New code of practice for crowd-funding sites to be launched in Jan to prevent fraud, boost donor trust

Websites such as Give.Asia, Simply Giving, and Ray of Hope Initiative will be required to verify the legitimacy of the fund-raising appeal, and state clearly the service fee or cut they are taking from the amount raised, among other things.
Websites such as Give.Asia, Simply Giving, and Ray of Hope Initiative will be required to verify the legitimacy of the fund-raising appeal, and state clearly the service fee or cut they are taking from the amount raised, among other things.PHOTO: SCREENGRAB FROM GIVE.ASIA, SIMPLY GIVING.COM AND ROHI.SG

SINGAPORE - A code of practice for crowd-funding platforms will be launched next month to ensure that those who give online can do so with greater peace of mind, the Commissioner of Charities (COC) told The Straits Times.

Given the growing popularity of crowd-funding websites, the new code will help build a safer online giving environment, said the COC, Dr Ang Hak Seng.

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, provide updates of donations received and disbursed, and state clearly the service fee, or cut they are taking from the sums raised.

As for those seeking donations, they are 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 turned to crowd-funding sites in recent years, with six-figure sums raised in some cases.

The government-backed Giving.sg Web portal also 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 fund-raisers provide inaccurate or incomplete information about themselves in order to get more donations.

When the code was announced in November, it was said then that it was likely to be ready in a couple of months.

The COC worked together with key players in the crowdfunding sector to draw up the code, which spells out the responsibilities of crowd-funding websites and those seeking donations, and sets benchmarks.

Dr Ang said: "We want to promote giving, and crowd-funding sites enable giving to be convenient and accessible. So we don't want to over-burden them with too many rules and regulations. But it's important for us to build a safer online giving environment."

While the code is not mandatory, Dr Ang stressed that he will get his staff to conduct audits to ensure that crowd-funding sites comply with it. And he plans to highlight compliant sites on his office's website, the Charity Portal.

Crowd-funding sites interviewed by The Straits Times say they make checks to ensure the legitimacy of a fund-raiser's appeal. Give.Asia, for example, asks for documented proof such as medical bills, payslips and Central Provident Fund statements. If these are not forthcoming, the campaign will be removed from the Give.Asia 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 a host of checks to prevent fraud, including finding out how much the individual has in his bank accounts and whether the individual is receiving financial aid from other sources. It also works with the individual to determine how much money is needed and should be raised.

On the importance of checking bank accounts, Mr Kenneth Kan, who is on the board of Ray of Hope Initiative, said a minority will try their luck to ask the public for donations even though they have enough money.

"If there are no checks and balances, some people will try (their luck) to raise funds."

He cited the case of a cancer-stricken man who wanted to raise funds for his treatment. But when asked for his bank account, he admitted he actually had enough money but was worried that his medical bills would deplete his savings. He eventually dropped the idea.

Crowd-funding sites interviewed welcomed the code, which they say will provide a common set of best practices and also increase donor confidence.

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