Crowdfunding: A fund-sapping rival, or a new opportunity for charities?

Crowdfunding takes an innate human desire to give to a new level, enabling people to offer and receive help within moments. With hundreds of millions of pounds raised online each year for a vast range of causes, does the practice pose a threat, or is it a new opportunity for charities? By Bill Borrows

Quaden Bayles: Rocketed to global fame after a crowdfunding campaign to help him went viral
Quaden Bayles: Rocketed to global fame after a crowdfunding campaign to help him went viral

When an oncologist told Jess Mitchell they were running out of options to treat her six-year-old son, Dylan, suffering from a rare medulloblastoma cancer in his brain, “a switch flicked” and she began for the first time to seriously consider fundraising.

Private intraventricular treatment – with chemo injected into the brain through a port in Dylan’s skull – was available, but extremely expensive. It led his mother to start a GoFundMe page.

“The decision to turn to crowdfunding was just a desperate mum trying every avenue,” she says. “I want to do what’s best for my child and I can’t let his life be decided by,” she pauses, “money. I just can’t.”

Crowdfunding is nothing new. Alexander Pope used subscriptions in 1713 to help publish his English translation of Homer’s Iliad. Seventy years later Mozart printed the names of his backers in the original manuscript for three newly written concertos he was hoping to perform in Vienna. And the base of the Statue of Liberty was financed after a direct appeal for public donations by the New York World newspaper.

People have always seen the benefit of banding together and making relatively small contributions to fund a more substantial project.

The contemporary twist is that modern communications make the task much easier. Having begun in the creative sector in the early 21st century, it is now a powerful tool for charities to raise money and spread awareness.

It is, of course, also available for individuals to canvass for donations for anything they think might attract them, from “cancer treatments” (342,357 results found on GoFundMe.com) to “table tennis” (478) and everything in between.

When a harrowing video of nine-year-old Quaden Bayles, an Australian boy bullied by classmates for his dwarfism, was shared on social media, the American comedian Brad Williams launched a GoFundMe campaign to send him to Disneyland.

Within days the crowdfunder raised more than $700,000 (the proceeds are now being shared between six charities) and Quaden became a global sensation, leading the Australian rugby league team the Indigenous All Stars onto the field for an exhibition match.

So at a time when individual donations seem to be in decline, does the rapidly expanding practice offer an alternative to the traditional model, or could a lack of regulation and its facilitation of more spurious fundraising events bring more harm than good?

The biggest crowdfunding platform in the world, GoFundMe, was founded in 2010 and works as a for-profit, with no charge for personal campaigns (except the processing fee for online credit card payments). In that time, people have donated more than 120 million times and raised more than $9bn (£7bn).

Of the more than 65 different platforms in the UK alone, JustGiving, one of the oldest and most well-known in the charitable arena, is also for-profit, whereas Virgin Money Giving, eschewing the crowdfunding tag but sharing the same oxygen, sells itself as a “not-for-profit fundraising platform on a mission to help every charity in the UK raise the money they need to make everyone better off”.

Whatever the model, over the past 10 years, and in tandem with the commercial world, the general public has become comfortable using the digital space to make financial and charitable transactions.

Dina Rickman, senior regional manager for northern Europe at GoFundMe, puts the exponential rise of crowdfunding down to the fact that “the innate desire to help others is as old as humanity and, over time, society has developed many ways of doing this”.

“The internet has opened up ways of giving and getting help almost instantly,” she says. “Often, donating is about more than just the money; it’s also about being able to say ‘when someone needed help I was there’, and to make that statement wherever you are in the world.”

High-profile campaigns

Recently, that impetus has helped Dylan’s Cancer Treatment Fund reach £35,000. High-profile campaigns on the platform include cookery writer Jack Monroe’s effort to raise more than £43,000 for food banks and Speedo Mick’s 1,000-mile walk to raise £360,000 for Leave the Light On, a charity supporting those who feel isolated.

Recently, Shelter Scotland received donations of £16,000 against potential legal costs in its ongoing battle with Glasgow City Council. More importantly, it built awareness of its cause by weaving GoFundMe into its advocacy strategy.

“We didn’t imagine crowdfunding would cover all our costs,” explains Gordon Macrae, assistant director of the homelessness and housing charity. “We were looking for a way to engage people in a policy campaign that gave them more than just another online petition to sign or social media post to share.

They could now chip in and be part of something, and that’s a different conversation. It was a very positive experience. The relevant metrics all demonstrated spikes and it has enabled us to maintain a relationship with our supporters.”

This last move is a perfect example of how some charities have embraced the changing digital landscape. It’s also a reminder of one great ancillary benefit of the crowdfunding mechanism that established charities have always bought into: keeping a crowd of people with an interest in your area of specialisation informed, involved and reaching out to elements of their similarly inclined network is an effective and profitable use of resources.

Exploiting a desire to tap into personal stories could mean that the more well-known charities and celebrity-driven campaigns are best suited to the model. But crowdfunding also lends itself when there is an emotional response to an appeal generated by an event such as the Grenfell Tower fire or the bombing at the Manchester Arena.

