Consumer Advocate

Sign up for newsletters and other news
Media > Newsletters > Consumer Advocate > June 2017 > Crowdfunding: What to Know Before Donating

Consumer Advocate RSS feeds

Crowdfunding: What to Know Before Donating

If you’re asked to make a donation online to cover someone’s medical costs, to help victims of a tragedy, or to fund another cause, learn the basics of crowdfunding and how to spot a potential scam.
Crowdfunding generally means funding a project through donations from a large number of people. It typically is conducted online, and in some cases, campaigns can go viral and quickly attract significant attention and money. A few common crowdfunding platforms include Kickstarter, Indiegogo, and GoFundMe, but an internet search of “crowdfunding sites” will reveal many more.
Crowdfunding can be used for various purposes. Charities may use it to collect donations, individuals may use it to raise money for medical costs or other needs, and businesses may use it to launch a new product or venture. Because there are many different types of crowdfunding sites and uses, it’s important to gather as much information as possible before making a contribution.
Many crowdfunding campaigns attract money and attention to legitimate causes, but unfortunately, some accounts are scams designed to get your money or personal information. They may use names, photos, or details that sound legitimate, even though the donations will go to a scam artist.
To protect yourself, follow these tips: 
  • Never assume that fundraising recommendations on Facebook, blogs, or other websites have been approved or verified as legitimate. Research the opportunity yourself. Make sure you trust the person who has set up the fundraising page or account. Determine whether that person had permission (from the organization, individual, or family involved) to set up the account. Discuss the opportunity with people in the community to assess the need.
  • Be vigilant when donating in the wake of a tragedy or natural disaster. Some people set up fundraising pages shortly after a tragic event in order to take advantage of the generosity of others. Even if someone sets up an account with good intentions, that person may not have the experience or knowledge to properly handle donations.
  • Research charities and businesses using resources such as the Ohio Attorney General’s Office, Better Business Bureau, IRS Select Check, Charity Navigator, GuideStar, Foundation Center, and Ohio Secretary of State.
  • Understand that giving money to an individual or family is different from donating to an established charity. Your contribution may not be tax deductible. Before making a donation, ask whether the contribution is tax deductible, and verify it with your tax advisor or the IRS.
  • Find out what percentage of your donation will go to the cause as opposed to the site or to the person who set up the account. Look for any additional fees that may apply to your contribution. Also find out whether there’s a refund policy, what would happen if the raised funds fall short of the stated goal, and how the site handles complaints.
  • Review privacy policies. Find out what the website will do (if anything) with your personal information. Be wary of websites that do not provide a privacy policy. Also, make sure the website is secure before entering your credit card number or other sensitive information. Look for the “https” in the web address; the “s” indicates that it’s secure. 
If you suspect an individual has set up a fraudulent account in order to steal money, notify the website where the account appears, and contact local law enforcement.
If you suspect a scam or unfair business practice, contact the Ohio Attorney General’s Office at or 800-282-0515.