November 30, 2023

According to the latest data from the Association of Fundraising Professionals, Americans have opened their wallets in response to crises like Covid-19 and racial injustice.

The organization reports a 7.6% increase in the amount donated in the first nine months of 2020. Leading the increase: lower contributions of $ 250 or less.

At the same time, non-traditional fundraising campaigns through crowdfunding sites like GoFundMe had unprecedented success over the past year. According to the site’s 2020 Giving Report, the year was the largest fundraiser in the site’s history – $ 44 million to fight hunger in an action led by Leonardo DiCaprio and Laurene Powell Jobs.

GoFundMe also announced that it held various $ 625 million fundraising drives in support of Covid between March and June. 500,000 donors have contributed to the official George Floyd Memorial Fund, the most individual donor ever won for a GoFundMe campaign.

Add to this thousands of tiny drives for everything from people’s medical expenses to their tuition fees, and charity experts agree that crowdfunding is and will likely stay a great alternative to traditional charity fundraising.

Boston-based marketing consultant Julia Campbell, who works with nonprofits, attributes the shift to what she believes is an unjustified distrust of nonprofits, especially younger donors.

“They don’t want to give money that they think is institutionalized,” Campbell told CNBC’s American Greed. “I think that has hit the nonprofit sector even more as trust wanes.”

A donation to an online fundraising campaign – whether via GoFundMe, Facebook or other websites – can, however, involve its own risks, despite the extensive security precautions that the platforms have taken.

Crowd scamming

In one of the most notorious cases of fundraiser trying to suppress a scam, New Jersey’s Mark D’Amico and Katelyn McClure raised more than $ 400,000 to help Johnny Bobbitt – a homeless man who McClure ran into after a petrol shortage met Philadelphia in 2017.

When the three of them told the story, Bobbitt was a veteran who had lost his luck. He saw McClure stranded on the side of the road and came to her aid. He went to a gas station, spent his last $ 20 to buy her gasoline, and helped her on her way.

A picture of Katelyn McClure (right), Mark D’Amico (center), and Johnny Bobbitt Jr. is displayed during a press conference in Mt. Holly, NJ, Thursday, November 15, 2018.

Seth Little | AP

McClure and D’Amico launched a GoFundMe campaign that went viral. But the story began to unravel when Bobbitt later claimed he hadn’t received any of the crowdsourcing funds and even filed a lawsuit against the couple.

Prosecutors said D’Amico and McClure spent and gambled away most of the money. And it turned out that Bobbitt was also involved in the fraud in exchange for some of the money. The story of McClure running out of gas and Bobbitt coming to her aid was fiction.

Adrienne Gonzalez, founder of the watchdog website, said the three were dangerously close to getting away with their cheating until Bobbitt suspected that his criminal partners had cheated on him.

“Had they split it up three ways and given the homeless man his cut, would we ever have heard of it? No, I don’t think we would,” she said.

Bobbitt and McClure pleaded guilty to the fraud. Bobbitt was sentenced to one year probation for conspiracy to steal by fraud. He is convicted of a single federal conspiracy on money laundering in October.

McClure has yet to be convicted of second degree theft through deception and conspiracy to launder money. She has agreed to testify against D’Amico, her former boyfriend.

D’Amico has pleaded guilty to a single state charge of misuse of entrusted property and has been sentenced to five years in prison. But he has pleaded not guilty of 16 point charges of fraud and conspiracy. His trial is suspended because of the pandemic.

GoFundMe said it honored its guarantee and returned all of the money raised in the fraudulent campaign, adding to the 14,000 people who donated in total.

CEO Rob Solomon told NBC News in 2019 that the site had tightened its anti-fraud measures following the attempted fraud. The website relies heavily on the user community to report suspicious activity. He said the 2017 scam couldn’t happen today.

“Abuse on the platform is very rare. Less than a tenth of 1 percent of all campaigns lead to abuse,” he said.

Sniff test

If an online fundraiser appeals to you and you believe that an established charity cannot meet the need, Campbell suggests stepping back and doing additional due diligence before donating.

“There’s a sniff test,” she said. “What is the purpose? How are the funds used? Does that sound suspicious in any way?”

Look for details about the intended recipient of the money. Look for their social media profiles.

“See if you just opened your account like you just got on Facebook this month,” said Campbell. “Do you have less than 40 friends? And look at the photos and pictures they are using. If they only have one photo, it is most likely a scam account and you should be clear about control.”

Also, take a close look at the photos on the fundraiser website to make sure they are real. You can do a google reverse image search by dragging the photo into the site’s search window. This can tell you if the fundraiser uses a photo or an image that was used by someone else.

Be especially careful when it comes to someone raising money for third parties, like D’Amico and McClure, who are raising funds for Bobbitt. What’s the connection? Is it real

“Look for specific details for the victim, for the family, and then find your own connections,” Campbell said. “Have your friends and family donated? Are they in any way connected to this person?”

Charity begins at home

GoFundMe has raised 65 million donations over the past 10 years, including many to charities. The organization says 110,000 charities benefited from their fundraising drives.

Campbell believes the platform has caught on with people who want a more hands-on approach to giving rather than donating money to a large, impersonal, national charity.

“They want to go and actually give coats to the homeless. They want to make sandwiches and serve them,” she said. However, a more effective approach could be to contribute to local organizations.

“I believe in national charities, but it’s the best way to donate locally, and only donate to causes you care about, helping nonprofits, and building the capacity of your local library, food bank, and animal shelter help the community, “she said.

Experts agree that despite last year’s fundraising records, challenges in fighting the pandemic have forced many charities to lay off employees or curtail services.

That makes it important to pass on, regardless of the platform and the amount.

“I think the perception is that $ 10 is going to go into a deep, dark hole,” said Campbell. “Trust me when I say $ 10, especially if you do it monthly, it can make such a big difference to these organizations.”

Just do some homework before you give.

See how crowdfunding scammers try to corrupt the system and steal from the really needy. Catch a brand new episode of “American Greed” on Monday, February 22nd at 10pm ET / PT on CNBC.