Facebook vs GoFundMe The giants go head to head in online fundraising
[Published 6/11/2018]
Facebook and GoFundMe - The global giants go head to head
Facebook has just released its much-anticipated donation and fundraising service to Australian Facebook users.
Clearly Facebook would like to extend its tentacles in all aspects of our lives from ‘Marketplace’ taking on eBay to ‘Jobs’ taking on Seek and now ‘Donations’ taking on crowdfunding platforms like GoFundMe.
With the Senate Committee enquiry into CHARITY FUNDRAISING IN THE 21st CENTURY now closed for deliberation, it’s timely to consider the regulatory environment in light of the two mega-players Facebook and GoFundMe.
Let’s face it the regulatory environment with the impost on charities is a mess, but in attempting to fix it are we asking the right questions and looking in the right places?
The Senate Committee is titled:
CHARITY FUNDRAISING IN THE 21st CENTURY
I propose that it should be titled either
CHARITABLE FUNDRAISING IN THE 21st CENTURY
Or more simply and more correctly
FUNDRAISING IN THE 21st CENTURY
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#fixfundraising Justice Connect’s Not-for-profit Law service has been working in collaboration with some of Australia's leading professional and peak bodies to improve the state of fundraising regulation in Australia for the last two years. The campaign is called #fixfundraising The proposed three simple steps to achieve fundraising reform are: 1. Clarification and minor amendments to the Australian Consumer Law (ACL) to ensure application to fundraising activities is clear and broad 2. Repeal of fragmented and out-of-date state and territory fundraising laws, and 3. All Australian governments to work together with self-regulatory bodies and sector intermediaries to draft and consult publicly on a core mandatory code to be enforced under the ACL framework. (This code can cover some of the details like the identification of collectors for face-to-face campaigns.) The Australian Consumer Law (ACL) is the national law for fair trading and consumer protection, which applies across Australia. The ACL applies to certain activities of charities, other not-for-profit entities and fundraisers. Whether the ACL applies to a particular fundraising activity generally depends on whether that activity occurs in ‘trade or commerce’. If it does, then you should expect the ACL to apply to that activity, no matter if you are a business, an individual, a charity or other not-for-profit. Until all Australian Governments work together to fix our current antiquated fundraising laws by making minor amendments to the ACL, charities (the fundraiser) and other individual fundraisers, might not be subject to the ACL if the activity cannot be proved as trade or commerce, leaving a gap in regulation and remedy. |
THE CHARITY IS THE FUNDRAISER
You can now create a fundraising campaign on Facebook for a Charity or a Personal Cause. This delineation is a duplicate of the mycause style of peer to peer fundraising where the campaign creator chooses a path. CrowdRise in the US also had a similar forking style. They were bought by GoFundMe. Just Giving also had a similar forking method. They were bought by Blackbaud.
CHARITY
The Facebook user can search for any Australian Charity to fundraise for. This begs the question that I raised in the Trolley Man article… Who is the fundraiser?
Is it the Facebook user or is it Facebook itself.. or is it PayPal in fact?
Australian charities DO NOT have an agreement with Facebook for them to fundraise on their behalf.
Facebook has pulled every type 1 DGR charity from the Australian ABN register and served this data to Facebook users to choose as their preferred charity.
All donations are processed by the PayPal Giving Fund which is a Public Ancillary Fund (PAFs can disburse money to any Type 1 DGR).
It remains to be seen how PayPal intends to disburse those funds within 90 (!) days. Will they phone the charity and ask for bank details? Will they send a cheque to the registered address? That would be amusing if an online fundraising initiative was disbursed by snail mail.
This scenario adds a layer of complexity for charities and makes them arms-length from their supporters. On a platform like mycause, a charity will have a login to view donor and fundraiser data. The charity can thank and nurture their supporters. Not in this case. It is merely a transaction, managed by two faceless multi-national corporations Facebook and PayPal.
PERSONAL CAUSE
If you post on Facebook with any key terms such as “raise money” or “fundraise” or “donate”, Facebook will serve you a prompt to create a personal fundraiser.
There is a simple 3 step form to create an online fundraiser. Funds are disbursed to the Facebook account holder.
