A dime for your dream

In a recent judgment, a US judge ordered a couple to hand over the money they raised for a homeless man through crowdfunding. Johnny Bobbit, a homeless in the US who gave his last dollar to McClure when she ran out of petrol on a motorway. His act of kindness was shared globally after a grateful McClure started a campaign on GoFundMe to raise money for Johnny. While he got some amount, Johnny suspected McClure and her boyfriend had spent a large sum of the money raised, on vacations and a luxury car. After taking the couple to the court, the judge directed them to transfer the remains of the $400,000 they raised. While Johnny was able to get the money raised for him, with hoards of platforms and campaigns running, a check on each draws complexity. Somewhat similar to the traditional concept of charity but with the liberty of choosing a cause and the objective of return — from funding a business idea, providing monetary help for health care to raising money for those affected due to natural calamities— crowdfunding in the age of technology is providing enough traction in India.  But as more people become aware of this method of raising capital, it also brings along its own set of risks. As with anything that’s money-related, there is a risk of fraud.

Checks and balances

Platforms such as Ketto that cover a large range of issues from charities, healthcare, education to travel, have over 200 odd campaigns running on their platform every day. While every campaign can’t be verified, co-founder Varun Sheth says health care that is their primary agenda, goes through various checks. “We verify the case by contacting the hospital and doctors. There are various NGOs as well that come on board to raise funds; even they undergo a verification process where they have to give their 80G certificate, FCRA certificate and PAN card,” lists Varun. Milaap, on the other hand, has a dedicated team that works closely with campaign organisers, beneficiaries, donors and an extended network to ensure that fundraising campaigns are accurately represented. “If a suspicion is raised regarding a fundraiser, we investigate by requesting supporting evidence. Any fundraiser set up on Milaap is verified within 24-48 business hours, within which the team verifies the legitimacy of the person raising funds. We always recommend donating only to fundraisers when you feel confident about the cause and legitimacy,” says Anoj Viswanathan, president, and co-founder, Milaap.

While Ketto conducts after checks on the information available to them, Milaap disperses payments only against specific bills, invoices or attested documents justifying the amount withdrawn. Additionally, these platforms make sure that campaign organisers post updates — of withdrawal and utilization — on the fundraiser page at least once every two weeks, especially in case of urgent medical needs. Range De that focuses mostly on helping entrepreneurs and students from low-income households with access to low-cost loans, conducts frequent audits to verify the economic background of the applicants. “Once the loans are dispersed, there is a team that actually travels to the field to understand how the money is being utilised. We also give feedback to the social investor,” says co-founder Smita Rao, adding, “Everybody is held responsible. The partner is held responsible because he needs to come back and the entrepreneur who took the loan is held responsible because they need to repay the money.” In case of a bogus campaign, Milaap has options on the fundraiser page to directly report a fundraiser that any user finds suspicious. “In such case, an additional level of scrutiny is performed on the fundraiser,” says Anoj.

The big shift

Over years the industry has seen a great transit in the propensity of giving online, the user engagement has risen. With challenges of payments, Zaheer Adenwala, co-founder & CTO, Ketto narrates how initially there was a lot of pushback from people to transact online or cash and cheque pickups. “Another big challenge we faced was the apprehension of donors towards most NGO’s (barring a few top ones) in terms of credibility. It took a lot of effort to build trust among our donors by thoroughly running compliance checks of our partners and constantly keeping our donors updated with all the money that was raised on our platform and the impact it has created,” he says. Talking about the shift, Zaheer informs that with the push of digital payments spearheaded by e-commerce, the government of India, plus the cost of mobile data; a very large population of India is now online and is regularly transacting online which is cost effective.

Another side

But for filmmaker Riju Bajaj the story is different. Riju has been trying to raise funds through Ketto for his film festival for the last two months, but with no progress. “I have generated zero amount. Ketto sends me mail asking me to share the campaign and they mainly rely on generating 30-40 percent of amount through family and friends. But these people have been helping me at an individual level, the need is for others to pitch in which is not happening,” rues Riju. The filmmaker points out that funding takes place only for the profitable campaigns, where the donor sees a return. “If it is a non-profitable thing people aren’t interested at all,” he adds.