Little transparency: Online fundraising platforms such as JustGiving and GoFundMe have had an explosive year
Online fundraising platforms such as JustGiving and GoFundMe have had an explosive year.
From Captain Tom’s garden laps to young Max’s Big Camp Out, Britons have been using their extra time — and savings — to raise millions of pounds for charity.
JustGiving alone reported a 157 per cent increase in the number of crowdfunding appeals since March 2020 compared to the previous year.
And GoFundMe noted spikes in more personal appeals featuring words such as ‘rent’ and ‘bills’. But while they may be popular, there is a cynicism around these websites that refuses to go away.
Just how much of our donations do they pocket themselves? And why is there still so little transparency around fees?
It has been several years since JustGiving and GoFundMe dropped their greedy platform charges, which saw them take huge slices of fundraising totals.
But in their place, the websites have added ‘voluntary tips’ at the check-out that are set between 10 per cent and 15 per cent and go directly to the website.
Customers can opt out of these charges but complaints have soared from users failing to notice them in the smallprint.
‘The industry is under-regulated and under-scrutinised,’ says one charity insider. ‘It’s nowhere near as bad as it used to be but it’s clear there is work to be done.’
Here, we explain all the fees generous fundraisers should be watching out for…
The mention of a fee is so small, anyone in a rush would miss it. But as you click through a JustGiving donation form, there is a small drop-down box with a charge automatically set to 15 per cent.
This is the ‘tip’ it recommends donors give straight to their website — sitting above the purple ‘continue’ button.
‘JustGiving won’t be charging a platform fee to the charity,’ says JustGiving in its smallprint. ‘Adding a small contribution on top of your donation means we can continue to help more people.’
While JustGiving did abolish its much-criticised 5 per cent platform fee in 2019, experts say this statement is misleading at best.
Charities are not listed on JustGiving for free and are expected to pay a monthly subscription fee to appear on its website.
This is £15 per month plus VAT for charities that earn less than £15,000 per year, rising to £39 for charities above this threshold. JustGiving says it offers some charities plans for free.
With 25,788 charities worldwide registered with JustGiving, it means the firm rakes in hundreds of thousands of pounds from subscription fees each year. And on top of that, it is squeezing cash from the individual donor with its 15 per cent tip system.
One small charity CEO, who did not want to be named for fear of damaging her relationship with the site, says: ‘We pay £46.80 a month in total to JustGiving.
‘I think it’s very misleading that they then ask for an extra 15 per cent from donors, who probably think that’s the only way the websites generate money. It’s not very transparent and it does frustrate us.’
Scores of donors have taken to consumer reviews website Trustpilot in recent months to complain about being duped into the hidden charge. One review says: ‘The sneaky voluntary charge is disgusting. I donated extra not knowing I could have chosen the ‘other’ option, which means 0 per cent voluntary charge.’ Another writes: ‘Be very careful not to involuntarily make a voluntary contribution. There is no explanation of where or how this money is spent.’
Crowdfunder is also guilty of adding a 15 per cent tip at the checkout. The site offers a dropdown menu that allows users to change it to between 5 per cent and 10 per cent.
To take off the tip entirely you have to add ‘other amount’ and put in the zero digit yourself.
Crowdfunder’s website says: ‘Since the outbreak of Covid-19, we’ve removed platform fees for projects that help those adversely impacted by the pandemic and other worthy causes.
‘The tipping function therefore enables us to both maintain and invest in our offering, which means we can support more projects during this difficult time.’ The site also says it does not charge platform fees to charities.
Crowdfunder and JustGiving are not the only offenders. GoFundMe also auto-enrol donors into tipping. Their fee is set at 12.5 per cent. Again, a donor must ‘opt out’ of this fee, with a dropdown list provided with a number of options.
However, unlike JustGiving, GoFundMe does not charge charities or individuals any fee to appear on its site and does rely on donations alone. Virgin Money Giving (VMG) has kept its platform fee, which stands at 2 per cent.
It originally waived this fee during the first lockdown in April last year but surreptitiously reinstated it six weeks later.
This means VMG takes a 2 per cent slice of all money raised on the platform. It also charges a one-off £150 payment for charities wishing to use the platform. However, unlike other fundraising sites, VMG is run as a non-profit.
On top of these charges, all three sites take a card-processing fee. For JustGiving, this is 1.9 per cent plus 20p, for GoFundMe it is 2.9 per cent plus 25p and for VMG 2.5 per cent.
HOW IT ALL ADDS UP
JustGiving recorded profits of £9.4million in 2019 — the same year it abolished its platform fee. This figure more than doubled from £4,133,810 in 2018. The company paid out £9,782,253 in staff costs in 2019.
The site has yet to reveal its profits for 2020, which will have almost certainly benefited from an increase in campaigns.
