Crowdfunding Policy Guidance & Best Practice for School Districts

Crowdfunding provides enormous opportunities for today’s classrooms and school programs to raise money because of it’s efficiency. Organizers can create campaigns in no time, and share them with hundreds if not thousands of people online.

However, these same opportunities also pose serious risks to those involved. Over the last few years, it has been found that crowdfunding may expose organizers, donors, schools, and districts (especially those without any policies or procedures) to a number of serious liabilities.

A variety of publications about crowdfunding in K-12 schools have been posted, including some from state and local school boards, education law firms and attorneys, state auditors and comptrollers, and even media outlets. Some of these publications contain guidance for school districts around crowdfunding, urging districts to implement policies and procedures around crowdfunding, and additionally including items and content that should be considered.

In order to make it easier for administrators to make decisions regarding crowdfunding in their districts, this article has consolidated and synthesized the common guidance and best practices of four different publications.

This article examines the following four publications:

1. “Crowdfunding in Public Schools: Mitigating Potential Liability
through Effective Policies
” written for the National School Board Association’s Council of School Attorneys by Erin Duryea Gilsbach, Esq. of King, Spry, Herman, Freund & Faul.
2. “Crowdfunding Classrooms” a Special Report by Dave Yoast, Ohio Auditor of State
3. “Online Fundraising Helps Schools, But Requires District Oversight” published by the California School Boards Association
4. “What School Districts Need To Know About Crowdfunding” published by the Fisher Phillips Law Firm.

For the remainder of the article, references made specific to the above articles will be associated with their number.

Here’s what each publication states that districts should do in regards to crowdfunding:

1. “Schools should have careful regulations regarding who can raise funds on behalf of a school and what procedures and protections should be put into place to protect the school in such instances”

2. “Because of these risks, it is prudent for school districts to adopt a crowdfunding policy that mitigates them.”

3. “Districts need to be aware of all such campaigns conducted in the name of the district, a district school or a district employee. It’s important that the district set ground rules that ensure transparency, fiscal integrity and effective use of the funds.”

4. “Because of these potential legal ramifications, schools should consider establishing a policy either allowing or prohibiting crowdfunding.”

Listed below is the common guidance posted consistently across their publications, followed by the specific suggestions stated by each publication. For school districts looking to get ahead of the issues associated with online fundraising, this guidance should be understood and carefully considered:

Require Prior Administrative Approval of All Crowdfunding Campaigns

1. “Individuals wishing to raise funds for a particular school should be required to obtain written approval after providing pertinent details, such as the site on which the funds would be raised, a complete copy of the proposed listing, and a copy of the school personnel’s personal profile to be listed on the site.”

2. “Require that all crowd-funding campaigns by reviewed and approved by a designated school administrator,” and “Mandate that no donations will be accepted without school board approval.”

3. “Policy regarding online fundraising campaigns that will benefit the district, regardless of whether the campaign is proposed by a district employee or another person or organization, should require prior approval from the superintendent or other designated employee.”

4. “Require review of any draft proposal prior to it being posted on a permissible website. This allows administrators to ensure the draft proposal does not violate any federal or state law and that it safeguards the school from a negative public image.”

Identify An Approved Crowdfunding Site List

1. “Develop an Approved Site List…Several education-based crowdfunding sites already have safeguards in place to prevent misuse of funds and/or misappropriation of materials…consider all of the available sites and approve only those that provide the safeguards deemed most appropriate by the school.”

2. “Designate which crowdfunding services can be used by teachers.”

3. “Some districts may also choose to specifically identify the crowdfunding platforms that may be used, based on the policies and agreements required by certain sites, the way in which the site collects donations, whether donations are sent directly to the school to ensure they will not be diverted or misused and/or the fees or percentage of donations charged by the site.”

4. “Designate permissible crowdfunding websites that teachers can post proposals on. Schools should consider all of the available sites and approve only those that provide the safeguards deemed most appropriate by the school.”

Bonus info: Get the School District Crowdfunding Considerations Guide for a real example of the risks that school districts are facing and the 7 areas that administrators need to consider.

Require That Donations Are Distributed Through the District or School

1. “Only Permit Crowdfunding on Sites that Send Proceeds and/or Items Directly to the Schools, NOT the Individual Employee…Schools should require that funds and/or items be delivered directly to the school administrator “

2. “These should be services that send donations directly to the school, not to the teacher, to ensure that donations are not diverted or misused.”

