Importance of Verification in Crowdfunding
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Enough has been said about the history of crowdfunding as a concept in our country.
Crowdfunding/Crowdsourcing was done manually before it reached the world of the internet. It involves the use of small amounts of money from a large number of individuals to fund the cause through a digital platform and is driven actively by mobile applications and payments. With the increasing social media penetration, there is a huge possibility of growth in the crowdfunding industry. The crowdfunding market is in the growing process with the total amount raised through crowdfunding in 2016 at USD 738.9 million globally.
However, it comes with a lot of dedication and effort when it comes to making people understand to go on a digital platform to raise funds for their cause. Taking people online, to a relatively new, and therefore, slightly intimidating space that is taking them out of their comfort zones to find more convenience and ease elsewhere is a challenging process. The digital world is a space for everyone. Especially through social media, all people have more liberty to share their opinions, feelings, experiences; to express it and be heard. This may be one of the major reasons why people hesitate from taking what they see online at face value.
Given the early development stage that the crowdfunding industry in India is in, it becomes very important for different crowdfunding platforms to establish their position as a brand, among the trusted ones. People tend to trust causes or participate in them, not just because they feel connected, but also because they believe their money will be utilized exactly to help the cause.
In the course of time, it is important to build your brand/name as a crowdfunding platform as the credible avenue that people can use to help others when and where needed. To ensure trust, it is important to maintain transparency: These are like 2 sides of the same coin. Keeping processes transparent is extremely important, given that money is involved. It is important to understand that primary stakeholder: campaign organizers and donors are coming to your platform and connecting over money: One, who is in need of it, and the other who have put their hard-earned money into a cause. Hence, every doubt, every clarification they ask for, must be addressed patiently, promptly and accurately. This makes communication an important part of the process.
The need for which people raise funds could be quite urgent in nature. Keeping that in mind, the time taken to review causes must be kept short.
Verification of both, the person raising funds, and the need in question is important. The person's identity and the background are analysed by a dedicated team. Documents are a must. Attested documents justifying the funds required, in medical cases, along with the case summary and cost estimate on the letterhead of a verified hospital, and signed by the concerned doctor are very important. The case is cross verified with the hospital, or a medical institute in question as well.
It is also just as important to present important documents and cost estimates on the fundraiser page, to maintain absolute transparency with donors.
Besides, verifying payments is also another important aspect of the process. With all transactions happening digitally, it is important to also provide donors with a safe avenue to render support. Hence, partnering with credible payment gateways, and building algorithms of our own to keep a check on any suspicious transaction is a great practice.
As an important part of maintaining transparency, platforms must also enable an easy way for potential donors to reach out to and communicate with beneficiaries directly.
All funds raised must be transferred to the beneficiary or their next of kin, only against attested documents or invoices justifying the amount being withdrawn, and this must be communicated to all donors.
Keeping donors posted with regular updates is an ideal way of maintaining trust. Beneficiary testimonials are an excellent way to thank donors.
Allowing people who come across the fundraiser to 'report/flag' suspicious fundraisers could be a great way to identify and weed out fundraisers that might not be completely honest.
Checking the authenticity of the campaign is of utmost importance. Crowdfunding platforms must ideally verify if the fundraisers being set up are for genuine causes, and ensure that funds reach the said beneficiary, and are utilized for the said cause.