Facebook soon will launch its own personal crowdfunding platform, which, like GoFundMe and other websites, will let individuals publicly ask for financial help, for their own benefit or someone else’s.
The social media giant’s foray into personal fundraising could make it a big player in a crowded field that attracts billions of dollars annually. A 2015 survey by the Pew Research Center found that one in five Americans has donated to a crowdfunding campaign, with about half giving from $11 to $50.
A big reason this kind of crowdfunding has become so popular is that it makes it easy to directly assist individuals facing difficult—or joyous—life events, or trying to put money together for a good cause.
For instance, on GoFundMe, the largest personal fundraising site, a Florida woman was recently seeking $50,000 for stem cell therapy for her young son, who she said had suffered a brain injury. A community in Washington state used crowdfunding to drum up more than $100,000 to save their beloved independently owned movie theater. Others have used crowdfunding to raise money for their weddings or to help pay their student debt.
Clearly, crowdfunding can make a huge difference in people’s lives. But is this kind of giving an effective way to spend your charitable dollars? Is it safe? How do you know you’re not funding a fraud? Before you give money to a crowdfunding campaign, it pays to understand the possible drawbacks and know how to avoid them.