3. “Districts should ensure that donations are subject to fiscal accountability measures related to the collection, accounting, expenditure, inventory and audit of donations.”
“Identify the crowdfunding platforms that may be used, based on…whether donations are sent directly to the school to ensure they will not be diverted or misused.”

4. “[Donations] must be paid directly to the school and not any individual school representative. The policy should specifically prohibit the donations from going directly to any individual employee.”

Establish That All Donations Are Property of the District

1. “Schools should also make clear, via written policy or procedures, that all funds and/or materials are property of the school and shall remain with the school in the event that the teacher terminates his or her employment with the school.”

2. “Establish 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.”

3. “Mechanisms for financial transparency should also be addressed, including a requirement that the campaign…states that funded resources will be owned by the district.”

4. “Specify that the donations are the property of the school…The policy should specifically note that the proceeds or donations from any crowdfunding proposal remain with the school.”

Establish Review & Approval Criteria

1. “Approving administrators should carefully review the proposed posts to ensure that no potential legal liability, violation of state or federal laws, and/or violation of the school’s policy and/or procedures exists. The proposed posts should also be reviewed to ensure that the posts do not paint the school, the district, or any of its employees or students in a negative light. Ideally, school regulations/procedures should prohibit all posting of student images on the site, limiting pictures to that of the classroom, the teacher and/or photos of students where the students are not identifiable (i.e., their hands, backs of heads, etc.). Reviewing administrators should have the authority to deny permission for a teacher to crowdfund on behalf of the school and/or the teacher’s individual classroom where potential issues or violations are present. Where a reviewing administrator spots an issue that might have legal implications, legal counsel should be consulted.”

2. “Direct 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.”

3. “Criteria to be considered in determining whether to grant the request should be clearly spelled out in the policy, and could include the extent to which the proposed fundraiser:
» is consistent with the district’s vision, goals and priorities;
» conforms with the board’s goal to provide equity in resources across school sites and student populations;
» is compatible with existing infrastructure, if it involves the purchase of technology, equipment or furniture;
» supports a one-time purchase and does not create an ongoing obligation that the board may not be able to sustain;
» does not violate any law or district policy, such as policies that establish criteria for the selection of instructional materials or that protect the privacy of student information and photos;
» does not pose any potential conflict of interest;
» and meets any other factors considered relevant and nonarbitrary.”

4. “Ensure the draft proposal does not violate any federal or state law and that it safeguards the school from a negative public image.”
“Reviewing administrators should have the authority to deny permission for a teacher to crowdfund on behalf of the school or the teacher’s individual classroom where potential issues or violations are present. Where a reviewing administrator spots an issue that may have legal implications, legal counsel should be consulted.”


For administrators looking to use this guidance to address the issues of crowdfunding in their districts, check out the blog, “How to Make Crowdfunding Work in Your School District (A Step-By-Step Guide).” This guide covers the process that some specific districts went through in order to solve these issues and successfully support fundraising in their districts.

For additional crowdfunding information including the publications, policy examples, procedure examples, presentations, etc., visit our resources page to download them for free.

How to Make Crowdfunding Work in Your School District (A Step-By-Step Guide)

As a growing number of school communities turn to crowdfunding and raise more money than ever before for their classrooms and programs, what should be celebrated as a victory has turned into a concern for school district administrators.

The concept of online fundraising in K-12 schools has erupted over the last decade as a combination of the perfect storm: community members got tired of having to buy things and just want to make a donation, online fundraising made giving easy, and made it possible to share fundraisers quicker than ever before. Since it’s become one of the most effective ways to raise funds for just about anything, it’s not slowing down any time soon.  

What was unfortunately discovered as a result of its growth were the unintended potential consequences. Many school districts are learning about these consequences through the numerous articles, reports, and guidance published about crowdfunding, and are now faced with the new challenge of supporting online fundraising in their schools in a way that safeguards everyone involved. Doing this requires a district-wide systematic approach, which has now sent school districts looking for a solution.

Luckily, some school districts around the country are getting ahead and leading the way. Instead of banning crowdfunding, these districts have embraced it and supported their members’ ambitions by putting new policies, procedures, and platforms in place that provide additional coordination between the fundraiser creators and the school and district administrators.

This guide was written based on the steps these school districts took to successfully put items in place that solve these issues and support fundraising in their districts.

