• STV
  • MySTV

Crowdfunding: risks, pros and cons with online donations

There is currently no regulation of crowdfunding platforms in the UK.

As crowdfunding campaigns remain a popular way of fundraising online in Scotland, questions have been raised about the transparency of how donations are distributed.

Gerald Oppenheim, the Chief Executive of the Fundraising Regulator, told Scotland Tonight people who want to donate should use platforms at their own risk.

Currently, there are no legal regulations for the majority of sites.

He said: "If you're giving money to an individual, you need to be very, very sure about what you're doing".

Here is an edited transcript of his interview.

https://stv.tv/news/west-central/1437758-crowdfunding-scam-warning/ | default

John MacKay: Gerald, crowdfunding seems to be everywhere now. Why has it become so popular?

Gerald Oppenheim: Because it's a very straightforward way for someone to raise money for a cause that they care about, whether that's a charity or something that's personal to them and their family.

John: It uses platforms, you can't just go up anywhere and set up a fundraising site?

Gerald: That's right. You have to use one of the established platforms. There are quite a number around, probably three or four that are quite well-known, like Just Giving, Go Fund Me, Virgin Money Giving. There are a number of others as well. You can go onto their site and say what you want to do, open up a page.

John: What is the regulation of these platforms?

Gerald: Well, most of the platforms are commercial operations. There are one or two in England that are registered charities as well, but they are the exceptions, not the rule. There was no real regulation of them. Back in 2017, when there were those terrible terror attacks in London and Manchester and then the Grenfell Tower fire, an awful lot of people wanted to donate to help the people affected and there was a real explosion in the number of fundraising pages that were opened up. There was concern there was no regulation and at the fundraising regulator, we were asked to step in to talk to the platforms about that.

John: What regulations guide or control what these platforms are providing?

Gerald: We're responsible for something called the code of fundraising practice, which has been around for about 20 years so. It sets out the rules about fundraising, whether you're someone actually raising money or like an online platform, you're the vehicle for the fundraising to take place. The rules are there, the dos and don'ts. Some of the rules are backed by charity law or other elements of the law, so it's both good practice and a guide to what you must and mustn't do. The platforms weren't covered by this until June last year, when we introduced some new provisions to the code, which brought them in and sought to regulate them in the same way that other bodies are. So you've spoken about why crowd funding is popular and what it can achieve, but there must be cons to it as well, which is why you need regulation.

John: What are the risks?

Gerald:The risk is that somebody goes on to a crowdfunding site, an online giving page, without a clear idea of quite what they want to do. They know they want to raise some money, they may even know how much they want to raise, but they also need to be clear about how they are going to get the money from the page to the place that they want it to go. That can be a real problem. Sometimes people don't realise that there may be fees and charges that the platform may take, if only to cover the cost of credit or debit card donations.

John: Is that transparent enough?

Gerald: It wasn't transparent, but the provisions we put into the code now require organisations running online platforms to be transparent, so that if you're a member of the public wanting to raise money, you can find all the information you want about fees, charges, how much you can raise, what happens to the money, all of that in one place, easily found on their website.

John: What if the target for a particular crowdfunding campaign is exceeded? What happens to that extra money?

Gerald: Normally speaking, when you open up a page, you'll say what your target is and that will be the target. Now, you might raise a little more than that. Say you were raising £500 and actually you raised about £510, that wouldn't be a terrible issue. But if you raise an awful lot more, the platform would really need to ask questions about what was going to happen to that money. They might indeed close the page before it got out of control as it were. So the platforms do some sort of diligence of people setting up pages.

John: If you want to contribute, if you want to give money to a crowdfunding site, what should you look at out for?

Gerald: If you want to give money, make sure that you understand what you are giving to. If the cause is a named charity, you can check that out very easily by looking at the Office of the Scottish Charity Regulator's website. You can look at our website to see what they are about. If you're giving money to an individual, you need to be very, very sure about what you're doing. There may be a limit to what you can check up about them, but it's at your risk at that point and you need to be aware of that.

One account. All of STV.

This field is required. That doesn't look like a valid e-mail format, please check. That e-mail's already in our system. Please try again.
ShowHide
Forgot password?
This field is required. This must be at least 6 characters long. Did you enter your details correctly?
If you've forgotten your details then use the 'Forgot password?' link.
Need to reset your password?

We'll send a link to reset your password to

We've sent you details on how to reset your password

Please check your email and follow the instructions.

Forgotten your email address?

Have you forgotten the email address that you previously joined with? Don't worry, by emailing enquiries@stv.tv we can help.

One account. All of STV.

This field is required. Please enter at least 2 characters
This field is required. Please enter at least 2 characters
This must be at least 6 characters long.
ShowHide
This field is required. This must be at least 6 characters long.
You must be over 16 to join STV.
This field is required. This doesn't appear to be a valid date
We need this to check that you live in an STV region.
This field is required. This doesn't appear to be a valid postcode
Would you like us to email you about our great shows and services from time to time?
We'll only send emails we think you'll like (see example) based on information you have supplied and shows you have watched on STV Player. For details on emails and advertising, see our STV & You page.
Would you like to receive emails from the Scottish Children's Lottery about draws, instant games and competitions?
We support the Scottish Children's Lottery (SCL), which is managed by our colleagues at STV ELM Ltd. You can find out more about the SCL on its website, including its Privacy Policy.

By continuing you agree to our Terms of Use, and understand our Privacy and Cookie Policies.

Upload Profile Picture

Please make sure your image is under 2mb in size and a valid JPG, PNG or GIF.

Are you sure?

Unfortunately, you'll be unable to access our premium content. We’ll be sorry to see you go, but if you change your mind you can rejoin us at any time.

Please verify your STV account

Please verify your STV account using the email we sent you. If you have lost the email, we can send you another one, just click the button below.

Thanks

We've sent you a new verification email.
Please check your email and follow the instructions to verify your account.

Welcome to STV
Thanks for joining us.

Oops!

Sorry, you must be at least 12 years old to place a vote for your Real Hero.

Please review our Voting Terms of Use for more information.

Oops!

Sorry! It seems that you are using a browser that is incompatible with our voting service.

To register your vote please copy the below URL in to your regular mobile browser. We recommend Google Chrome, or Safari.

http://shows.stv.tv/real-heroes/voting

Oops!

Sorry, you seem to have already voted in this category.

Thanks for voting

Now share your vote with friends on your social network

Share on twitter Share on facebook

Cast your vote

Please register or sign in to continue.

Cast your vote

This field is required. This doesn't appear to be a valid date

Cast your vote

Please fill out this form to cast your vote. As you are under 16 years old you will not create an STV account. Why do we need these details?

This field is required. Please enter at least 2 characters
This field is required. Please enter at least 2 characters
This field is required. That doesn't look like a valid e-mail format, please check.
Location This field is required.
Parental Consent This field is required.

That's you. All that's left is to click the 'Submit Vote' button below. By doing so, you confirm that you and your parent or guardian have read and accept our Voting Terms of Use, Privacy Policy and Cookie policy, and that the details you have entered are correct. We'll look after them as carefully as if they were our own.