The Straits Times says

Crowdfunding needs code of practice

As an innovation of the sharing economy that makes it easy for the public to do good, crowdfunding is to be welcomed. It allows individuals in need of financial aid to make a direct appeal to large numbers of others with the means and the desire to donate to a worthy cause. There are many heartwarming stories of how families were able to make a fresh start after crowdfunding helped them pay off hefty medical bills or for other necessities.

Little wonder, then, that the sums raised through this means have risen significantly in recent years. Giving.sg, a government-backed Web portal, has raised $50 million since its inception in December 2015, a sum its predecessor SG Gives took five years to collect from 2010 to 2015. Give.Asia collected $10.8 million last year, more than double the previous year's $4.5 million.

A code of practice for such platforms to be launched this month is thus timely, to protect the integrity of charity drives and prevent abuse. The office of the Commissioner of Charities has received about 25 complaints about fund-raisers annually in the past three to five years, mostly from donors who wanted to know how funds were used or who suspected wrongdoing.

The code will not discourage people from donating online but it will help to ensure that the causes are legitimate.Those in need who present the full picture of their difficulties, including any government aid that they receive, will have no cause for worry. It is misrepresentation, even partial, that needs to be cut out. Donor trust must be upheld.

Commissioner of Charities Ang Hak Seng has said that his office will look into every complaint. He also emphasised that he would not hesitate to work with the police if there was fraud or dishonesty. Given Singaporeans' willingness to donate generously, it is right that the code of practice be backed by state investigating power to ensure accountability. Crowdfunding platforms in Singapore have welcomed the code, saying that it will set out best practices and boost donor confidence.

Britain has a crowdfunding association whose members agree to a code of conduct that includes pledges to separate donor and business monies, ensure transparency, promote healthy competition, and agree to periodic audits and reviews of their businesses by the association. That is the direction in which Singapore should move to preempt potential abuse which could erode public trust and deter future donations. The history of established charities that went awry, because they were able to go about their business without sufficient checks and balances, provides ample proof that once trust is lost, it can be very difficult to restore. The time to introduce best practices and checks is now, when crowdfunding still enjoys the warm backing of a majority of Singaporeans.

A version of this article appeared in the print edition of The Straits Times on January 10, 2018, with the headline 'Crowdfunding needs code of practice'. Print Edition | Subscribe