As Jo Barnett, executive director at Virgin Money Giving, puts it: “People want to give in the moment.”

There is an agility here that larger, more traditional organisations struggle to imitate, and which has become a source of irritation as they chase what some believe to be a finite pot of money for “good causes”.

Barnett argues that such emotional and responsive donations tend to be incremental to traditional charitable giving, but asks the question of crowdfunding: “If someone gives to an individual’s appeal to support a new cancer treatment for X, will they stop giving to Cancer Research UK general research or services to help all cancer sufferers?”

That is the fear, but it’s one that GoFundMe’s Rickman does not accept. “Absolutely not,” she insists. “This isn’t a zero-sum game.”

A totally unscientific and unrepresentative sample of family and friends would seem to support Rickman’s assertion. Those with direct debits to more traditional charities have also been on crowdfunding pages to sponsor or donate to people they know for similar causes and reacted spontaneously to appeals made in the wake of tragedies or terrorist attacks.

However, the most recent Charities Aid Foundation UK Giving report said that the proportion of people in the UK regularly giving to charity directly or sponsoring someone fell for the third year in a row to 65 per cent in 2018, from 69 per cent in 2016. And Third Sector’s 2019 Donating Trends Report showed a similar dip, with the proportion of people who gave falling to 77 per cent, from 81-82 per cent in 2016.

Austerity context

This should be seen in the context of a period of continuing austerity and would also include the money given to crowdfunding sites (the success of which throws into relief those charities reliant upon more old-school models).

But two far more worrying trends to emerge were that fewer people said they had been approached to donate money than in previous years across a variety of channels, including on the street, door-to-door and particularly direct mail (28 per cent to 23 per cent over the same period), and that trust in charities had decreased since 2016, with 48 per cent – significantly, less than half of respondents – saying that they believed charities to be trustworthy, down from 51 per cent.

The logistical issue might just be an indication of the ubiquity of internet-driven donations, but the question of trust is of almost existential concern to those who work in the sector.

In the era of fake news and a pervading air of cynicism, the figures chime with the mood of the times, but charities cannot function without trust. People need to know that their money is going to be used for the purposes they intended when they gave it. Rightly or wrongly, this is seen as the Achilles heel of crowdfunding.

As Gill Gibb, chief executive of children’s charity Tree of Hope, wrote in a 2017 Third Sector opinion piece: “A registered charity guarantees, through detailed auditing and regulation by the Charity Commission, that donations will be put to use for the purposes they were originally intended. But go to JustGiving’s crowdfunding page and it makes it clear that the site cannot guarantee donations will be used correctly. If the JustGiving crowdfunding page has been set up by a registered charity, donors should be reassured – but what if cowboy organisations start to take advantage of the situation?”

Not just cowboy organisations, but individuals. Later that year, multiple news outlets reported that JustGiving had shut down more than 100 appeal pages that were deemed to be fraudulent, while GoFundMe reported several instances of “misuse” in the wake of the devastating Grenfell Tower fire in west London and blocked the offending campaign organisers from the platform.

Regulation, then, is the pain point: donations made to charities or raised in the name of a charity are regulated by both the Charity Commission and the Fundraising Regulator, but money generated for individual causes that are not investment-based, and do not go directly to a charity, are not.

An inquiry to the commission for this piece was redirected to the Fundraising Regulator. But although the latter exists to reinforce best practice, it has no statutory powers.

GoFundMe is signed up with the regulator and even helped develop its guidance for crowdfunding, but as Barnett points out: “Crowdfunding is less accountable than traditional charitable giving.

“The sites should be required to provide evidence they have undertaken all reasonable due diligence to ensure the funds are not fraudulently acquired and are spent to deliver the stated impact,” she says. “Without this, crowdfunding risks having reputational issues.”

JustGiving and GoFundMe would no doubt highlight the safeguards they have in place, including the GoFundMe guarantee that “funds are never released until we’re 100 per cent happy they’re going to the right place”. The platforms would also probably point to the speed with which “suspicious” accounts were closed down in the aftermath of Grenfell.

Win-win zone

If Dina Rickman is right that crowdfunding is “not a zero-sum game” and you can imagine a Venn diagram with the two circles representing “traditional charities” and “crowdfunding platforms” respectively, the intersection between the two is the win-win zone, with enthusiastic fundraisers inspiring one-off donors to develop a deeper relationship around a specific illness championed by a traditional charity, for example.

Every crowdfunding platform is adamant that they should be seen as complementary rather than some kind of fund-sapping rival. Jes Bailey, founder of the consultancy Crowdfund 360, argues that the platforms have forced the charities to up their games.

“It makes charities get their fundraisers and marketing teams to talk to each other,” she says. “Crowdfunding needs both, but when organisations are a bit too resistant to that you can see big failures such as Oxfam’s campaign for the bees in Nepal: its target was £60,000 and it got about £6,000.

“It paid loads of money into Facebook adverts, but it didn’t work because people assumed Oxfam had already got money. You’ve got strategy, creativity and psychology, and that psychology is what makes smaller charities and community groups so much better at crowdfunding than the big ones.”

