Crowdfunding - Know Before You Donate
Jul 03, 2013 | 1301 views | 0 0 comments | 25 25 recommendations | email to a friend | print
Crowdfunding refers to a collective effort of individuals who network and pool their resources, typically through online fundraising.Crowdfunding websites are established to allow solicitation of money for a variety of purposes- organizations or individuals to which the funds are given can be, but are not necessarily charitable -some contributions through these sites may not be tax deductible as charitable donations Forbes magazine recently reported that crowdfunding has quadrupled in since 2011, moving from a $32 million to a $123 million market. Securities administrators have found nearly 8,800 Internet domains with crowdfunding in their name, and a Google search of the word returns over ten million results. As crowdfunding websites grow in popularity, BBB cautions consumers looking to make contributions.


“Online giving provides a quick and easy mechanism for supporting those in need”, said Mechele Agbayani Mills, President and CEO of BBB Serving Central East Texas. “Donors should, however, remember to ask questions and do their homework so they know what to expect when contributing through crowdfunding websites.”

BBB advises consumers looking to make a contribution through a crowdfunding website to do the following:

  • Research the organization or individual you are contributing to. Ask questions and know exactly what you are supporting before contributing towards any cause. Go to if the organization is affiliated with a company, and do an internet search for negative information about individuals involved with the organization. Always investigate before you give.
  • How much of your donation is going to the charity. Many websites deduct service fees from each donation collected and less of your money goes towards the cause than you may have intended.
  • Check for hidden fees. Most crowdfunding websites have processing fees that can be tacked on for credit card handling. These fees can be added on top of your donation or taken out of what money you contributed to your particular cause.
  • Read the terms and conditions before making your donation. Make sure you understand the terms of the organization and the conditions of their fee structure. It is important to understand what the website is asking of you and what you are signing up for when you make a donation.                 
  • Check the privacy policy. Read the websites privacy policy and ensure that you have a secure internet connection before divulging any personal information.
  • Ask if the donation is tax deductible. When giving to a crowdfunded charitable cause, keep in mind that contributions are typically not tax deductible. If it is important to you that your contribution can be deducted from your taxes, you may want to choose another outlet for donation.
  • Report suspicious accounts. Many websites will allow you to report a suspicious project Be sure to provide as much detail as you can (links to the page with the concern, links to an account, details of the problem, etc.)

For more advice about how to be a savvy consumer or donor, go to To report a fraud or scam, call the BBB Hotline: (903)581-8373.

About BBB Charity Information Service: BBB Wise Giving Alliance,, produces reports on more than 1,200 nationally soliciting charitable organizations, and local Better Business Bureaus report on another 10,000 local and regional charities. BBB Wise Giving Alliance does not rank or rate charities but rather seeks to assist donors in making informed judgments by providing objective evaluations of charities based on 20 standards that address charity governance, finances, fund raising, appeal accuracy, and other issues. There is no charge to charities for the evaluation, and the resulting reports are accessible to the public at

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