Crowdfunding platforms to have code of practice

The new code comes as more people in financial need have turned to crowdfunding sites in recent years, with six-figure sums raised in some cases.
The new code comes as more people in financial need have turned to crowdfunding sites in recent years, with six-figure sums raised in some cases. PHOTO: THE NEW PAPER

Code, to be launched in January, will require sites to verify appeal's legitimacy so donors have greater peace of mind

A code of practice for crowdfunding platforms will be launched next month to ensure that those who give online can do so with greater peace of mind, Commissioner of Charities (COC) Ang Hak Seng told The Sunday Times.

Given the growing popularity of crowdfunding websites, the new code will help build a safer online-giving environment, said Dr Ang.

It will require sites - such as Give.Asia, Simply Giving and Ray of Hope Initiative - to, among other things, verify the legitimacy of the fund-raising appeal, give updates of donations received and disbursed, and state clearly the service fee or cut they take from the sums raised.

Those seeking donations will be required to declare whether they are receiving financial aid from the Government, among other things.

"If you declared you did not (get government aid) but you did, it's misrepresentation. You didn't tell people the whole picture and ask for donations," said Dr Ang. "If your need is fake, you bet I will look into the matter."

The COC has the power to restrict or prohibit donation appeals that are found to be improper.

The new code comes as more people in financial need have turned to crowdfunding sites in recent years, with six-figure sums raised in some cases.

 

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 this year, more than double last year's $4.5 million.

But there is potential for abuse, say observers, such as when people give false or incomplete information in order to get more donations.

When the code was announced last month, it was said that it was likely to be ready in a couple of months. The COC worked with key players in the crowdfunding sector to draw up the code, which spells out the responsibilities of crowdfunding websites and those seeking donations, and sets benchmarks.

Dr Ang said: "We want to promote giving, and crowdfunding sites enable giving to be convenient and accessible. So we don't want to overburden them with too many rules and regulations."

While the code is not mandatory, Dr Ang stressed his staff will conduct audits to ensure crowdfunding sites comply with it. He also plans to highlight compliant sites on his office's website, the Charity Portal.

Crowdfunding sites say they carry out checks to ensure the legitimacy of a fund-raiser's appeal.

Give.Asia asks for documented proof such as medical bills, payslips and Central Provident Fund statements. If these are not forthcoming, the campaign is removed from the site. Its co-founder Aseem Thakur said the site has not come across any fraudulent fund-raiser in Singapore.

The Ray of Hope Initiative also conducts checks to prevent fraud, like finding out how much the individual has in his bank accounts and whether he gets financial aid from other sources. It also works with the individual to determine how much is needed and should be raised.

Crowdfunding sites interviewed welcomed the code, saying it will provide a common set of best practices and boost donor confidence.

Said Mr Thakur: "People give based on trust and we believe the new code will increase donor trust."

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A version of this article appeared in the print edition of The Sunday Times on December 31, 2017, with the headline 'Crowdfunding platforms to have code of practice'. Print Edition | Subscribe