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Someone has probably asked you to give money to charities, causes, and people in need through crowdfunding sites or online charitable fundraising platforms. Here’s how to avoid donating to a scammer.

Donating Through Crowdfunding Sites

Crowdfunding is a way to raise funds online, person-to-person. Online platforms like GoFundMe, Kickstarter, and Indiegogo let people create crowdfunding campaigns. They’re easy to set up, and the organizers get the funds quickly. Here are a few things to know:

  • The campaign organizer sets the goal of the crowdfunding campaign. The organizer is the person who set up the crowdfunding campaign to help specific people, like a family that lost everything in a house fire, or a veteran who needs help paying medical bills. Or they can set it up to help a larger group or cause, like people who’ve been through a natural disaster in a particular area.
  • There are many crowdfunding platforms, and each has its own set of rules. Platforms have different rules about setting up the fundraising campaign. Find out how much the platform will keep in fees, and when the platform will give the money to the campaign organizer.
  • The money raised goes to the campaign organizer. This might be someone who’s not closely connected to whoever the campaign is set up to help. The campaign organizer controls how the money is spent. They might take out a fee for their services or not even deliver the money to the intended person or cause.
  • Donations to individuals are not tax deductible. Even if the person who collects the donation plans to donate the funds to a charity, your donation to that person is not tax deductible.

How to avoid donating to a crowdfunding scam

The safest way to give through a crowdfunding campaign is to donate to campaigns organized by people you know and trust. To be sure your money goes to the person or cause you want to support, before you donate:

  • Do some research. Find out who’s behind the crowdfunding request. If a friend posted, shared, or “liked” the request on social media, contact your friend separately before you donate to that request. Ask them what they know about the post. Do they know the person or group who’ll get the money? If the crowdfunding campaign is sponsored by a charity, research the charity.
  • Be vigilant when donating after natural disasters or tragedies. Donate to charities you know and trust, with a proven track record in dealing with disasters.
  • Do a reverse image search of photos used on the crowdfunding campaign page. Search on your web browser for how to do a reverse image search. If the images on the campaign’s crowdfunding site also appear under another crowdfunding campaign, or if they’re associated with names different from those on the campaign website you’re considering donating to, walk away. This could be a sign of a scam. Scammers often use stolen photos and copy and paste other people’s stories.
  • Look for charities you know and trust. To be sure your money is going where you want it to go, consider donating to your charity of choice through its website, instead of through a crowdfunding page. This also minimizes the chance of fees being taken from your donation.
  • Remember, donations to individuals are not tax deductible. If it’s important to you that the donation is tax deductible, donate directly to an organization that is registered with the IRS as a charity. Not an individual. Look up the organization in the IRS’s Tax Exempt Organization Search Tool.

Crowdfunding campaigns to fund a business project or invention

People also use crowdfunding campaigns to fund a project or invention. The organizer might ask for small contributions — $10, $50, $100 — which can quickly add up to thousands of dollars in funding. In other cases, the goal is to get individual investors to give large amounts of money, perhaps in exchange for a reward once the project is completed — like getting a prototype of the new gadget, or some other incentive.

But a dishonest person might lie about the project or product and its development timeline. And they might lie about the rewards donors will get once the product is finished.

If someone asks you to give money to a crowdfunding campaign to fund a business project or invention:

  • Do your own vetting. Find out who the organizer is — the platform should tell you — and look them up. Search online for the organizer’s name and the name of the project, plus the words “complaint,” “review,” and “scam.” See what you can find out. Ask the campaign organizer lots of questions. Have they launched other products successfully? Have they funded those projects using crowdfunding? Use what you find online to confirm the details.
  • Find out what happens to your money if the project doesn’t get off the ground. There’s no guarantee that the crowdfunding campaign will be successful, or the project completed. Would you get a refund in that case? What are the risks?
  • Confirm the production status. Having a 3D photo of the product doesn’t mean the product is finished. Ask for a production schedule and be clear on the current stage of development. Some crowdfunding sites don’t let fundraisers show 3D photos of the product on their websites because donors might mistake them for a finished product. Ask the campaign organizer if there’s an actual prototype and if you can see it.
  • Understand the purpose of the campaign. When you give to a business project or invention through a crowdfunding site, you’re not buying the product. You’re simply helping fund its production. Be clear about what the fundraising is for and if you’re getting anything out of it.

Crowdfunding campaigns for medical treatments

If the crowdfunding campaign is for medical treatments, don’t assume the treatments are safe or have been tested. Some medical treatments promoted through crowdfunding are unproven and ineffective and could even cause serious harm to people who try them.

Donating Through Other Online Fundraising Platforms

An online fundraising platform, or online giving portal, is a website that lets you donate to charities. Companies like eBay, Amazon, Facebook, Instagram, Lyft, and others have online fundraising platforms their members can use.

When you donate through an online fundraising platform, your money may not go directly to the charity you chose. Another company — maybe the platform or some other intermediary — may get your money first, take some of it as a fee, and then pass on the rest to the charity. Also, it may take time for the charity to get the money. That could be an issue if you’re donating to help people with immediate needs, like people affected by a natural disaster.

The best online fundraising platforms will have clear, easy-to-find information on their websites about:

  • Where your money goes. Online fundraising platforms should tell you who gets your donation and how your money gets to the charity you chose. Just remember that even if a charity is listed on an online fundraising platform, it’s important to do some research on that charity to see how it will use your donation.
  • Fees. The website should clearly state whether (and how much) the platform or another intermediary will keep as a fee before it sends the rest to your chosen charity. Consider whether the charity would get more money if you donated directly through the charity’s website.
  • Whether your donation is tax deductible. Some states require the online fundraising platform to tell you whether the donation is tax deductible or not. This is required by some state laws.
  • Timing. Online fundraising platforms should say how long it will take for the charity to get your donation.
  • Follow-through. In case your donation can’t be sent to the charity you chose, the website should say what happens to your money — and how often that happens.
  • Your information. Check to see if you can choose whether or not your information is shared with the charity — or anyone else.

If these details aren’t clear, consider taking your donation elsewhere. You can always donate directly to the charity you want to support, through the charity’s own website.

Report Scams

If you spot a crowdfunding scam, first report it to the crowdfunding platform. Here are links to report to some of those companies:

Then, report the campaign organizer to:

  • the FTC at ReportFraud.ftc.gov
  • the attorney general of the state in which the campaign organizer lives, if you know it, or where the business project is being developed, if the funds are raised for a business purpose

If you spot a problem with a local charity listed on an online fundraising platform that serves your community, tell your state’s charities regulator.

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