Why It Matters

A code for crowdfunding

Crowdfunding websites have been described as a major disruptor when it comes to charity.

They allow practically anyone to ask for help online, potentially appealing to the generosity of thousands of donors. They obviate the need to rely on social workers in charities to assess their situation, or to depend on government financial aid schemes, which have strict eligibility criteria.

All a fund-raiser needs to do is share on these platforms their stories, photos, videos and, of course, some proof of the desperate situation they are in. And they can do so on as many crowdfunding platforms as they wish. As a result, some people have raised eye-popping six-figure sums.

While these sites offer much promise by matching help seekers with potential donors, the peril of abuse cannot be shrugged off. Such abuse can be committed by individuals who are just plain dishonest or give an incomplete picture of their plight.

To nip such abuses in the bud, the authorities have said they will set the record straight if online help seekers give misleading or one-sided accounts.

On Wednesday, it was announced that the Commissioner of Charities is working with crowdfunding sites to come up with a set of best practices for these platforms to follow.

The new code of practice will detail recommended practices, such as conducting due diligence to ensure the legitimacy of fund-raising appeals, as well as ensuring transparency by providing updates on the donations received, among other things.

This is a good start to ensure greater accountability and transparency, even though the code is not likely to be mandatory.

By spelling out what the good practices are, people at least know what they can expect from these sites before they give.

Hopefully, the Charities Commissioner will also make public the platforms that abide by the best practices code.

It will go a long way in helping people give to the most deserving causes and individuals.

A version of this article appeared in the print edition of The Straits Times on November 18, 2017, with the headline 'A code for crowdfunding'. Subscribe