Read in : தமிழ்

The controversy over YouTuber Karthik Gopinath collecting funds on a crowdfunding platform to “renovate” temple statues in Siruvachur of Perambalur in Tamil Nadu, and the State government coming down on him for accumulating money without authorisation has raised the uncomfortable question once again – is crowdfrauding threatening crowdfunding?

Although the case against the right wing YouTuber in Tamil Nadu remains a charge as of now, with the government claiming that he had invoked the name of Mathura Kaliamman Temple in Siruvachur without government permission, it has brought the entire concept of crowdfunding through online forums for social causes under a cloud. Gopinath was arrested over the campaign he ran citing one government-managed temple and another private temple. His initiative led to the accumulation of Rs 33 lakh in donations, and he garnered a lot of support from State BJP functionaries.

Karthik Gopinath, who runs “Ilaya Bharatham” on YouTube, started his temple statues campaign on the Milaap platform last year in October. He claims there was no wrongdoing. Media reports suggest that he applied for permission to donate funds to temples controlled by the government’s HR and CE department in December 2021, after his fund collection was underway. The State government’s decision to make the arrest is based on charges including breach of trust, cheating and personation using a computer resource.

Open to fraudsters
Whatever the outcome in the Karthik Gopinath case, the controversy has once again raised questions about online crowdfunding. The issue is not unique to India, though, and there are prominent cases of fraud in developed economies, including the United States.

A spectacular instance of fraud involving crowdfunding was that of an allegedly homeless ex-serviceman in the U.S. who came to the rescue of a stranded woman, resulting in a campaign to help the defence veteran that raised $400,000. The campaign was floated by a couple and later found to be a concocted story, resulting in prosecution of all the three people involved for “theft by deception.”

In India, much of the highly publicised campaigns on the crowdfunding site Ketto revolve around health expenses of people in private hospitals that charge heavily for some treatments and medicines. Online appeals for funds are common in other countries too, notably in the United States, which has an insurance-based, expensive health system on which India is modelled.

The crowdfunding experience on dedicated websites like Milaap and Ketto and social media platforms such as Facebook, WhatsApp in India show that verification is key

The fortunes of online sites depend on growing campaigns. Ketto says on its website that it applies 0% success fee for NGOs and individuals for basic campaigns and 5% success fee for premium campaigns, with 3% fees applicable for donations via local and foreign payment gateways in all cases. It also has a Plus and Amplify option, with premium campaign features besides support for content creation and a crowdfunding coach. Ketto did not respond to questions on its anti-fraud mechanisms and volumes of funds handled, and this article will be updated when it does.

Milaap told this writer in response to questions: “Milaap is a completely free fundraising platform and has 0% platform fees. We completely rely on the generous tips provided by the donors (while donating), campaign organisers (while withdrawing the funds) and it is completely optional.

Milaap has several safeguards to verify the legitimacy of fundraisers. The first level of checks include verifying the government-issued ID proof, verification of mobile number, followed by a call with the campaign manager, who asks for background details and necessary documentation for the fundraiser.

Our staff works closely with organisers, beneficiaries, donors and an extended network to ensure that fundraising campaigns are accurately represented. If suspicion is raised regarding a fundraiser, we investigate by requesting supporting evidence. If we find that a fundraiser is fraudulent or illegal, the fundraiser will be removed and barred.”

Responding to a query from Inmathi on the fate of contributions made to Gopinath, a Milaap spokesperson said: “Milaap is the trusted repository of funds for Mr. Karthik’s fundraiser at the moment. We are waiting for a decision to be communicated by the authorities on the initiative and will communicate the same as an update to our donor community.

In the meantime, our donors, who are the first decision makers on how they want to utilize their donations, ask for a refund, we do so immediately. We will also reverse if the beneficiary or campaign organiser gives a written request to refund donors.”

U.S. view on regulation
Given the likelihood of fraud in online crowdfunding, Lloyd Hitoshi Mayer of the Notre Dame Law School proposed a regulatory framework in an article in the Indiana Law Journal. “First, they should require notification of designated beneficiaries to help ensure funds raised reach those beneficiaries. Second, they should require notification of regulators, but only for the small subset of campaigns that cross a relatively high threshold, to provide information about the scale and growth of charitable crowdfunding and help resolve any problems that arise with the largest campaigns.”

The State of California has legislated to regulate crowdfunding and requires charities raising funds and platforms hosting campaigns to periodically report to the state’s Registry of Charitable Trusts with effect from January 1, 2023.

The concern, however, is that extreme regulation should not kill off a medium that helps many individuals tide over a genuine personal crisis. Equally, lack of oversight could bring crowdfunding under a cloud because of fraud, and deter people from donating.

Another review of crowdfunding for medical causes by Marco Zenone and Jeremy Snyder in Policy and Internet (2018)  found that the most fraudulent claims were made by faking or exaggerating one’s illness. Faking or exaggerating another’s illness came next, followed by impersonation and misapplication of funds.

Interestingly, researchers at University College London propose in a pre-print paper (2020) that anti-fraud measures could be in-built into the online system, using natural language processing and image analysis – machine learning drawing from proven fraudulent cases. Some other researchers have suggested that block chain technology in donations would give greater control and oversight to the donors and determine the movement of the funds.

Bound to grow
Online microdonations to fund humanitarian causes are expected to grow, given the trends over the past few years, and the ease of the process. The authors of the UCL article cite data to show that crowdfunding grew from $597 million raised worldwide in 2014 to $17.2 billion in North America alone in 2017.

Extreme regulation should not kill off a medium that helps many individuals tide over a genuine personal crisis.

Milaap declined to give data specific to the COVID years on crowdfunding in India, but said it hosted 46,975-plus medical campaigns and raised Rs.1,046 crores from 52 lakh donations in all. In the area of  social and community causes, it supported 28,493-plus campaigns and raised over Rs. 550 crores from 18 lakh donations.

The crowdfunding experience on dedicated websites like Milaap and Ketto and social media platforms such as Facebook, WhatsApp in India show that verification is key. The profile of the individual starting a campaign, inclusion of a physical address, verifiable endorsement by credentialed agencies and hospitals, outcome evidence, and a legal requirement for platforms to maintain public records can grow micro-donations. It is also essential in a country with a voting age-population of about 900 million people with access to mobile phones and easy fintech payment options.

Share the Article

Read in : தமிழ்

Why we always find lots of cashews on top of Deepavali mixture why tangedco need to pay us for damaging household appliances why eating on banana leaves is healthier What the Tamil Nadu Organic policy needs what is the real story of onam festival