Today, the Ohio Auditor of State’s office issued a special report on crowdfunding. “Crowdfunding” refers to online fundraisers that help teachers and schools solicit donations of money and supplies to enhance classrooms and enrich the education of their students.
According to the Auditor’s report, online crowdfunding websites like GoFundMe, crowdrise, and DonorsChoose give districts the opportunity to reach out to contributors throughout their community and the world. However, they also pose some risks, including the following:
- Student privacy. A crowdfunding campaign might inadvertently violate federal and state privacy laws by using a classroom photo or including a narrative that provides enough information to make it possible to identify a student.
- Financial controls and accounting. Several provisions of state law govern the receipt and disposition of money that is collected on behalf of a public entity. It is important to ensure that these laws are followed and that the donations go to the intended beneficiary and are not diverted for personal gain.
- Reputational risks. Any time a teacher uses the name, logo or other symbol of a school or district as part of a crowdfunding campaign, the school has a vital interest in ensuring that the campaign does not reflect badly on the school.
To help mitigate these risks, the Auditor of State’s office recommends that districts consider designing a policy that incorporates the following guidelines and best practices:
- Requiring that all crowd-funding campaigns be reviewed and approved by a designated school administrator.
- Directing the designated administrator to ensure that the proposed crowdfunding campaign does not violate any federal or state law, including those governing the confidentiality of student information, and that the campaign seeks donations that comport with the district’s education philosophy, needs and technical infrastructure.
- Designating which crowdfunding services can be used by teachers. These should be services that send donations directly to the school, not to the teacher, to ensure that donations are not diverted or misused. The district also should determine if participation with a given crowdfunding site obligates the school district to assume any responsibility to file government-required reports of charitable activities.
- Requiring that donations only be used for the stated purpose.
- Mandating that no donations will be accepted without school board approval.
- Establishing that all crowdfunding donations are the property of the school district, to be entered promptly into the district property inventory or deposited in district bank accounts so that they are subject to normal financial oversight and auditing.
The Auditor’s guidelines and best practices are similar to the recommendations that OSBA provided to subscribers of School Management News in April 2017. OSBA policy subscribers will receive policy recommendations, along with additional guidance, in the August 2018 Policy Development Quarterly. If you have any questions in the meantime, please contact the OSBA Division of Legal Services.