Know the fundamentals of crowdfunding

From paying medical bills to helping a family after a disaster, crowdfunding has become a popular way to raise money and support someone in need. According to a 2015 survey, roughly one in five Americans has donated to an online crowdfunding campaign, often in amounts of $11 to $50.

But before you let a personal story tug at your purse-strings, there are a few things to consider. Consumer Reports says it can be hard to tell if the campaign is legitimate. In fact, there have been documented cases of fraud.

To protect yourself, keep donations between friends. Generally, the best thing to do is to give only to people you know rather than complete strangers. If you don’t know the recipient personally, don’t be the first one to pitch in.

You may want to read comments from other donors before giving and see what they have to say about the campaign.

You also want to avoid over-funding. If a campaign has met it’s goal, then don’t give more. Assume they’ve gotten what they need and don’t give anything more than that.

Also keep in mind the recipient won’t see every dollar you give. These sites often charge the campaign a fee to cover things like payment processing and fraud protection. If you know the person in need, Consumer Reports says consider giving them the money directly and cut out the middleman.

All Consumer Reports material Copyright 2017 Consumer Reports, Inc. All Rights Reserved. Consumer Reports is a not-for-profit organization which accepts no advertising. It has no commercial relationship with any advertiser or sponsor on this site. For more information visit consumer.org.

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