As crowdfunding sites like GoFundMe.com and Indiegogo.com started to take off, worthy causes, such as the kid with stage-four kidney cancer who wanted to travel the world, dominated the action.
Soon, New York editor Brandon Wenerd, 30, was swamped with more selfish requests: people raising money not for anything high-minded or charitable, but for spring-break trips, honeymoons and credit-card debt.
“It has taken on this air of panhandling to me,” Wenerd said.
The crowdfunding field has ballooned to over $34 billion in just a few years, according to the consulting firm Massolution, up from $880 million in 2010, so it is perhaps inevitable to see some backlash.
“You know what people did before GoFundMe? They worked,” said Damen Bell-Holter, a professional basketball player who plays overseas in Finland. He is among those who finds himself awash in crowdfunding requests, and he is sick of them.
The floodgates to silliness opened when people figured out that the online interface allows them to reach out and ask for things they might not have the temerity to ask for in person, said Amir Pasic, dean of Indiana University’s Lilly Family School of Philanthropy.
Even Kickstarter, which has successfully funded over 102,000 projects toward the goal of bringing “creative projects to life,” helped one man raise over $55,000 so he could make potato salad.
GoFundMe has raised $2 billion in the last year, with some users seeking money to buy bottles of Hennessy cognac, Yeezy sneakers and breast implants.
These sites can be fertile ground for potential scams. Washington state Attorney General Bob Ferguson calls the phenomenon “crowdfunding theft.” Last year, he ordered restitution to donors who had paid for one project of horror-themed playing cards and got zilch in return.
Sites such as Kickscammed and GoFraudMe have cropped up to police crowdfunding projects that don’t deliver what they promise.
The main source of conflict: Once the funds are disbursed, there is not a lot of transparency.
When famed girl group TLC raised more than $430,000 from fans last year to put out new music, the musicians faced backlash when no album emerged.
To effectively sort through donation requests, potential donors need to avoid information overload, which can make it hard to discern among the truly needy and the personal larks. Research shows that when donors get bombarded with direct-mail requests for money, Indiana’s Pasic said, they don’t get more generous — they just get really irritated.
Some stop giving altogether.
If you get a crowdfunding request and do not know the person that well, “just ignore it,” said financial planner George Gagliardi.
If the request involves a close friend or a family member, Gagliardi suggested dividing the requests into varying levels of urgency, from “dire, life-threatening situations” all the way to “luxuries.” Then you can make the call depending on the particular case and your own ability to contribute.
The final step is to take the request out of the digital world. Ask yourself: Would this person actually ask for money to your face?
“If there is a genuine need, and a real case to be made, then try picking up the phone and talking with them about it,” Pasic said.
Chris Taylor writes for Reuters.