a number of causes and has recently founded the Gary Sinise Foundation to help build homes for wounded ex-service members.</p> <p><strong>2. Eric Clapton</strong></p> <p>The former Cream guitarist has involved himself with a number of charities including UNICEF, Amnesty International and performed at Live Aid with Phil Collins.</p> <p><strong>1. Bill Gates</strong></p> <p>The founder of Microsoft is no scrooge when it comes to charitable causes, setting up the Bill and Melinda Gates foundation and giving away more than $28 billion to charity.  </p> <p><strong>Related links:</strong></p> <p><span style="text-decoration: underline;"><em><a href="http://www.oversixty.co.nz/finance/money-banking/2016/01/facing-up-to-why-we-fail-with-money/"><strong>Excuses, excuses! Facing up to why we fail with money</strong></a></em></span></p> <p><span style="text-decoration: underline;"><em><strong><a href="/finance/money-banking/2016/01/10-important-quotes-about-money/">10 quotes that show money isn’t everything</a></strong></em></span></p> <p><span style="text-decoration: underline;"><em><strong><a href="/finance/money-banking/2015/12/10-apps-to-help-you-budget-this-year/">10 apps to help you budget this year</a></strong></em></span></p>

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