GoFundMe: A Study In Stupid

Cancelling The Freedom Convoy Fundraiser Was Bad, And Trying To Steal The Money Was Worse

It perhaps should come as no surprise that GoFundMe had, on its own initiative, canceled the fundraiser to help supply needs of the truckers protesting Canada's myriad COVID-19 Gof and restrictions. As a private enterprise, surely GoFundMe retains the right to decide with which causes it will become involved; opting to cancel the Freedom Convoy’s fundraiser after it had raised Can$10 million might be slightly sleazy corporate mendacity, but no more than that.

However, when GoFundMe decided that, rather than refund the money raised, it would redirect the unreleased portion of the funds—some Can$9 million—to “credible and established charities”, it was a complete surprise to many, this writer included.

GoFundMe plans to distribute the remaining $9million of donated funds to 'credible and established charities' that were reportedly chosen by the convoy organizers and have been verified by the platform.   

While GoFundMe is no stranger to corporate hypocrisy (this is the company which froze donations to Kyle Rittenhouse’ legal defense fund, after all), the unilateral expropriation of millions of dollars of someone else's money was a new ethical low.

As was quickly demonstrated by the company's rapid climbdown from that position, it was also an intellectual low. To seriously believe that such behavior is in any way permissible is not only breathtakingly corrupt, but also staggeringly stupid.

GoFundMe Violated Its Own Terms Of Service

As is common in today's litigious society, GoFundMe has an extensive Terms of Service to protect itself from unwanted lawsuits.

The main thrust of the GoFundMe Terms of Service is that GoFundMe offers a “platform" for raising funds online via donations.

The GoFundMe Services are offered as a platform to allow an individual, entity or non-profit organization (the “Organizer”) to post a fundraiser (“Fundraiser”) to the Platform to accept monetary donations (“Donations”) from donors (“Donors”) on behalf of the beneficiary of the Fundraiser (“Beneficiary”).  Neither the Organizer nor the Fundraiser will provide goods or services in exchange for Donations.  

Everything GoFundMe provides is meant to fall under this blanket description of what they do. All an individual needs to do is set up the fundraiser on the GoFundMe platform and GoFundMe handles the rest of the donation logistics: they deal with the credit card processing and organize the necessary funds transfers to deliver the donations to the fundraiser and, ultimately, the fundraiser beneficiary.

By that same description, GoFundMe also seeks to clarify what they are not: they are not a charity nor non-profit organization. They ostensibly do not get involved in the underlying fundraiser.

The Services are administrative platforms only. GoFundMe facilitates the Fundraiser of the Organizers and permits Donors to make donations to these Fundraisers. GoFundMe is not a broker, agent, financial institution, creditor or 501(c)(3) nonprofit corporation.

Key to this distinction is that GoFundMe claims not to hold the money raised. Rather, it works with payment processors to handle the individual donation transactions.

GoFundMe is not a payment processor and does not hold any funds.  Instead, GoFundMe uses third-party payment processing partners to process Donations for a Fundraiser (“Payment Processor”).  You acknowledge and agree that the use of Payment Processors are integral to the Services and that we exchange information with Payment Processors in order to facilitate the provision of Services.

This stance means that GoFundMe is promising to be a only a conduit for donations. At no point do they claim to be in a position to influence the direction of those funds—except they quite clearly did in the Freedom Convoy’s fundraiser. By announcing their intent to direct the raised funds to “credible and established” charities, they established that they indeed do hold funds. They hold funds and they are in a position to direct those funds. There is no other way to reconcile GoFundMe's original plan for the Freedom Convoy’s funds.

GoFundMe violated their own Terms of Service.

Yet this is not the biggest problem GoFundMe created for itself. Another point where GoFundMe's actions and disclaimers diverge is in the Terms of Service’ effort to make the donor responsible for their own comfort level regarding what happens to their donation once the charge hits their credit or debit card.

All Donations are at your own risk. When you make a Donation through the Platform, it is your responsibility to understand how your money will be used. GoFundMe is not responsible for any offers, promises, rewards or Promotions (defined below) made or offered by Users or Fundraisers; such conduct violates these Terms of Service. We do not and cannot verify the information that Users or Fundraisers supply, nor do we represent or guarantee that the Donations will be used in accordance with any fundraising purpose prescribed by a User or Fundraiser or in accordance with applicable laws. Notwithstanding the foregoing, we take possible fraudulent activity and the misuse of funds raised very seriously. You can learn more about our Fraud Policy. If you have reason to believe that a User or Fundraiser is not raising or using the funds for their stated purpose, please use the “Report” button on the Fundraiser to alert our team of this potential issue and we will investigate. If you are a Donor, you may also be covered by the GoFundMe Guarantee.

