Supporting Charities vs. Personal Fundraisers

The desire to give in any form is a beautiful human instinct that we should all cherish, but bringing our heads into the process is the best way to ensure our actions match our intentions. Currently, trust in nonprofit organizations is low, with fewer than one in five Americans reporting high trust in charities. In concert with the eroding trust, Charity Navigator’s traffic has increased by 50% over the past three years, indicating that people want to give and do so confidently. At the same time, the rise of GoFundMe and other giving platforms has made it easier than ever to give directly to individuals in need. So what is the well-meaning donor to do; trust that an organization will use funds efficiently and effectively to help people or trust an individual to collect and use donations for their stated purpose? 

Supporting personal fundraisers can be a beautiful experience - or a horrifying one. Here is what you need to know before you give.

What is a Personal Fundraiser? 

Personal fundraisers happen when an individual creates a fundraiser, often through a site like GoFundMe, for themselves or a loved one in need of financial assistance. Examples include raising money for medical bills, funeral expenses, or rebuilding after a disaster. Increasingly, online influencers are starting personal fundraisers by asking their followers to support them as they work to address an issue like homelessness themselves.  

How is a Donation to a Personal Fundraiser Different from a Donation to a Charity?

Individual fundraisers are not tax-deductible and are not subject to the stringent requirements that registered 501(c)(3) organizations, also known as public charities, face. When you give to an organization, you receive a tax receipt. Your donation legally binds the organization to spend the donation as intended with audits to ensure that the charity meets those requirements. In addition to these legal requirements, services like Charity Navigator exist to rate nonprofits and help you choose ones that you can support with confidence. Charities also hire for and develop relevant experience and expertise in the issue area they are working on. Typically, the organization produces an annual or biannual impact report for donors to demonstrate how donations are spent. From start to finish, as the donor, you can see how your money moves and makes a difference. 

In contrast, an online influencer who is going around picking up homeless people and trying to change their lives with your financial support may not have a proven track record of helping the homeless. They don't have the connections, resources, or years of expertise to help that person or multiple people like them. An established organization has had all of the successes and failures along the way in order to become a well-oiled machine.

Any donation you make to a personal fundraiser is not tax deductible. If the funds are used for anything other than the cause you intended them for, there are no formal consequences. Without reporting requirements or norms, you may not even know what the money was used for. For these reasons, donors who choose to go this route should exercise extra caution to ensure that their money serves its intended purpose.

Making Your Giving Decision

At Charity Navigator, we applaud and support cautious and intentional giving of all types. If you do not feel comfortable giving to an individual fundraiser, or if you wish to give to charitable organizations in addition to supporting an individual fundraiser, we encourage you to use Charity Navigator. Use the free tools and resources to find highly rated nonprofits that best fit your criteria so that you can feel confident in giving. 

If you choose to give to a personal fundraiser (or fundraisers), here are some dos and don’ts that will help to keep your donation on track:

Do:

• Give to someone you love and trust. Once you hand money over to an individual, it’s theirs to spend as they please. Giving your money to a personal fundraiser requires your complete trust. 

• Confirm with your intended recipient that they are receiving the money. Scammers may take advantage of your love and trust by claiming to be raising money on behalf of someone you care about. If you receive a request for an individual donation - particularly one that sounds urgent - ALWAYS confirm with the person in question (or, in the case of a medical emergency, a guardian or partner speaking on their behalf) that they are actually in need and that the money is flowing to them. 

• Give through a service like GoFundMe with a verification process. This is particularly relevant if you want to support individuals you don’t know well or at all. For the cost of a transaction fee (2.9% + $0.30 in the case of GoFundMe), you can feel secure knowing that your donation is going to the intended recipient. While the requirements for the use of funds and reporting are nowhere near that of public charities, it still offers protection against outright scams. 

• Consider funding in concentric circles. Giving money directly to someone you love to help them in their time of need is beautiful. It is also a good time to consider the system-level problems that created the situation. For example, if your loved one is suffering from cancer, in addition to supporting them directly, you may consider funding a charitable organization (or multiple organizations) to advance research to cure cancer or help others receive treatment. Think about making an impact on an individual level, on a community level, on a statewide level, on a national level, and on an international level.

Don’t:

• Don’t blindly trust someone you don’t know. An influencer or someone you do not know personally asking for money should give you extra pause.

• Don’t give out your bank information. Scammers may use your bank account information to access funds far beyond what you have approved. 

• Don’t give in gift cards. They are commonly used by scammers as they are untraceable. 

• Don’t make a wire transfer. These are similarly popular among fraudsters as they are quick and irreversible. 

• Don’t click on links in solicitation emails or text messages from unknown sources. This is sound advice for any email or text from an unknown source as clicking on links can expose you to the theft of your data and money. 

Giving to individuals can greatly express love and generosity, but extra caution is warranted when approaching this type of donation. Doubling down on your support by also donating to nonprofits working in a related cause area is a great way to diversify your giving and spread the love.