1. Understand What Crowdfunding Is

In its most basic sense, the process of crowdfunding in K-12 education starts when someone from a classroom, a team, a school program, a parent organization, or other school-associated group has an idea that requires funding, for which they create an online-based fundraiser. In order to gain donations, the creator usually has to do some level of promotion by sharing with family, friends, community members, and others across the web. Once funded, the donation is sent to the creator by means of funds or items. EdSurge uses a great visual to describe this process in their Crowdfunding Research Report.

There are a wide variety of crowdfunding sites on the web. General crowdfunding sites like GoFundMe and Fundly are made for anyone to raise money for almost any cause. There are some sites like Kickstarter or Indiegogo that are for more specific causes, like funding creative projects and innovative ideas by entrepreneurs. And finally, there are sites that are specific to education, so specific even, that they are made only for specific user groups – for example, sites like AdoptAClassroom and DonorsChoose are made only for teachers, and sites like SnapRaise are made for teams and programs. The challenge this creates for school districts is finding just one education-specific platform to use that fits the needs of their teachers, teams, clubs, and programs.

For more insight on crowdfunding and things that districts should know, an article by Fisher Phillips Law Firm also does a solid job explaining how the process works.

2. Be Aware of What’s At Stake

Certain legal, financial, and reputational issues can pose potential risks for those involved with online fundraisers, sparking districts to establish protective policies and procedures. Having a thorough understanding of these issues is what has helped many school districts reach the best solution.

The process of crowdfunding in K-12 school districts has been described as “decentralized” due to the lack of controls and coordination available to school districts, which in turn can also create a number of potential legal, financial and reputational risks for the district, the organizer, and the donor. For a better understanding of how the issues of K-12 crowdfunding have evolved, quickly watch Livingtree CEO Gary Hensley discuss today’s current crowdfunding situation, and some of the issues it’s creating for school districts.

Livingtree CEO Gary Hensley discusses the current situation in K-12 schools when it comes to crowdfunding and the risks that teachers, donors, and the district all face when it’s not done right.

The liabilities created by these campaigns can be rather serious as warned about by a number of school boards, attorneys, and state auditors, which can result in PR nightmares, a loss of funds or inventory, or worst-case legal action against a school or district. For a list of the potential liabilities that school districts should know about, read our blog “The Liabilities of Crowdfunding for K-12 School Districts.

3. Understand What Is Happening In Your District

Understanding what’s happening in your school district is the first step in addressing these issues, which will help you navigate the upcoming steps and avoid push back by members of your district when it comes time to decide on policies and procedures. While the risks are serious, some school districts have come under fire from teachers and the public after quickly banning crowdfunding sites without creating any available alternatives, as written about in Education Week.

To understand what crowdfunding platforms are being used in your district, a census, or even a survey of a few schools can be most telling. This can help you determine what groups are using what platforms, the frequency they are being used, and how much money or inventory they are collecting as a result.

Another option is to simply do some research to see what’s out there. How? You can usually find the currently active crowdfunding campaigns, and often times even the completed ones, just by searching these sites by the name of your school district, schools or location.

Search options on DonorsChoose allow users to display search results by district, simply by typing and selecting the name of your district from the bottom of the list.
DonorsChoose allows users to search by the school district, simply by typing and selecting the name of your district from the bottom of the list.
DonorsChoose allows users to filter results to show only fully funded projects, enabling districts to view completed projects.
AdoptAClassroom allows users to search for campaigns based on location or school name.

While this requires you to do some digging through crowdfunding sites that your district members might be using (since you won’t know every site being used), the option is typically easier and may give you the answers you need. We suggest starting with some of the more popular sites, such as DonorsChoose, GoFundMe, AdoptAClassroom, and PledgeCents. For more on taking this step to understand what’s happening in your district, here is Lana Berry, Chief Financial Officer of Chandler Unified:

Lana Berry, Chief Financial Officer of Chandler Unified School District, led the way in Chandler and across Arizona by working through this process to find a solution that would meet their needs and support the fundraising efforts of their district.

4. Understand the Guidance

Because of the potential liabilities and risks from Step Two, guidance around crowdfunding has been issued by a number of organizations across the country, including state and local school boards, education law firms and attorneys, state auditors and comptrollers, and even media outlets. The guidance urges districts to implement policies and procedures around crowdfunding, and contains items and content that should be considered.

