“Crowdfunding” is the practice of funding a project by raising relatively small amounts of money from a large number of people, usually via the internet. In schools, crowdfunding helps teachers and schools to obtain funding and supplies.
Online Crowdfunding and How It Works
Crowdfunding websites vary in how they raise funds. Some well-known crowdfunding websites include GoFundMe, Adopt-A-Classroom, Kickstarter, Incited, and Donors Choose. Some of these websites will raise money and transfer it directly to the teacher or the school district. Other websites will raise money toward the desired products, which will be shipped to the school when the items are funded. This way, the teacher or school never receives any cash at all. Websites further differ in the amount of support and advice they will give teachers or school districts in securing these donations.
Ohio Auditor of State
In July 2018, the Ohio state auditor released a report titled Crowdfunding Classrooms, which was the outcome of a widespread survey of Ohio’s schools. One-fifth of Ohio districts responded to the survey. Among the districts that reported, the auditor found the following statistics related to crowdfunding policies and use of funds:
- 55.4 percent prohibit crowdfunding
- 59.0 percent have no crowdfunding policy
- 26.2 percent don’t know if teachers are using crowdfunding
- 56.2 percent of those who permit crowdfunding don’t know the amount raised in the last 12 months
Auditor’s Recommended Best Practices
The auditor suggests in its report that schools work with legal counsel and adopt a policy that incorporates as many of the following safeguards as possible:
- Require that all campaigns be reviewed and approved by administration
- Direct administrator to ensure proposal does not violate any federal/state law
- Designate permissible crowdfunding websites
- Require donations to be used for the stated purpose
- Prohibit donations without board approval
- Establish all donations as property of the school
- Enter donations promptly into district inventory
- Deposit into district bank accounts
Furthermore, the auditor recommended that every policy include the following financial controls:
- Require that all crowdfunding campaigns be listed under the school’s name
- Specify that donations are the property of the school district and paid directly to the district and not to the teacher
- Require documentation of donations in financial ledgers for monetary donations or inventory for items
General Policy Guidelines
Districts should have a policy that dictates who may raise funds and which crowdfunding platforms may be used. A policy to ban crowdfunding minimizes risk to school districts, but it would also force districts to forego many of the potential benefits. Such a ban on crowdfunding may also be difficult for school districts to enforce. A ban on crowdfunding would require policing all of the crowdfunding platforms to ensure that the policy is being followed.
A policy that allows crowdfunding creates risk, but this risk can be minimized with the right safeguards in place so that schools can reap the benefits of crowdfunding. This policy should ensure that the school is not violating any state or federal laws, the money is properly accounted for, and the donations and materials are appropriate for the district.
A district’s policy should include a prohibition against any funds going directly to teachers. All funds raised should be in the name of the board of education and should be treated like any other funds of the board – accounted for and deposited in accordance with policy and state law. Donated funds should be used only for the purpose for which they were donated. Additionally, no student or teacher should receive a benefit from crowdfunding that is proportional to the level of participation by the teacher or student in raising the funds.
A centralized approval process for crowdfunding campaigns is recommended. Requiring an administrative review and approval of all proposed crowdfunding campaigns will provide safeguards against accidental violations of student privacy laws and will ensure the content and goals of the crowdfunding proposal are appropriate. For example, crowdfunding campaign materials that include a photo of a classroom with the students could violate privacy laws. Descriptions or narratives that reveal personally identifiable information also violate confidentiality. Additionally, administrators will want to ensure that the crowdfunding proposal does not imply that the district is falling short of its state and federal obligations, which may prompt inquiry by a regulating body.
Some existing sources of law are implicated by crowdfunding performed by public school districts in Ohio. The Ohio Revised Code mandates that all money be deposited with the treasurer within a specified time (R.C. 9.38). Specifically for public schools, R.C. 3313.51 establishes that the treasurer of the board of education is the treasurer of all school funds. This is important because the treasurer could be held liable through a finding for recovery for any unaccounted funds. For this reason, the treasurer’s office should be part of the crowdfunding process.
The Ohio attorney general has issued an opinion (OAG Opinion 85-085) that donations must be used for the purposes stated in a crowdfunding campaign. Ohio ethics law (R.C. 2921.43) includes some important considerations. Employees are not permitted to accept additional compensation for performing their duties. (OEC 2008-01). Teachers should not divert any amount of the funds raised for personal gain, as an administrative fee or for any other reason. Remember that any funds and items donated are school district property.