Let’s say I create a campaign for my friend. All funds are banked to me… Hopefully, I will pass on the funds. There is no verification at all about who the beneficiary is. The fundraising campaign does need to pass a verification – all campaigns are pending until approved.
Unfortunately, if you share a mycause fundraising page on your Facebook it will ask you if you want to create a fundraiser. this is confusing and will lead people who are just sharing their friend's campaigns to accidentally collect money for that friend... into their own bank.
To receive personal cause donations, add your bank details to Facebook and the donations will be processed via Stripe. Fees are 1.77% plus .33cents per transaction
If you mention a charity in your text the personal cause fundraiser will be rejected. This is a good thing (I wonder if AI is doing this job or a real person?). Facebook is ahead of GoFundMe with this important verification. mycause also has clear guidelines that you cannot take charity money intended for a charity into your personal bank account ever. An example is some people want to bank the money and "present a cheque".. this kind of activity is not allowed on our platform and those campaigns are moved over to the charity stream, so all funds are sent to the beneficiary charity from mycause. GoFundMe is going to find itself in a Bell Gibson-esque scenario if they do not fix this area of their platform verification (more)
The #fixfundraising campaign wants fundraisers to be more clearly covered by the Australian Consumer Law (ACL) to ensure that some provisions such as coercion and harassment, that currently only apply if the fundraising occurs in conjunction with the supply of goods or services, are broadened to cover fundraising activities.
Remember the Belle Gibson case? The only reason the ACL was successfully employed in that instance was because Ms Gibson promoted her book for financial gains (trade or commerce). Note the charity was NOT the fundraiser. Gibson was.
“The Federal Court’s finding shows that the nationwide ACL is well up to the task when it comes to prosecuting fundraising misbehaviour in the not-for-profit sector, and that the Victorian Commissioner for Consumer Affairs was right to use it in Belle Gibson’s case rather than the state-based Fundraising Act.
“…the national consumer law arms the regulator and courts with other enforcement tools where fines are impractical. This is important when a fundraiser or fraudulent charity has no money, as is the case with Belle Gibson.” Said Sue Woodward from Justice Connect
So until we #fixfundraising – what levers do the authorities have in the case of misleading and deceptive behavior or fraud?
The ACNC has the power to investigate charity non-compliance and will act on concerns where:
- there is a serious risk to public trust and confidence in the sector, AND
- they relate to a charity's compliance with requirements of the ACNC Act.
All registered charities must comply and continue to comply with the ACNC Governance standards – if the charity is not complying with fundraising laws (including obligations under the ACL) and/or not ensuring funds are properly used for its charitable purposes then this can bring the ACNC into play.
However, this is moot with Facebook and GoFundMe because on both platforms the fundraiser is not a charity even if the beneficiary is the charity.
GOFUNDME VS FACEBOOK
It’s war between the two giants
GoFundMe has never worked with PayPal to the ire of some of its fundraisers, meaning you can not donate using PayPal on GFM, only via credit card.
Until two weeks ago all fundraisers on GFM had to create a third party account (eg Stripe) to receive their funds
You must now provide full identification akin to opening a bank account including an IBAN number (yes no one knows what that is).
The opening of Facebook fundraising has coincided with GFM now offering free commission, while additionally requesting that you give them a “tip” of 15% - yes you read right 15%! Coincidental..not.
GoFundMe wants to be the giving layer of the internet but Facebook is blocking their way.
At least Facebook is clearly defining between a CHARITY and a PERSONAL CAUSE and making an effort to block fundraisers trying to take money for a charity to their own bank (as we have been doing for years).
Shame for the charities that they have no say at all in their new partnership with Facebook and PayPal.
GoFundMe will need to address their issues with Australian Charities as I explained in the Trolley Man article.
- The charity does not have a contract with GoFundMe
- GoFundMe does not distinguish between charities and individuals in its display or its processing including banking. This is how mycause shows a charity as fundraiser and beneficiary
- The platform is not licensed
- The platform does not issue tax receipts.
Facebook will also need to address their issues with Australian Charities
- The charity does not have a contract with Facebook
- The charity will receive funds from the PayPal Giving Fund (however we do not know if this will be electronic.) The PP Giving Fund is a PAF registered with the ACNC
- The charity will not receive any data
- The platform is not licensed
PayPal Giving Fund Australia makes every effort to deliver each donation according to the donor's wishes. In the rare event that your chosen charity cannot be funded, PayPal Giving Fund Australia may reassign funds to another charitable organization. If this happens, they will ask you, whenever possible, to recommend another charity to benefit from your donation. For more information, please visit the PayPal Giving Fund Australia Donation Delivery Policy.