“Because of these risks, it is prudent for school districts to adopt a crowdfunding policy that mitigates them.”
– Published by Dave Yost, Ohio Auditor of State in his Special Crowdfunding Report (2018)

With a host of resources already available, it’s important to understand the guidance and how you can incorporate it into your district’s decisions. As discovered in our research, several consistencies exist across the guidance that has been issued.

This article examines the guidance suggested by:
1. Erin Duryea Gilsbach, Esq. at the King, Spry, Herman, Freund & Faul in the article written for the National School Board Association’s Council of School Attorneys.
2. Dave Yost, the Ohio Auditor of State in his Special Report on crowdfunding.
3. The California School Boards Association’s guidance article on crowdfunding.
4. The Fisher Phillips Law firm in their article on “What School Districts Need To Know About Crowdfunding

Here is the guidance listed most consistently across their publications that should be understood and carefully considered:

School Districts Should Require Prior Administrative Approval of Fundraising Campaigns

As suggested across all publications, one of the most agreed-upon requirements is that school districts should have a pre-approval process for administrators to review and approve the fundraising campaigns before they are published on permissable sites. The reviewing administrators at the school and/or district level should carefully review the campaigns for potential issues and violations, and ensure the campaigns are compliant with all board policies.

In some cases, the guidance suggests that the Superintendent should review or designate another district employee to review the campaigns, and districts should mandate that no donations be accepted without school board approval.

One consideration that should be taken into account is that approval processes can become messy, requiring forms from across the district to be submitted, properly routed, and recorded, which can potentially inundate business offices.

However, many districts like Chandler Unified have gotten ahead of these issues. These districts have implemented a solution that streamlines this process through a central system and ensures that campaigns are always reviewed by the correct administrators, tracked with audit trails, and reported on when the campaign is fully funded. 

School Districts Should Identify An Approved Crowdfunding Site List

School districts should develop a list that identifies the crowdfunding platforms and sites that may be used by district members. This list should be created based on a number of considerations, the first being the safeguards, controls, and level of coordination available to district administration – this may include whether the platform has a built-in approval system, how campaigns are tracked, the audit trails available, and the reporting provided to the district. Other considerations include who the platform’s intended use is for (is it only for a specific group like teachers, or can it be used by anyone?), fees or percentages charged by the site, and the effectiveness/usability of the fundraising platform.

Other considerations include who the platform’s intended use is for (is it only for a specific group like teachers, or can it be used by anyone?), fees or percentages charged by the site, and the effectiveness/usability of the fundraising platform.

School Districts Should Require That Donations Are Distributed Through the District or School

When a fundraising campaign is completely funded, as stated in the CSBA’s guidance, “districts should ensure that donations are subject to fiscal accountability measures related to the collection, accounting, expenditure, inventory and audit of donations.” The guidance across these resources states that school districts should require that the donations be routed through the district and/or school accounts, and then distributed to the organizer.

In the case of monetary donations, ensuring the donation goes to a district or school account provides safeguards and can provide tax relief to the donor. This process provides administration with the ability to properly record and track the donation, and equip any physical donations with inventory tags and/or the required software.

School Districts Should Establish That All Donations Are Property of the District

This requirement should be established and made clear through policy and/or procedures. The policy should specify that donations are the property of the district, and that the proceeds or donations from any proposal remain with the school. This ensures that donations remain in place for their original intended purposes in the event that the original campaign creator terminates his or her employment.

5. Use Your Resources to Make Decisions

Making district-wide decisions about crowdfunding isn’t easy and can look different in every district. You are going to have to make changes to your procedures, guidelines, and even your policies, which typically requires collaboration between the Superintendent, district cabinet members, the finance office, and the school board.

If someone has made it to this step of the process, it’s important to make sure that everyone is on the same page and understands everything we’ve covered in previous steps. If you are looking for presentations that cover this topic, you can take a look at “Crowdfunding – Setting Your District Up for Success!” by Chandler Unified School District’s Chief Financial Officer Lana Berry or “Legal Issues and School Board Policies on Crowd Source Funding” by the North Carolina School Boards Association’s Staff Attorney, Justice Warren.

Because laws and regulations in regard to raising funds can differ state by state, your team may also want to consult other agencies such as your state school boards association and your state auditor or comptroller, before making any further decisions. Before enacting any procedures in their district, Chandler USD made sure to consult their state school boards association and state auditor to ensure they understood the regulations and how to maintain compliance.

