Safeguarding digital giving from abuse

There have been numerous research reports demonstrating that members of the public are influenced by emotional stories which propel them to donate money. Researchers at the University of Hong Kong, for example, studied the development of charitable crowdfunding and individuals’ donation behaviour between April-July 2017, and found that people are much more likely to donate to a crowdfunding project when they feel empathy for a credible cause.

For example, on Thursday 15 June 2017, a day after a devastating fire engulfed the West London Grenfell Tower block, JustGiving revealed that more than 400 fundraising pages had been set up for the victims, raising over £1.6m. In the same period, GoFundMe reported that more than £300,000 had been donated on its platform for those affected by the disaster, bringing the total raised via charitable crowdfunding sites in the first 24 hours to well in excess of £2 million.

Technology facilitates

What is clear, is that while empathy towards a particular cause or event influences the public to donate money, it is technology that has facilitated the ability to both drive awareness of an issue or goal on a national and international basis, and allow individuals and groups to more rapidly fundraise and donate money in support of those specific needs.

While technology may have been slower to disrupt the charity sector than others, online fundraising is now actively connecting people and communities. As well as providing a means for pooling financial contributions, crowdfunding allows members of the public to express solidarity and quickly provide their support in the wake of national tragedies.

This was evident following the major tragedies of 2017, including the Grenfell Tower fire, the Manchester Arena bombing and four terror attacks in London. According to the Fundraising Regulator, the public’s generous response to these incidents raised more than £38 million for victims.

As Helen Stephenson, chief executive of the Charity Commission, recently commented: “The emergence of new crowdfunding and online giving sites has had a positive impact on charitable giving in the UK, making it easy for the public to donate to a wide range of causes and respond quickly to large scale disasters.”

While the sense of community spirit and generosity that online fundraising fosters is of course to be welcomed, it can also be open to abuse. Indeed, in the aftermath of the Grenfell Tower fire, GoFundMe reported that it had detected and removed a small number of “suspicious” campaigns from its platform. JustGiving also recently confirmed that criminals are targeting its site for money laundering purposes and that it has shut down nearly 100 fundraising pages in the last 18 months as a result.

Preventing illegitimate donations

Recent concerns around how to prevent illegitimate online donation sites prompted the Charity Commission and the Fundraising Regulator to invite 14 of the UK’s major fundraising platforms to a summit to discuss how to improve transparency around online giving.

The stated aim was “to collectively agree principles that will ensure individuals are supported when setting up or donating to online appeals, help to increase public trust and confidence in charity and online giving, and ensure that charitable resources in the short, medium and long term are used as effectively as possible”. This led to an agreement to work with the Fundraising Regulator to revisit and make relevant the Code of Fundraising Practice with regards to fundraising platforms.

All fundraising platforms have a responsibility to educate and inform donors, grant givers and fundraisers about best practices for funding and fundraising. For example, anyone wishing to donate to charity would be wise to consult authorised bodies such as Companies House and the Charity Commission for a list of approved and registered charities and to donate through an online giving platform that fully vets any person or organisation wishing to raise funds.

Just taking these two simple steps helps everyone to make an informed decision regarding the charities or projects they wish to support. These platforms also have work to do to make it more difficult for fraudulent projects and transactions to appear online in order to deter criminality.

Finally, there must be a faster and more integrated process for any suspicions regarding fraudulent activity to be reported to organisations such as the National Crime Agency.

Whether online or offline, someone masquerading as a fundraiser is nothing new, but online fundraising platforms have the edge in safeguarding against this type of abuse over their more traditional counterparts. For instance, an online platform can prevent money from being paid into an individual’s bank account by requiring all monies to be paid into a verified, approved, organisational account.

Fundraising platforms can also retain payments for a set period of time before disbursement while they verify the source and the destination, rather than allowing funds to be paid in and transferred instantly. This allows time for any anomalies and irregularities in donation making – such as multiple donations from one individual donor for money laundering purposes – to be thoroughly identified and investigated.

Mandatory application processes

Online platforms should also be implementing mandatory application processes as an important safeguard - for instance, requiring applicants to complete a detailed online application form, including full organisational and financial details, plus itemised budgets for each charitable project seeking funds. This can then be vetted before an organisation and a funding project can be listed on a platform.

While ensuring that the claim is valid, this information can also then be made available to potential funders, donors and fundraisers to help inform their decisions regarding which projects and organisations they’d like to support. At the end of a project, an evaluation should also be completed, giving funders full visibility into what was achieved.

The more information a charity, project or individual has to provide and the more scrutiny that is undertaken, the more likely it is that the organisation and project will be valid. Simple measures such as this aren’t overly time-consuming, but they introduce much needed accountability. This extra step is unlikely to discourage genuine fundraisers, but will deter fraudsters looking for quick and easy gains.

Boost transparency and accountability

Ultimately, any loss in public trust as a result of fraudulent activity is to the detriment of the charitable sector as a whole, which is why the online fundraising industry must take urgent steps to boost transparency and accountability.

From vetting would-be applicants before their fundraising projects go live on a platform, to ensuring total transparency over how the money raised is processed and spent, it is essential to make the process as safe from abuse as possible. After all, public trust, the lifeblood of fundraising both on and offline, is hard earned and easily lost.