THE TROUBLING ETHICS OF CROWDFUNDING / PROJECT SYNDICATE

The Troubling Ethics of Crowdfunding

While it is encouraging to see many people responding to the appeals of strangers in great need, there are fundamental ethical problems with crowdfunding, especially when it becomes a primary method of helping others. Systemic bias and fraud associated with platforms like GoFundMe are only the start.

Peter Singer and Gregory E. Pence

MELBOURNE – When two gunmen started shooting at Jews celebrating Hanukkah at Sydney’s Bondi Beach last December, Ahmed al-Ahmed hid behind a car and then, when one of the murderers was looking the other way, ran at him and wrestled his gun away. 

His bravery undoubtedly saved several lives, but he was shot by the other gunman. 

Fortunately, al-Ahmed survived. A GoFundMe site set up to benefit him has raised nearly AU$2.7 million ($1.9 million) from 45,000 donors.

The impulse to reward heroism is strong, and it may seem churlish to ask if this was the best use of the donors’ spare cash, but that question needs to be asked. 

If some donors had the additional motive of encouraging others to act heroically, surely $1 million would have sufficed. 

As an Australian citizen, al-Ahmed is entitled to free hospital and medical care. 

Does massively rewarding a single person represent the best way to give?

Consider another example: Charlie Gard was born in the United Kingdom in 2016, suffering from a terminal condition with no viable treatments. 

His parents used GoFundMe to raise £1.3 million ($1.7 million) for unproven experimental procedures. 

Sadly, but predictably, the procedures failed, and Charlie died.

These cases indicate specific problems with crowdfunding. 

But what should we think about it as a concept? 

While it is encouraging to see many people responding to the appeals of strangers, whether to reward bravery or, more commonly, to help those in great need, there are fundamental ethical problems with crowdfunding, especially when it becomes a primary method of helping others.

For starters, crowdfunding rewards the technically savvy and socially connected. 

Most of the world’s poorest people have no internet access or knowledge of platforms like GoFundMe, so they are systematically excluded from this form of charity.

A recent article in the International Journal of Equity in Health examining medical GoFundMe campaigns found that appeals for people in rural areas and economically disadvantaged people were less successful, as were those for people with less education. 

Appeals for white people received more funds than appeals for those who were not white. 

Requestors with more education and social capital received substantially increased donations.

The researchers concluded that algorithms within GoFundMe “privileged users with preexisting advantages,” amplifying existing inequalities rather than ameliorating them. 

Successful campaigns depend heavily on whether recipients appear attractive in photos, can articulate compelling stories, and frame narratives that resonate emotionally with viewers. 

Those suffering most may be least able to market their suffering effectively.

GoFundMe is a for-profit organization, and its profits come from taking a percentage of donations, so it has an interest in increasing the amount donated, irrespective of how much or little good those donations may do. 

Likewise, it is not in GoFundMe’s interest to vet requests for validity or accuracy, and it will act against fraud only when users report it.

Fraud does happen. 

In Australia, Renee Jocelyn O’Brien pleaded guilty in 2020 to multiple counts of fraud after falsely claiming that her five-year-old daughter had a terminal brain tumor and soliciting donations from the public. 

Her lie was uncovered only when authorities verified the child’s medical records. 

People have also faked cancer diagnoses in Canada and the United States. 

In another US case, a couple raised money for a supposedly homeless veteran but spent it in Las Vegas casinos. 

The emotional manipulation that makes crowdfunding effective also makes it vulnerable to exploitation.

A 2018 study in the Journal of the American Medical Association found that GoFundMe campaigns often solicit funds for unproven medical treatments: stem cell therapies, Hyperbaric Oxygen Treatment for vegetative comas, colonics, and herbal medicines. 

Donors give money believing that they are funding potentially lifesaving treatments, but outcomes are not reported back to them, much less evaluated by independent third parties. 

This creates a market for medical hope that may be entirely unfounded.

Moreover, many GoFundMe campaigns operate in a transparency and accountability vacuum. 

What happens to donated money when campaigns exceed their target, when the intended recipient of medical treatment dies before receiving it, or when fraud is discovered years later? 

Unlike traditional charities, GoFundMe lacks clear answers to these questions.

In the US, where millions of people lack health-care coverage, crowdfunding for medical expenses functions as a band-aid over structural inequities. 

Rather than addressing the systemic problem – the absence of universal healthcare – it diverts attention and resources to individual cases, allowing the underlying injustice to persist.

Recent cuts to official government aid, especially in the US, have created an urgent need for donors who give wisely and effectively. 

Organizations like GiveWell and The Life You Can Save make it easy for people to find the charities that will do the most good with their donations – and unlike GoFundMe, 100% of what is donated through their websites goes to the charities.

The difference in impact is enormous. 

According to GiveWell's analysis, the money donated to Ahmed al-Ahmed could instead have purchased and distributed insecticide-treated mosquito nets to fight malaria in Africa, potentially saving hundreds of lives.

It is good that people want to respond helpfully to the needs of others, but when it comes to helping others most effectively, we should recognize crowdfunding for what it is: a profit-making scheme that is often inefficient and inequitable.

Peter Singer, Emeritus Professor of Bioethics at Princeton University and V.K. Rajah Visiting Professor at the Centre for Biomedical Ethics at the National University of Singapore, is co-host of the podcast Lives Well Lived, co-founder of the charity The Life You Can Save. His books include Consider the Turkey, Animal Liberation, Practical Ethics, The Ethics of What We Eat (with Jim Mason), Rethinking Life and Death, The Point of View of the Universe, co-authored with Katarzyna de Lazari-Radek, The Most Good You Can Do, Famine, Affluence, and Morality, One World Now, Ethics in the Real World, Why Vegan?, and Utilitarianism: A Very Short Introduction, also with Katarzyna de Lazari-Radek. In April 2021, W.W. Norton published his new edition of Apuleius’s The Golden Ass. In 2013, he was named the world's third "most influential contemporary thinker" by the Gottlieb Duttweiler Institute. He is a co-author (with Shih Chao-Hwei) of The Buddhist and the Ethicist (Shambhala Publications, 2023).

Gregory E. Pence, Professor of Philosophy at the University of Alabama at Birmingham, hosts the YouTube channel Great Stories in Bioethics.