Using school districts that have already enacted controls to support online fundraising activities can also be a great resource. There are a growing number of school districts across the country, Chandler USD included, that have led the way and made strides to tackle these issues.  You can view the crowdfunding procedures from Chandler USD, and the policy from Union County School District, both of which are notable districts in terms of successfully supporting online fundraising through policy and platform.

Bonus info: Get the School District Crowdfunding Considerations Guide for a real example of the risks that school districts are facing and the 7 areas that administrators need to consider.

6. New Policy, Procedures & Guidelines, and Platforms

Once you’ve done your homework, and fully understand what your district should do to protect your fundraising organizers, it’s time to solidify your plans through guidelines, procedures, and policies that provide expectations for district members.

One of the most surprising discoveries made by Chandler USD as they initially went through this process was the fact that they had to make very few changes to their board policy. In talking with their Chief Financial Officer Lana Berry, she stated that many districts already have board policy that covers fundraising, which is usually all that’s needed. The major changes they made were in their procedures and guidelines.

Some districts do choose to re-write this section of their policy, or add in a section on crowdfunding such was done at Union County School District. If your district is advised to make this change, you can use the examples we’ve already listed, as well as the rules that were adopted by New Prague Area Schools, Minnesota, outlined in our previous blog. The three resources listed in Step Four contain valuable policy and procedural recommendations that you reference when making these changes.

7. Roll Out Your Changes

Once you’ve solidified your new policies, procedures, and/or platforms, you’ll need to roll out these changes across your district, making sure everyone in your district knows about the updated crowdfunding procedures. Livingtree typically provides its partner districts with communication tool-kits that assist with this communication, but it’s a good start to consider a press release, announcements via social media, email, or newsletter, and even letters to your staff.

Another option to aid is awareness is providing professional development around your new fundraising path. If you’ve identified a list/an approved crowdfunding site for your district to use, identify a champion in the district or at every school who understands how to use them, and help everyone follow the new procedures. This would provide a great opportunity for fundraisers to get approved on the spot, and then launched online. Many school districts that have already gotten ahead of these issues have found success by providing professional development and training on their selected platforms that establishes best practices to maximize the funds they raise.

Of course, fundraising isn’t always at the top of everyone’s minds all the time, so it’s very likely that someone doesn’t remember the new required procedures and launches a campaign without approval or on a site that isn’t approved. That’s ok – it’s an adjustment.

Some monitoring of social media and crowdfunding websites may be required from time to time to ensure the rules are being followed. If you find they aren’t, a gentle reminder is all it takes. Remember, this is about protecting your schools, fundraiser creators, and donors so they don’t ever find themselves in hot water because they tried to do something good for their students.

Union County School District responds to an Amazon Wishlist link tweeted by a teacher, asking "Please check with your school about setting up a Livingtree campaign for your class project. Thank you."

In conclusion, to make crowdfunding work in your district:

1. Understand that crowdfunding in K-12 schools is the process of someone launching a fundraiser online, sharing it with the community and others across the web, and raising money for a school idea.
2. Be aware that crowdfunding in school districts without processes or oversight can lead to potential legal, financial and reputational risks for the district, the organizer, and the donor.
3. Understand what’s happening specifically in your district by either conducting a census or survey of your district members, or doing research on popular crowdfunding sites.
4. Understand that all of the guidance published for school districts suggests implementing policies and procedures around crowdfunding, and contains resources that you can incorporate it into your district’s decisions.
5. Use or reference existing resources like the crowdfunding presentations, your state school boards association, your state auditor or comptroller, and school districts that have led the way and have already tackled these issues.
6. Write your new policy, procedures, and guidelines, and use your resources to do so.
7. Roll out your changes, making sure to communicate and create awareness about the updated procedures.

Livingtree is not only helping school districts across the country implement a central platform to pre-approve, track, and report every fundraiser, but is also assisting school districts through the early steps. If you need help with any of the steps above, Livingtree can help! Simply email info@livingtree.com, and our team can help provide reports and guidance around crowdfunding, deliver a crowdfunding report of the most current and past campaigns in your district, and provide resources from other districts who have conquered this challenge.

For additional crowdfunding resources (reports, guidance, district policies & procedures, etc.), visit learn.livingtree.com/givetogether.

If you’d like more information about using the Livingtree Give platform to manage online fundraising in your district, visit the webpage here, or click the button below to request more information.

Ready to get started with Livingtree?

Request Information
 
Skip to content