2018-19 K-12 Mid-Year Crowdfunding Risk Report

  • by admin
  • January 4, 2019
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  • District News
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    Crowdfunding has exploded in K-12 education. The number of campaign requests, as well as the number of donations towards these campaigns have significantly increased over the years. Data from one popular crowdfunding site for teachers showed that during the 2017-2018 school year, over 254,000 campaigns were funded, resulting in over $152 million in funds raised for K-12 classrooms, projects, and experiences.

    This type of online crowdfunding has opened enormous opportunities for K-12 school districts to raise funds for projects, equipment and supplies. Crowdfunding is ultimately helping close the education funding gap and support the needs of schools and students. Its efficiency and effectiveness have been proven not only through the generous donation amounts, but also through the speed and ease compared to traditional methods like burrito or donut sales.

    Despite the many benefits of online crowdfunding, school districts need to be aware of the associated risks and liabilities. Every single campaign that is posted poses serious liabilities for a school district, depending on how the campaign is pitched, what names are used, what the campaign is raising funds for, and what type of student information (photos, names, etc.) is displayed. Every donation made to the campaign also comes with financial liabilities for a school district, including where that money is routed, who controls or oversees those funds, who owns the funds, how inventory is accounted for, and how the school district manages to report those funds.

    The lack of proper built-in oversight, tracking and reporting on crowdfunding sites – even education-specific sites, present significant legal and reputational risks for school districts across the country. Every school district should have oversight for any online fundraiser conducted in the name of the district, a district school or a district employee.

    At Livingtree, it’s our goal to help school districts understand the risks of crowdfunding, and better manage the process within their district to ultimately raise more money. Due to the recent publications from state auditors and school board associations on crowdfunding, Livingtree decided to take a deeper dive and report what is happening right now. To provide a better picture of the current risks school districts are facing this year, we took the latest data from the earlier mentioned crowdfunding website to develop this Mid-Year Education Crowdfunding Report.

    According to the crowdfunding website, over 145,000 projects have been fully funded so far in the 2018-2019 school year. At that pace, we expect to see around 290,000 fully funded campaigns by the end of this school year, an increase of 36,000 campaigns from the previous year. In addition, this year’s completed campaigns have raised over $77 million of donations for teachers and school projects. Based on that number, we’d expect to end the school year with around $154 million of donations, an increase of $2 million over last year. Since this data is only taken from one popular crowdfunding site, it’s likely that the overall crowdfunding totals are much greater.

    To further understand this issue, Livingtree compiled all of the campaign data from the crowdfunding site for the 2018-2019 school year and composed lists to help identify which states currently have the highest risk when it comes to education crowdfunding. Below, we’ll examine the states with the Highest Average Amount Raised per District, the Highest Average Number of Campaigns Posted per District, and the Highest Average Number of High Risk Campaigns Posted per District.

    Note: the data is organized to represent states in amounts per district to give the most accurate representation of every state. Hawaii and the District of Columbia are not represented in the data.

    Highest Average Amount Raised per District

    StateAvg Amount Raised Per DistrictTotal Amount Raised (Statewide)
    Florida$57,479.91$4,253,513.32
    Nevada$42,042.15$756,758.69
    Utah$40,327.33$1,653,420.65
    Maryland$40,118.36$962,840.74
    North Carolina$32,785.70$3,770,355.42
    South Carolina$22,163.51$1,861,734.46
    Louisiana$18,089.54$1,266,267.86
    California$13,182.13$12,404,386.71
    Delaware$13,141.04$249,679.84
    Virginia$12,485.71$1,648,113.87
    Georgia$10,534.94$1,896,289.92
    Massachusetts$9,805.79$2,333,777.15
    Texas$9,486.36$9,761,468.95
    Tennessee$8,855.31$1,248,599.03
    Connecticut$8,411.12$1,421,479.43
    Arizona$8,395.31$1,897,340.05
    Rhode Island$7,415.36$259,537.51
    New York$7,076.41$4,932,259.16
    Alabama$6,898.59$945,106.61
    Mississippi$6,152.57$929,038.73
    Alaska$6,018.77$318,994.63
    Idaho$5,595.59$643,492.62
    Colorado$5,291.34$941,858.24
    Oregon$5,030.50$905,490.29
    Indiana$4,891.85$1,447,986.53
    Washington$4,837.99$1,441,720.76
    West Virginia$4,749.19$261,205.20
    Pennsylvania$4,356.19$2,178,095.45
    Oklahoma$3,841.52$2,001,429.55
    Illinois$3,826.11$3,309,581.73
    New Mexico$3,691.19$328,515.69
    Kentucky$3,689.04$645,582.54
    Minnesota$3,072.05$1,044,497.13
    Michigan$2,960.27$1,628,147.41
    Wisconsin$2,899.49$1,223,582.74
    Missouri$2,734.23$1,424,533.66
    Arkansas$2,624.42$624,611.88
    Ohio$2,441.36$1,508,758.66
    New Jersey$2,376.73$1,430,790.69
    Wyoming$2,031.94$97,532.93
    New Hampshire$1,898.28$317,012.57
    Maine$1,731.74$412,154.09
    Kansas$1,263.09$390,295.37
    South Dakota$970.19$146,498.51
    Iowa$890.90$310,032.83
    Nebraska$613.40$152,735.74
    Montana$552.87$229,439.89
    North Dakota$319.74$58,192.12
    Vermont$228.82$60,409.64

    Florida made number one on the list for the highest amount of money raised from the crowdfunding site, averaging out at over $57,000 per school district. The next three states all averaged over $40,000 in funding per school district.

    Regardless as to whether these donations reach schools in the form of funding or project items, a district must be able to ensure that every dollar is tracked and properly routed, and oversee the process to maintain accurate inventory and donation reporting. State-wide totals are also included in this report for reference.

