Proceed with caution when donating online

A consumer alert has been issued in Michigan to encourage donors to be cautious when contributing money online.

The alert, issued by Attorney General Bill Schuette through Michigan’s Consumer Protection Division, calls attention to a new form of online giving known as crowdfunding.

“Crowdfunding and other types of Internet giving can be tools of tremendous good, but as with any type of giving, it can be abused, so it’s important to proceed with caution when donating online,” said Schuette. “I encourage all Michigan citizens to give – but give wisely.”

Crowdfunding is defined as a collective effort of individuals who network and pool their money, usually via the Internet, to support efforts initiated by other people or organizations. Simply put, crowdfunding is another way of asking people for money.

There are several popular crowdfunding platforms. These include IndieGoGo, Kickstarter, and GoFundMe. Here, users can create their own projects in seeking donations to fund their proposal. Crowdfunding projects are often spread through social media sites, which can potentially lead to a wider donor base.

Here are some questions to consider before donating:

– To whom are you donating? Are you sure of the asker’s identity? Could it be someone else?

– How do you know that your money will be spent appropriately?

– If donating to an individual: Is it someone that you know? Someone that you trust? Is the amount being raised reasonable or does it seem excessive?

According to the Better Business Bureau’s “Crowdfunding for Charitable Causes,” Guide, crowdfunding platforms typically charge between 4 percent and 20 percent; the credit card processor may charge a fee on top of that. Thus, before using a particular crowdfunding platform or donating through a particular website, consumers should carefully read that platform’s terms of use.

“Nonprofits that intend to engage in crowdfunding efforts should also be aware of state laws that regulate such activities,” said Donna Murray-Brown, president and CEO of the Michigan Nonprofit Association.

If you have further questions regarding donating to charitable organizations, contact local law enforcement or the Attorney General’s Charitable Trust Section. Under the Charitable Organizations and Solicitations Act, the Charitable Trust Section registers charitable organizations that solicit from the public; both the attorney general and local prosecutors have enforcement authority under this Act.

The Attorney General’s Charitable Trust Section may be contacted at:

Charitable Trust Section

P.O. Box 30214

Lansing, MI 48909

(517) 373-1152