Has American Crowdfunding Lost its Moral Compass?

Strangers began sending money within hours of Luigi Mangione’s arrest for gunning down UnitedHealthcare CEO Brian Thompson outside a Manhattan hotel in December 2024 — donors backing a man who would go on to face state murder charges. Nearly two years later, on August 14, Mangione pleaded guilty to two federal stalking charges and admitted to the killing, which took the death penalty off the table. His defense then moved to dismiss the state murder case on double jeopardy grounds and a judge indefinitely shelved the state trial, which had been set for jury selection on September 8. Manhattan prosecutors had until October 9 to respond to that motion and a judge will hear arguments December 10. Mangione’s federal sentencing, which could bring up to life in prison, is set for December 18. Through it all, the money kept coming. The GiveSendGo campaign established by the December 4th Legal Committee — now officially accepted by Mangione and his attorneys — has since climbed past $1.56 million. Donations kept arriving within hours of the guilty plea, with supporters leaving messages telling him “we’re still here with you.”GiveSendGo says the fund can stay open because Mangione still faces unresolved cases. Its policy requires money raised for legal defenses involving violent charges to go to a licensed attorney or law firm. Consumer watchdogs and financial regulators have questioned the practice for years but Mangione’s case has pushed the warning into the open.Crowdfunding in America is now a business involving tens of billions of dollars a year. It runs on rules so uneven from platform to platform that fraud, celebrity spectacle, and — according to global terror-financing watchdogs — extremist fundraising can move through the same open channels.A Platform Patchwork With No FloorSo, how did this begin? It turns out, by accident.When the British rock band Marillion couldn’t afford a reunion tour in 1997, dedicated fans paid for it themselves through online donations. The incident led to the first dedicated crowdfunding site, ArtistShare.The crowdfunding websites Kickstarter and Indiegogo were launched in 2008 and 2009 respectively, built for creative projects and new product launches. Then, in 2010, GoFundMe launched and propelled the entire industry toward personal and medical fundraising, now the biggest category by far.The growth since has been steep: The global market hit $24 billion in 2024 and is expected to climb by more than 18 percent a year through 2033. North America alone accounts for 41 percent of that activity, which is spread across more than 1,500 platforms in 100 countries — none of them bound by a single federal rulebook.What began as a niche tool for musicians and inventors has since split into at least four distinct models — donation-based, reward-based, equity-based, and lending-based — with donation platforms like GoFundMe and GiveSendGo now accounting for the largest share of activity in North America.The growth has not been accompanied by corresponding regulation and that is by design.“Oversight is deliberately light, which is largely a good thing,” a political strategist, John Thomas, tells the New York Sun. “Donation-based platforms have grown rapidly precisely because they operate with minimal bureaucratic interference. This light-touch approach has unleashed innovation and allowed millions of Americans to support causes directly. However, the lack of basic transparency standards has created predictable problems.”GiveSendGo bills itself as a Christian alternative to GoFundMe, and it has built a business hosting campaigns that other platforms won’t touch. It raised nearly $586,000 for the legal defense of Kyle Rittenhouse, the Illinois teenager acquitted of all charges after fatally shooting two men during the 2020 Kenosha unrest. This is in addition to hosting the Mangione fund and raising funds for January 6 Capitol riot participants. The process across the board is consistent: Get banned on one platform and another one is waiting in the wings. The economics explain why. Nearly every donation platform charges the same way — a processing fee of around 2.9 percent plus 30 cents per transaction, topped off with an optional tip from the donor. The fee structure rewards volume, not scrutiny. In this model, more campaigns mean more revenue, and no one forces a platform to check the claims made by those seeking donations.Political cases aren’t even the biggest misappropriation problem. GoFundMe built 1.4 million donation pages for American nonprofits without consulting any of them first. After a backlash in October 2025, the company made the pages opt-in and took down unclaimed ones. Even so, in March 2026, a bipartisan coalition of state attorneys general and charity regulators, co-led by California’s Rob Bonta, sent GoFundMe a demand letter accusing it of plagiarizing the charities’ identities and demanding proof the pages were gone. Regulators said the unauthorized pages sowed “donor confusion, deception, distrust, and conflicting messaging.”In Texas, a 28-year-old Florida woman was charged at Harris County in January 2026 with fraudulently posing as the father of a Camp Mystic flood victim to collect donations on a GoFundMe page. A second fake campaign aimed at the same family surfaced on Spotfund.None of this is new. The “Paying It Forward” scam — a fabricated good-Samaritan story that pulled in roughly $402,000 — ended in guilty pleas and prison time, with GoFundMe reimbursing donors after the fact. That’s the common thread: The platforms are the only real gatekeepers, and they police themselves unevenly.GoFundMe rejects the idea that fraud is widespread, citing its Trust and Safety team and a “Giving Guarantee” that refunds donors once it confirms misuse. The catch is in the fine print: The company alone decides what counts as misuse, and its policy says it makes every call at its “sole and absolute discretion.”Some analysts argue that the oversight gaps aren’t a flaw in the system. They are the system. “The risk and oversight challenge for the crowdfunding industry is two-fold: value delivery and fraud management,” a global financial risk