This receipt confirms you have made the donation as a gift and that PayPal Giving Fund Australia has provided no goods or services in consideration for your contributions to PayPal Giving Fund Australia.
PayPal Giving Fund Australia Level 24, 1 York St, Sydney NSW 2000
Note that all Australian third-party platforms that specialise in charity fundraising have contracts with the charities that are displayed on their platform. This gives the platform the authority to display the logo, receipt, and accept funds via their gateway. It also gives the charity a secure portal to view and manage their profile and their data. This important contractual agreement protects the charity, the platform and the consumer (donor and campaign creator). For example, should a donor request a refund is granted?
It is now patently clear that there is no point in State-based charity fundraising registration.
Fundraisers may be individuals, they may be organisations, they may be charities.
Most States do not have a provision for personal cause fundraisers. For example, Queensland is using their charity licensing for personal causes and trying to fit a square peg into a round hole. Fundraisers are unable to comply as they are not charities… The Victorian registration system is somewhat simpler but it only covers that State. Fundraisers do not know or understand the registration requirements and the authorities are in no position to chase up thousands of fundraisers.
Mycause has hundreds of personal cause fundraisers raising money for their causes every day across State borders as do our competitors. Whilst our charity partners are the “fundraiser” in the context of charity fundraising, the personal cause fundraisers are covered by our special license with Consumer Affairs Victoria. Whilst this special arrangement keeps us within the (nonsensical) regulations, what about the Global players?
If there is a problem such as misleading conduct, what is the solution? Can an individual ever be covered under the trade and commerce provision of the ACL? If not, that leaves the possibility of a person fraudulently receiving donations as being charged with a crime.
Hence the donor needs to be “buyer beware”. We recommend that donors do not donate to causes they do not trust. Here’s a secret for free…people do not come to platforms like mycause and GoFundMe and randomly donate. People donate to people they know and trust, in general – their friends, family and colleagues.
When a campaign goes “viral” or public” the platform should carefully vet the beneficiaries as mycause does. We don't believe a robot can do this effectively.
GoFundMe and Facebook are not currently registered in Australia as they are located in the US. However, registration does not and should not imply that the platform takes responsibility for the fundraisers. Platforms are not fundraising, and are not “professional fundraisers”. They are hosting the campaigns created by organisations, charities and individuals for beneficiaries including charities, individuals, schools, or clubs.
The line between who is the fundraiser and who is the beneficiary is becoming blurred as evidenced above
It is up to platforms to be transparent about who the fundraiser and beneficiary is, it’s up to fundraisers to act within the law and donors to be aware. Let’s clarify which law that actually is and #fixfundraising for all fundraisers and all beneficiaries.
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Tania Burstin is the founder and Managing Director of mycause.com.au
mycause.com.au is the only Australian platform that allows fundraising for personal and charity causes with over 3500 charity partners. Mycause has raised over $75 million for charities and causes.
Tania is a three times Telstra Business Awards finalist, a Monash University Global Leader and named as one of Australia’s leading female tech entrepreneurs.
Tania appeared before the Senate Committee inquiring into CHARITY FUNDRAISING IN THE 21st CENTURY.
mycause has a stringent vetting process and we are proud to provide a platform for our campaign creators to raise money for public campaigns such as the 2017 Bourke Street massacre, the Dreamworld disaster, for Mat raise money to give 3D printed hands to amputee kids, we’ve helped Lilli and her family stranded in Thailand and Oli fulfil his dream to go to the Paralympics and many other campaigns created by friends, family, and workmates.
UPDATE 23/06/2019
The fundraising landscape changes quickly and some issues raised above have now changed. GoFundMe is now also using the PayPal Giving Fund to process their charity donations. This is a real blow for Australian charities forced to deal not only with GoFundMe but now also with PPGF... both giants are almost impossible to contact. The charities are losing control of their supporters and their fundraising and they are simply the minnows being squeezed out of the relationship with their supporters.