Better Business Bureau (BBB) says new regulations under India’s Foreign Contribution Regulation Act, which took effect in September 2020, have placed restrictions on foreign donations. Some of these restrictions could make it difficult for funds collected through crowdfunding sites to reach those in need, especially since these individuals may not have the proper systems in place to follow government guidelines. In addition, there are several fraudulent posts targeting donors. With this in mind, BBB is urging donors to exercise caution before giving through a crowdfunding platform.

By DESIBUZZCanada Staff

VANCOUVER - With news circulating around the globe about the growing COVID-19 crisis in India, many Canadians are trying to find legitimate ways to help. 

However Better Business Bureau (BBB) says new regulations under India’s Foreign Contribution Regulation Act, which took effect in September 2020, have placed restrictions on foreign donations. Some of these restrictions could make it difficult for funds collected through crowdfunding sites to reach those in need, especially since these individuals may not have the proper systems in place to follow government guidelines. In addition, there are several fraudulent posts targeting donors. With this in mind, BBB is urging donors to exercise caution before giving through a crowdfunding platform.

“Generally speaking, it is much more difficult to verify the trustworthiness of individuals than it is to assess charities,” explained Karla Laird, Senior Manager for Media & Communications at BBB Serving Mainland BC. “There are individuals out there trying to fight a crisis, but there are also scammers trying to take advantage of donors and their generosity, using heart wrenching photos and desperate appeals. Review the crowdfunding posts for specific details on how your donations will get to those in need and how the funds will be used to help them. Where possible, donate directly through established charities.”

BBB is sharing the following tips to donors considering to give through a crowdfunding post:

Give to people and organizations you know. While charities can be vetted, it is much more difficult to assess the trustworthiness of individuals who have posted a request for assistance. As a result, it is safest to give to crowdfunding postings of people you personally know. If that is not possible, the next best circumstance is to find out if the funds collected by a posting are going to be forwarded and distributed by an established charitable organization. In that case, the organization can be checked out and the involvement of a third-party organization can provide an additional level of oversight and assurance.

Not all crowdfunding sites operate alike. Some crowdfunding platforms do a better job of vetting postings and projects that appear on their site than others. Review the site’s description of its procedures. If they do take precautions, they generally announce that fact loudly to help encourage giving. For example, some sites will hold the funds collected and distribute them directly to the recipient, while other sites rely on the individual to follow through on their promised assistance.

See if the posting describes how funds will be used. Vague descriptions of how the collected funds will be used are a clear sign to exercise caution. Thoughtful collections will take the added step of identifying and verifying needs before money is raised.

Do not assume pictures represent an official connection to the person or family identified. Unfortunately, some crowdfunding postings may be using pictures of victims without the permission of their families. As a result, you cannot assume the poster has an official connection. 

Your contribution may not be deductible as a charitable gift. As a Canadian donor, keep in mind that you can generally only take a charitable deduction if the organization has an office in Canada that has applied for and received charitable tax exempt status from the Canada Revenue Agency. This will not be the case if the organization is located in another country.