analyst, Dennis Santiago, tells the Sun. “Crowdfunding often relies more on emotional stories than auditable financials. Retail investors have no control over fairness analysis to prevent over-promising storytelling or post-investment funding drift.”Fame, Grief, and the Question of Who Deserves to AskWhen Dawson’s Creek star James Van Der Beek died of colorectal cancer at 48 on February 11, a GoFundMe for his widow Kimberly and their six children described the family as “out of funds” and set a goal of $1.5 million. Nearly 50,000 people donated, pushing the total past $2.7 million within days. That was before real estate records surfaced showing Van Der Beek had secured a down payment on a $4.76 million Texas ranch on January 9, 2026, 33 days before his death.Defenders noted that Van Der Beek had auctioned off career memorabilia to offset mounting medical bills, and that a long cancer battle can hollow out savings regardless of what a property is worth on paper. Eight days after Van Der Beek’s death, Grey’s Anatomy actor Eric Dane died of ALS at 53; a GoFundMe for his two daughters has since raised over $400,000.A representative for Van Der Beek said friends helped him secure the down payment through a trust so the family could move from renting the ranch to a mortgage. A parallel case arose this summer in Massachusetts. Lindsay Clancy, who stood trial for strangling her three children in a case that turned on an insanity defense, is not herself the named beneficiary of a GoFundMe — her parents, Mike and Paula Musgrove, are — yet donors treat it almost unanimously as support for the daughter regardless of the framing. The “Musgrove Family Fund,” launched by a Wisconsin TikTok user with Clancy’s parents’ consent and her attorney’s knowledge, passed $1.17 million by early September, and the organizer has since raised the goal to $3 million.The organizers state the money cannot be used to cover legal fees and is intended only to offset the parents’ travel and living costs — a distinction most donor comments don’t observe. Ms. Clancy’s trial ended in a mistrial September 4 after jurors deadlocked. At a September 29 hearing, the Plymouth County district attorney said his office has not decided whether to retry her, and the judge set the next hearing for November 2, when he will take up her motion to dismiss on double jeopardy grounds. Those criticizing celebrity crowdfunding say it is increasingly used as a first resort rather than a last resort, diverting attention and dollars from ordinary families.Mr. Santiago warns that the trend is contributing to a broader erosion of public confidence.“In recent years, the arrival of automated fraud fueled by increasingly sophisticated tools to appeal to retail investor emotions represents the most significant threat to the American economy continuing to trust the crowdfunding industry,” he says. “AI robots can mimic founders, create fake products, tell convincing investment value stories — all of it nothing but vapor.”No single case makes the point better than the numbers do. GoFundMe by itself launches more than 8,000 campaigns a day, takes in a donation every second, and rakes in over $50 million a week. That’s only one platform. More than 1,500 others have different rules and agendas.Because money raised for an individual is generally treated by the IRS as a tax-free gift rather than income, recipients face essentially no reporting obligation and platforms face no disclosure requirement beyond what they choose to publish, meaning there is no public ledger of how many millions flow to defendants, celebrities, or causes that later prove fabricated.Watchdogs say this creates an invisible pecking order. A viral case with a sympathetic story or a famous name can raise seven figures in days. Meanwhile, the everyday medical-bill and funeral campaigns — the ones GoFundMe’s own data shows are growing fastest — get buried under the Mangione-scale spectacles and rarely surface in search results.Moral hazard and fraud are two of the problems. However, national security officials worry about another, often harder-to-spot issue.The Terror Financing Blind SpotThe most acute concern, flagged with increasing alarm by international security bodies, is that donation-based crowdfunding faces no meaningful anti-money laundering requirements in America and virtually none globally.The Justice Department disclosed in 2020 that three separate financing operations, tied to Hamas, Al-Qaeda, and ISIS, had used online crowdfunding tactics to move money. Five years on, a report from the Financial Action Task Force, the most thorough global look at terrorist financing risk in a decade, exposed that 69 percent of jurisdictions worldwide had major gaps in investigating and prosecuting these cases.Speed, anonymity, and global reach, the report concluded, let bad actors exploit digital fundraising platforms undetected.The regulatory mismatch is glaring. Traditional banks face extensive Bank Secrecy Act obligations; donation-based crowdfunding platforms carry no equivalent mandate. The IRS office that examines anti-money laundering safeguards at money-service businesses — the closest existing analog to crowdfunding oversight — saw its staff fall 33 percent in 2025, to 139 agents, the lowest level since the agency started tracking the data in 2017.In Mr. Thomas’ view, the answer lies in market forces.“The best path forward is market-driven accountability, not heavy-handed new regulation. Congress should focus on enforcing existing fraud and material support laws aggressively rather than layering on complex compliance rules that hurt small platforms and legitimate charities,” he argues.Some people see it differently.“We need this system to work for American business, and we need it to be a safe and trusted place for small retail investors to participate,” Mr. Santiago says. “That means someone in the infrastructure needs to apply advanced due diligence and anti-fraud technologies, proactively instead of reactively, to safeguard the process in the future.”

Has American Crowdfunding Lost its Moral Compass?

Has American Crowdfunding Lost its Moral Compass?

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