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Consumer Reports: Fundamentals of crowdfunding

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From paying medical bills to helping a family after a disaster, crowdfunding has become a popular way to raise money and support someone in need. According to a 2015 survey, roughly one in five Americans has donated to an online crowdfunding campaign, often in amounts of $11 to $50.

But before you let a personal story tug at your purse strings, there are a few things to consider. Consumer Reports says it can be hard to tell if the campaign is legitimate. In fact, there have been documented cases of fraud.

To protect yourself, CR suggests keeping donations between friends. Generally the best thing to do is to give only to people that you know rather than complete strangers. If you don’t know the recipient personally, don’t be the first one to pitch in and you may want to read comments from other donors before giving. And see what they have to say about this campaign and make sure that it’s legitimate.

You also want to avoid OVERfunding. If a campaign has met it’s goal, then don’t give more. That’s kind of the limit and assume that they’ve gotten what they need and don’t give anything more than that.

Also keep in mind, the recipient won’t see EVERY dollar you give. These sites often charge the campaign a fee to cover things like payment processing and fraud protection. If you know the person in need, Consumer Reports says consider giving them the money directly and cut out the middleman.

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