The internet has opened up ways of giving and getting help almost instantly. Donating is often about more than the money; it's also about being to say 'when someone needed help, I was there'

Dina Rickman, senior regional manager for northern Europe, GoFundMe

It is perhaps this conspicuous money-raising prowess of the more high-profile campaigns (only 21 per cent of all campaigns in the UK actually hit their target) that has marked the platforms out for criticism, as much as perceived reputational damage caused by lack of stringent regulation and some malevolent campaigns. Yet there seems little reason why the relationship between the two cannot work.

Marcus Missen, head of fundraising at WaterAid UK, agrees with Bailey that crowdfunding is good. “It gives more people more choices,” he argues. “It puts the control in the supporter’s hands. We need to adapt to it.”

Barnett argues that resources – notably data about fundraisers and donors who give permissions for future interactions – gathered by agile giving platforms can bring immense value to charity partners.

“Our data always goes to the charity, and I’d like more charities to use it,” she says. “We have a valuable asset available to download from the site, yet not enough are thinking ‘here are my potential long-term supporters; what can I do with this?’”

A happy solution might just require applying the regulatory framework across the board. The “best-interest” model enforced by the Charity Commission, for example, does not apply to crowdfunding, so surplus funds raised for medical treatment, unspent because the intended recipient has died, do not have to be returned or given to others in need.

“Crowdfunding can be an amazing way to raise money, but not the best way to spend it,” Barnett says.

“It doesn’t quite work between the in-the-moment passion of raising the money, the governance and the expertise to necessarily spend it effectively. That’s a disconnect.”

Last May, Deborah Alsina, chief executive of Bowel Cancer UK at the time, expressed her reservations about crowdfunding at Third Sector’s Fundraising Conference, saying she was aware of instances in which families intended to keep the money raised for loved ones who had subsequently died.

“People are giving to an individual for a treatment that might or might not work, but when it fails, which it generally does, what happens to that cash?” asked Alsina, who has since taken the helm at Independent Age. “It’s been sucked out of the sector.”

But she added that crowdfunders and more established charities had scope to learn from each other. “We need to be thinking about the governance of crowdfunding,” she said.

“It has to be about strategically driving forward that change together, but accepting that there are circumstances in which people are fundraising for hope for an individual.”

Back to Dylan and his mum, Jess. She is the everywoman who, suddenly faced with a crippling situation from a position outside the “charity bubble”, had to find a way to navigate the options available to provide the best care for her son.

She has lived and is still living that journey from diagnosis, warm embrace and support from a traditional charity, reliance upon the NHS and the sudden and dramatic need for urgent funding that took her first to GoFundMe and, most recently, to Virgin Money Giving and an association with the Superhero Foundation run by “Adventureman” Jamie McDonald.

Her decision to leave GoFundMe was prompted by concerns that, even in the short time she had been crowdfunding, there was a perception that the process was not held to be as vigorously accountable as it might be with a registered charity. It also enabled her chosen charity to claim Gift Aid.

The journey has not been one way. Learning all the way, and raising more than £35,000 for Dylan’s treatment so far, she has also made more than £20,000 for the Brain Tumour Charity by running two balls, raised awareness of the charity’s mission and developed a relationship with his illness in order to help expedite a cure.

With the help of the Brain Tumour Charity, which she “has on speed-dial”, she even managed to get some of the medicine she was crowdfunding for on the NHS, and another boy is now benefiting from that persistence.

“Nobody is saying there is a cure,” says Jess. “But, anecdotally, children with the same condition are surviving three or four years after relapse, and I’m buying him time.”


Speedo Mick: “1,000 miles in me shreddies”

Through Storm Ciara, Storm Dennis, through brutal winds and temperatures of -6C, Speedo Mick walked the length of the UK, blown to the finish line at Land’s End just ahead of Storm Jorge on 22 February.

Dubbed “Britain’s coldest hero”, Mick Cullen began his crowdfunded charity walk on 6 December 2019, traversing the length of the UK to raise money for Leave the Light On, a Liverpool-based community interest company he founded.

Beginning at John O’Groats, he walked close to a marathon every day clad in nothing but a pair of Everton-branded Speedos, goggles and a hat, raising more than £500,000 on GoFundMe.

The funds will enable the CIC to facilitate community projects for young people living in less well-off areas and offer mental health and wellbeing support, causes close to Cullen’s heart as a former addict, alcoholic and self-described “hopeless case”.

He first began fundraising in 2014 while attending Everton football matches in his Speedos, collecting an average of £600 a game, according to the Pride of Sport awards.

In the years since then, Cullen has completed a series of fundraising challenges and donated the proceeds to a range of charities. These included hiking from Everton’s Goodison Park to the home of Olympique Lyonnais in France to watch his beloved football team play in the Europa League, raising more than £20,000 for Alder Hey Children’s Hospital.

He also raised £30,000 from one of his first and most famous efforts: swimming the English Channel. It’s estimated that he has raised more than £100,000 for local charities in all.

“What has happened to me is nothing short of a miracle,” he says. “I have made it my life’s ambition to give back to others, and this is where I get my own strength.”

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