    Highest Average Number of Campaigns Posted per District

    StateAvg Number of Campaigns Per DistrictTotal Number of Campaigns (Statewide)
    Florida107.27931
    Nevada86.11550
    Maryland76.01823
    Utah64.62648
    North Carolina62.57185
    South Carolina47.03947
    Louisiana30.12107
    Delaware28.8547
    Virginia26.13442
    California20.819562
    Georgia20.03595
    Massachusetts17.04053
    Connecticut16.02710
    Tennessee15.82229
    Texas14.514963
    Rhode Island14.4505
    New York13.19097
    Alabama12.01646
    Arizona11.82674
    Mississippi10.41574
    West Virginia10.3564
    Indiana10.33035
    Oregon9.31680
    Colorado9.31661
    Washington9.22739
    Idaho9.01032
    Alaska9.0475
    Pennsylvania8.84399
    Kentucky7.21258
    Oklahoma7.13685
    New Mexico7.1628
    Illinois7.06057
    Michigan6.03304
    Wisconsin5.82458
    Minnesota5.71951
    Missouri5.72965
    Arkansas5.01185
    Ohio4.93030
    New Jersey4.32601
    Maine3.5831
    Wyoming3.5166
    New Hampshire3.3547
    Kansas2.7848
    South Dakota1.9294
    Iowa1.9659
    Nebraska1.4339
    Montana1.0414
    North Dakota0.6106
    Vermont0.5120

    Florida again tops the list at number one for the highest average number of campaigns posted from the crowdfunding site, at 107.2 campaigns per school district so far this year. The higher the number of campaigns being posted, the higher the risks and liabilities for school districts without fundraising controls in place. And without the ability for school districts to review and approve campaigns before they go live, it’s almost impossible to be sure that the campaign meets all of school district’s requirements.

    Highest Average Number of High Risk Campaigns Posted per District

    StateAvg Number of High Risk Campaigns Per DistrictTotal Number of High Risk Campaigns (Statewide)
    Nevada7.7139
    Florida6.9513
    Maryland6.3150
    Utah4.8198
    North Carolina3.8434
    South Carolina2.6220
    Delaware2.547
    Rhode Island2.278
    Massachusetts2.2519
    Virginia2.0259
    Louisiana1.8127
    New York1.61107
    Texas1.61631
    California1.41345
    Georgia1.4252
    Connecticut1.2209
    Arizona1.0223
    Tennessee0.9130
    Washington0.8229
    Pennsylvania0.7373
    Illinois0.7621
    Oregon0.7120
    Alabama0.791
    Colorado0.7118
    Idaho0.776
    Indiana0.6190
    New Mexico0.653
    Alaska0.529
    Minnesota0.5179
    Kentucky0.589
    Oklahoma0.5259
    Michigan0.4224
    Wisconsin0.4170
    Mississippi0.459
    New Jersey0.4233
    West Virginia0.420
    Missouri0.3173
    Ohio0.3197
    Maine0.361
    New Hampshire0.240
    Kansas0.258
    South Dakota0.228
    Iowa0.259
    Arkansas0.240
    Nebraska0.128
    Vermont0.09
    Montana0.014
    North Dakota0.04
    Wyoming0.01

    Nevada leads the way for the highest average number of high-risk campaigns posted from the crowdfunding site, at 7.7 high risk campaigns posted per district so far this year. At Livingtree, we identify high risk campaigns as those classified on the crowdfunding website as either “Special Needs” or “ESL.” The classification of high risk is due to the fact that “Special Needs” campaigns have a high possibility of violating a student’s IEP, which a district would be legally required to fund through IDEA. There are also special services that ESL students qualify for that can’t be funded outside of the school district. These are all in addition to the existing risks that go along with crowdfunding, making them much higher risk campaigns. So far this school year, “ESL” and “Special Needs” are ranked as the 7th and 8th most popular project categories.

    What to do next:

    Again, it’s important to note that these statistics were generated from a single crowdfunding site, and that this is only a piece of the “crowdfunding picture.” We’d expect that total crowdfunding numbers are much larger, however it is difficult to collect data from every single site out there.

    Because of these statistics and the associated risks, some districts take the easy route by setting policies that ban crowdfunding. However, this option forgoes the many benefits that crowdfunding has to offer for school districts, and creates a new task of having to police the large number of crowdfunding sites to ensure district members aren’t using them.

    The other option is to evaluate online fundraising management options and adopt one that provides an automated district approval process for all campaigns, tracks all donations, routes funds through a district account, gives the district access to their donor information, provides aggregated reporting for every campaign, and has built in tools to make fundraising easy for any PTA/PTO, booster, club, team, or district member.

    Once a management platform is selected, procedures and guidelines can be written to accompany the school district’s fundraising policies (no, you don’t actually have to re-write policies!). These should clearly outline rules for only using the district’s chosen fundraising management platform, campaign approval criteria, required campaign content, and ownership of the funds raised.

    Once this is all in place, start fundraising! With your district overseeing the entire fundraising process and having official procedures to guide the process, fundraising becomes manageable and easy.

    If you are curious about your school district’s risk potential on the crowdfunding site we used, check out the free tool created by Livingtree to evaluate your district’s risk potential, dollars collected, and number of campaigns posted so far this school year: https://learn.livingtree.com/risk-analysis

    Is your school district ready to start evaluating fundraising management solutions? Then download our free Crowdfunding Considerations Guide for K-12 School Districts and know the 7 important areas to evaluate when looking at fundraising sites: https://try.livingtree.com/crowdfunding-considerations-blog/

    Data Sourced from:
    https://data.donorschoose.org/explore-our-impact/

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