Sarah Blake & Steven BrownConflict strategist and Mediator | Commercial Lawyer – Disputes & Transactions
Cost of living crisis, charity drive rise in WA crowdfunding campaigns.
When a single mum and her six-year-old son from Mandurah were homeless and living in their car three months ago, they reached out to a local Facebook group for help.
Her story was seen by a kind stranger who not only offered them a place to stay until they found a rental, but launched a GoFundMe page that raised more than $20,000 for the struggling pair.
It is becoming an increasingly common story, with recent data from the crowdfunding website revealing a 68 per cent increase in fundraisers in Australia due to the cost of living last year alone, compared to the 12 months prior.
There was also a staggering 80 per cent increase in fundraisers relating to the housing crisis in 2022 alone.
“In the last 12 months, a new and emerging trend is that Western Australians are turning to GoFundMe to deal with the state’s housing and rental crisis, which has been compounded by the rising cost of living,” GoFundMe Australia regional director Nicola Britton said.
Complete strangers donating money to good causes is nothing new, but campaigns being run by individuals and not charitable organisations is.
Baldvis-based author Sarah Blake, a conflict strategist, mediator and TEDx speaker, said crowdfunding as a way to get donated money really took off five years ago.
“Over the past five years or so, people were becoming disillusioned with the traditional organisations where funding went to,” she said.
“There were issues of concern about transparency and how money was being used. There were outcries that too much donated funds were being used for operational issues rather than going directly to those who needed the help.
“People started distrusting those institutions and wanted to find a way to directly impact where money went.”
But the biggest reason people in WA donated money last year was for medical expenses and memorials for those in crisis mode.
One fundraiser alone raised more than $240,000 in July 2022 for 14-year-old Perth girl Jasmine McGough, who was left paralysed after a mountain biking accident while on holiday in Margaret River.
Despite emergency surgery to relieve pressure, Jasmine’s spinal cord was severely damaged, resulting in a complete C5 spinal cord injury.
“At the heart of the rise of crowdfunding is the age-old notion of community and mateship,” Britton said.
“Australians are generous and though societies and communities may have become fragmented over the decades, the rise of technology has brought them back together online. This means it is a lot easier to band together in times of crisis or personal financial distress.”
Last year, more than 800 fundraisers were created in the “memorial” and “emergency” categories on GoFundMe – but what are the legal implications?
Perth commercial lawyer Steven Brown said crowdfunding was still a grey area and recipients should beware.
“Crowdfunding poses significant risk of fraud by the recipient of the funds on the provider,” he said.
Also, the use of the funds and surplus funds can create issues or both parties. There is some suggestion that the recipients are holding the funds on trust for the provider to only be used for the specific purpose advised. ”
Brown warns that not using the donations for the express purpose of what they were intended for could be a legal minefield
“Do surplus funds have to be returned?,” he said.
“How easy will that be to do?”
Despite the serious side of raising money for those in need, crowdfunding has also been a way for people to get support for a fun or unique project.
Sam Hensen-Thompson recently asked for donations towards his campaign to raise money for people doing it tough by running a marathon in thongs, while Warren Duffy is trying to crowdfund $130,000 towards the restoration of a 71-year-old Bassendean diesel locomotive.
“Crowdfunding can be a powerful and positive way to access funds that you otherwise wouldn’t be able to generate,” Blake said.
“Unfortunately, it is the selfish causes that taints the brand of ‘crowdfunding’; the overuse of it for seemingly wasteful ideas.
“Certainly, I am increasingly switching off from these campaigns and directing my funds through more traditional means. For me, it is more that I know specifically where money is going, the governance responsibilities for the causes are more transparent and I am able to see and watch the impact.
“Perhaps it becomes a personal question of who you trust to handle the money you donate?”