GoFundMe makes the donor responsible for knowing where their donation will go and what will happen to the money. GoFundMe claims to have no assurances to offer about the recipient of any donations—except when the money is sent by them to “credible and established charities.”

In that instance it is impossible for donors to know where the money is going, and at the same time only GoFundMe can offer any assurances about the recipient of the funds.

In other words, GoFundMe violated their Terms of Service a second time.

Jumping The Shark

This point is where GoFundMe unwittingly jumped the shark. Not only are they expressing their own discomfort with where the Freedom Convoy donations will go and how the funds will be used—a point they are allowed, as they are a private entity—but they arrogated to themselves both the power and the right to change the direction of the funds.

The letter of their own Terms of Service precludes them from ever having either.

That subtle distinction makes it impossible for any donor to know and understand where their donation will go, or to have any confidence about where any donation ends up.

That subtle distinction means donors are handing their money over to GoFundMe and trusting them to do what the donor intended, even as GoFundMe blatantly betrays that trust.

Trust is an essential part of any online service—an essential part of any transaction—and trust is something GoFundMe goes to some length to provide the donor. They have even taken the position of guaranteeing the proper delivery and use of donated funds with the “GoFundMe Guarantee”:

It takes a leap of faith to help someone else. That’s why we want to honor your generosity by backing it up with the first and only guarantee for social fundraising: the GoFundMe Guarantee.

Our team of specialists work night and day to make sure that funds get to the intended recipient, every time.

In the rare case that something isn’t right, our Guarantee ensures that donations and donors are protected.

In other words, GoFundMe explicitly promised everyone who donated to the Freedom Convoy their money would go to the Freedom Convoy. The Convoy might misuse the funds once they had them, but GoFundMe promised the funds would at least get that far.

When GoFundMe proposed to send the funds instead to “credible and established” charities, GoFundMe proposed to break its promise.

Is It Fraud?

Whether the breaking of that promise constitutes an act of fraud is a legal assessment I will leave to the lawyers. It certainly sounds like fraud, as the term is defined by Merriam-Webster:

an act of deceiving or misrepresenting

Still, the legal particulars of any potential statutory offense are themselves a question, and I will not pretend to know that all the technical elements of a crime of fraud are met.

I will note, however, that multiple states governors and/or attorneys general are asking that very question and have announced investigations to explore possible answers. Florida was the first to announce.

On Saturday morning Florida Governor Ron DeSantis announced he will launch an investigation into GoFundMe following their attempt to commandeer donations and give them to charities.

Florida was soon joined by Georgia and Missouri. Texas, West Virginia, and Ohio quickly followed suit.

If just one of these states concludes there was fraud involved, GoFundMe is in serious trouble.

Shredding Their Own Business Model

With or without actual criminal charges, GoFundMe has very likely invited serious trouble upon itself. As I have detailed previously, the Freedom Convoy is popular, and the success of that fundraiser is further proof of that.

The people who donated to the Freedom Convoy almost certainly support other causes. Those people now have good reason not to rely on GoFundMe's promises when donating to their preferred causes.

People who are in need now have good reason not to rely on GoFundMe's promises when seeking the financial assistance they need.

With this one intemperate action, GoFundMe not only proved once again that it is influenced by its own political biases and agenda, but that even their business model means little to them compared to those political biases and agenda.

With this one intemperate action, GoFundMe has left a question mark in everyone's mind as to whether the company can be trusted to do its chosen role and not be consumed by its own politics.

This action also was unnecessary. GoFundMe has cancelled fundraisers before, and often exercised a double standard in so doing, as in the case of Kyle Rittenhouse. Cancelling the Freedom Convoy fundraiser would have been one more example of their fundamental hypocrisy.

Yet even canceling a fundraiser does not call into question GoFundMe's integrity with respect to handling funds. GoFundMe might be partisan and political about who's funds they handle, but up to this point donors could at least have faith that if GoFundMe pulled a fundraiser they would get their money back.

Now that faith is gone for good. GoFundMe has crossed an ethical if not legal line that cannot be uncrossed.

Regardless of how one views the Freedom Convoy, GoFundMe's arrogant disregard for the Freedom Convoy's donors was a useless, pointless, and stupid blunder.