Kickstarter. Indiegogo. Patreon. Thanks to the rise of these online platforms, crowdfunding has become a new norm for business financing. A more direct way to fund a new product, service, project or cause that reaches into the pockets of consumers and the average folk, crowdfunding relies on a massive group of supporters instead of a handful of angel investors. The capital generated tends to be a lot lower than the millions raised through traditional VCs as well.
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All taking place online, each project typically illustrates the amount of money it hopes to raise by a certain date, a breakdown of what the money’s for, and different tiers of pledges donors can purchase. For instance, if for a film project, the lowest tier may offer you a mention in the closing credits, while a higher tier grants you a copy of the film when it’s finished. For a consumer product, the tiers can serve as pre-orders for the goods themselves.
Take a brief scroll through Kickstarter, and you’ll see that crowdfunding campaigns exist for a diversity of things—a series of essays analysing children’s show My Little Pony, novel items such as a frying pan with a sword handle, the largest jockstrap in the world, and the weirdest jewel in the crown, a chicken burrito from Chipotle (The goal was to raise $8. It received $1,050). The majority of the Kickstarters projects are legitimate, of course, focusing on high-quality products that appeal to the masses. Many of them have even gone on to conquer the shelves of the offline, retail world. But a curious trend has emerged in recent years. It turns out a growing number of people are using crowdfunding platforms to organise funerals.
In fact, it’s one of the fastest growing categories at GoFundMe, which revealed that 13% of its campaigns in 2017 were memorials and funerals. It’s even marketing itself as the “leader in online memorial fundraising”, raising more than $330 million each year for crowdfunded send-offs. Looking past the oddity of the concept, it can actually be a worthy cause to support, especially if the family of the deceased is not in the financial position to afford a proper memorial or if the deceased, say, an exceptionally kind-hearted soul without life insurance, has no family to begin with but deserves a ceremony.
The Problems of Crowdfunding Funerals
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Depending on which tradition or religion you follow, a funeral in Singapore can cost anywhere between $1,000 and $10,000. The average range lies between $7,000 and $9,000, which for most working class families is no small amount. That’s excluding the heftier medical and emergency fees related to the hospitalisation and subsequent death of a loved one.
Enter sites such as Fund the Funeral, You Caring, and GoFundMe. While Fund the Funeral is targeted specifically at funeral directors who will use the donations to alleviate costs for their clients, other sites run independently organised fund-raising projects. There’s not much to the process of creating a funeral campaign. Much like starting any regular fund-raising campaign, you start by registering a profile on the site, creating a new project, uploading pictures and the story behind the campaign, setting your goals, and capping it with your bank details to receive the donations. Within minutes, you’ll have a funeral campaign.
Given the lax procedure to get a funeral campaign up and running, technically anyone is able to do the same thing at anytime. Now take a second to consider the dangers of that. Without proper verification, there’s no way of knowing if the stories are real, if the money is really going to the deceased’s family, or if the deceased in question even exists. At its core, it’s a call to solicit money from strangers on the Internet who have no real ties to the beneficiary of the campaign. If it were a random man standing by the MRT station asking for the same favour, it would’ve triggered alarm bells right from the get-go.
It is entirely possible for the funds to be misused because it’s happened before. Clients have evaded payment to funeral homes, despite having raised the money online. Some have used crowdfunding to organise infant funerals, even though such services (for infant deaths) come at no cost for certain funeral homes. At times, families will lie about how much they’ve raised, keeping a portion of the donations as profit. In some cases, the beneficiaries inadvertently collect a profit, but they’ll have to figure out what to do with it, a sensitive task that will no doubt invite immense debate.
On the other side of the fence, funeral directors have been known to upsell their services once they discover the amount of money their clients have raised. One can also imagine the apparent conflict of interest in funeral directors using crowdfunding platforms, acting like the middle man between clients and donations. Are they really out to assist grieving families? Or are they just looking for a larger paycheque? Crowdfunding sites themselves charge about 3% to 5% for each donation (including personal and funeral campaigns), which has been called out as an immoral strategy to benefit from the tragedies of others.
The Dangers of Business Crowdfunding
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With the possibility of fraud in funeral crowdfunding, one has to wonder if crowdfunding as a business financing method is even a smart move at all. Are there similar risks and ethical quandaries involved in commercial crowdfunding? For one, those who turn to online fundraising are generally in the early stages of the company. Many of them don’t come from a traditional business background, and thus are ill-informed about running a successful company. Crowdfunding campaigns, particularly successful ones, may place its creators in a state of false confidence and complacency.
For a business to succeed, it needs consistent cash flow, but crowdfunding is a one-off affair. Young start-ups may not know how to manage their earnings in a way that sets them up for longevity. At a time when such entrepreneurs need mentorship, more than money, crowdfunding platforms can only fulfill the latter, while VC firms backed by business veterans are able to provide both. The worst quagmire to get caught in is being unable to deliver to thousands of optimistic backers. A single collective letdown will turn hordes of fans into raging mobs demanding their cash back.
If regular crowdfunding campaigns are inherently risky, what more is there to say for online funeral fund-raisers? Sticking to tried-and-tested methods for such delicate matters would be a lot more appropriate than simply depending on the kindness of strangers.