Controversially, JustGiving has never publicly stated how much it made from Captain Sir Tom Moore’s fundraiser for the NHS, which raised nearly £33million.
A JustGiving spokesman says the recommended tip was reduced from 15 per cent to 10 per cent for this campaign, which not all donors agreed to.
But even if just half of donors had spotted the tip and reduced it to zero, the site would have still made just over £1.6million. This would have been on top of Captain Sir Tom’s £33 million and not deducted from the sum.
Another high-profile 2020 campaign was a GoFundMe account set up in the wake of the Black Lives Matter movement, which generated £1,221,610. If every person who donated had kept the 12.5 per cent tip in place, GoFundMe would have made just over £150,000 on the sum.
If half of the donors noticed the clause and reduced the sum to zero, that figure would stand at £76,350.
WHO IS CASHING IN?
JustGiving was taken over by U.S. software giant Blackbaud in a £95million deal in 2017.
The company is one of the world’s largest providers of education, administration, fundraising and financial management software.
Blackbaud’s chief executive Mike Gianoni made £6.6million from the company last year. This included a £433,136 salary, £6.2million in company shares and £20,610 in other benefits including pension contributions.
Prior to 2017, the company was run by its founders, Zarine Kharas, 70, and Anne-Marie Huby, 54. They had purchased separate London homes worth £2 million and £3.7million respectively.
GoFundMe was founded in May 2010 by Brad Damphousse and Andrew Ballester in San Diego, California. It was reportedly sold for around $600million (£424million) in 2015. It is now owned by American venture capital firm Accel and investment firm Technology Crossover Ventures. While it has offices around the world including in the UK, no details of its accounts can be found online.
Crowdfunder was founded by Rob Love, Phil Geraghty, Dawn Bebe and Simon Deverell. The company claims it has raised nearly £100million from its campaigns. Its profits are not available at Companies House owing to UK audit exemptions allowed for small companies.
WHAT SITES SAY
Both JustGiving and GoFundMe say they will provide refunds to anybody who paid the contribution without realising. But Crowdfunder says it will not refund accidental tippers. Instead, it says donors must cancel their pledge and repay it without the tip.
A spokeswoman for GoFundMe says: ‘Generally, we have found that this way of charging has proved popular with donors, campaign organisers and beneficiaries. This is becoming the standard way of charging for platforms like ours.’
JustGiving says: ‘There is a voluntary contribution that customers can choose to make (or not) to JustGiving on top of their donation. This means 100 per cent of the donation goes to the charity, except for payment-processing fees. This is signposted very clearly on the website.’
JustGiving has also launched a GivingCheckout which allows users to bypass card-processing fees by paying on an app.
Meanwhile, a spokesman for VMG says: ‘VMG has a transparent and low-cost funding model based on a 2 per cent platform fee. ‘Unlike other platforms, we don’t claim to be ‘free’ and then charge charity donors a (pre-ticked) 10 per cent or 15 per cent tip.’
RISE IN FRAUD
There has been a worrying jump in the number of fraudulent accounts being generated on these pages.
This problem is believed to mostly affect GoFundMe, which has seen sick children have their identities stolen and fraudsters fake illnesses to claim thousands of pounds.
Earlier this year, Nicole Elkabbas, 42, was jailed for 33 months for fraud by false representation and possessing criminal property after raking in more than £45,000 in donations for falsely claiming she had ovarian cancer.
And last year, three men were arrested after they raised £4,000 on a GoFundMe page claiming to be in memory of four young men who died in a ‘horrific collision’ in Wiltshire.
But what happens if you have fallen victim to a fraudulent case? GoFundMe says it will offer refunds through its guarantee scheme.
And JustGiving too says it will refund users, though it adds fraudulent cases on its pages are ‘extremely rare’.
The issue is complicated by a lack of clarity around who officially regulates the sector.
The Fundraising Regulator can deal with complaints but it only regulates appeals made for charitable purposes and not for individuals.
The regulator says the ‘onus is still on the donor to be aware when you give money and to consider who it is you are supporting’.
DOING IT RIGHT
Wonderful was set up in 2016 after founder Kieron James became frustrated by the administration charges and monthly subscription fees offered by other fundraising websites.
The organisation instead asks corporate sponsors to subsidise its costs and offers a totally fee-free alternative to online fundraising.
It also uses the open-banking system to transfer payments, meaning there are no card-processing fees.
This means the money goes from the donor’s bank account straight to the charity’s, so Wonderful never handles the money.
Mr James says: ‘I think a lot of people don’t realise until afterwards that not all their money goes to the charity itself.
‘There’s a lot of frustration there. Personally, I am also surprised by how much alternative sites charge on their card-processing fees.
‘When we first started out, we used card payments and charged a small fee but we were able to really negotiate this down to a small sum with the banks.’
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