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Not so noble crowdfunding sparks backlash


As crowdfunding sites like GoFundme.com and Indiegogo.com started to take off, New York City editor Brandon Wenerd was more than happy to donate to worthy causes, like the kid with stage-four kidney cancer who wanted to travel the world. Soon Wenerd, 30, was swamped with more selfish requests: people raising money not for anything high-minded or charitable, but for spring break trips, honeymoons and credit-card debt."It has taken on this air of panhandling to me," said Wenerd. For anyone with a Facebook or email account, it is likely a familiar story. More and more family members, or friends, or friends of friends, or even strangers, are asking for help with the rent, or to fund a trip. The crowdfunding field has ballooned to over $34 billion in just a few years, according to the consulting firm Massolution, up from $880 million in 2010, so it is perhaps inevitable to see some backlash."You know what people did before GoFundMe? They worked," said Damen Bell-Holter, a professional basketball player from Alaska who now plays overseas in Finland. He is among those who finds himself awash in crowdfunding requests, and is sick of them. "Help me with my rent, help me with my school bills. I understand tragedy occurs, and some people legitimately need help - but others are just lazy," he said. The floodgates to silliness opened when people figured out that the online interface allows them to reach out and ask for things they might not have the temerity to ask for in person, said Amir Pasic, dean of Indiana University's Lilly Family School of Philanthropy.

Even Kickstarter (kickstarter.com), which has successfully funded over 102,000 projects toward the goal of bringing "creative projects to life," helped one man raise over $55,000 so he could make potato salad. GoFundMe (gofundme.com) has raised $2 billion in the last year, with some users currently seeking money to buy bottles of Hennessy cognac, Yeezy sneakers, and breast implants. Indiegogo (indiegogo.com) has raised over $800 million for projects since its inception - including ventures like a bug-killing salt rifle, 13 dates for a British bachelor named Tom, caffeinated toothpaste and an attempt to bail out Greece. These sites can also be fertile ground for potential scams. Washington State Attorney General Bob Ferguson calls the phenomenon "crowdfunding theft," and last year ordered restitution to donors who had paid up for one project of horror-themed playing cards and got zilch in return.

Vigilante sites have also cropped up, like Kickscammed (kickscammed.com) and GoFraudMe (facebook.com/GoFundMeGoFraudMe), to police crowdfunding projects which do not follow through on what they promise. The main source of conflict: Once the funds are dispersed, there is not a lot of transparency. When famed girl group TLC raised more than $430,000 from fans last year to put out new music, the musicians faced backlash when no album emerged. GIVE SMARTER

To effectively sort through donation requests, potential donors need to avoid information overload, which can make it hard to discern between the truly needy and the personal larks. Research shows when donors get bombarded with direct-mail requests for money, Indiana University's Pasic said, they do not get more generous - they just get really irritated. Some stop giving altogether. If you get a crowdfunding request and do not know the person that well, "just ignore it," advised financial planner George Gagliardi of Lexington, Massachusetts. If the situation is more delicate - such as a close friend or family member - Gagliardi suggested dividing the requests into varying levels of urgency, from "dire, life-threatening situations" all the way to "luxuries." Then you can make the call depending on the particular case, and your own financial ability to contribute. The final step is to take the request out of the digital world. Ask yourself: Would this person actually ask for money to your face?"People are using the cover of technological distance, and just hoping people will make quick donations on the fly," said Pasic. "If there is a genuine need, and a real case to be made, then try picking up the phone and talking with them about it."

Press digest australian business news jan 16


Compiled for Reuters by Media Monitors. Reuters has not verified these stories and does not vouch for their accuracy. THE AUSTRALIAN FINANCIAL REVIEW (this site)The largest oil company in France, Total, has announced that it is looking for takeover targets in Australia as part of an ambitious expansion strategy. "There is no limitation for Total to invest more in Australia... Australia is a core asset and is part of our future," Marie Guillermou, senior vice-president for production and exploration in Asia at Total, said. The French group last week acquired a 24 percent stake in oil and gas explorer Inpex's US$34 billion liquefied natural gas venture in Australia. Page 15.-- Futuris, the largest domestic car parts manufacturer in Australia, has announced plans to double its foreign operations over the next five years. Managing director Mark de Wit said the company was looking into ways to enter the Indian market as soon as 2013, with Australian politicians and businessmen divided on whether to continue to provide subsidies for car manufacturers. Page 15.-- Rod Sims, chairman of the Australian Competition and Consumer Commission, yesterday said there could be additional delays in pay-television operator Foxtel'sA$1.9 billion proposed acquisition of rival Austar United Communications. The competition regulator needs to approve the bid by early February to allow Austar's minority shareholders to vote on the takeover, but Mr Sims declined to commit to any deadline for a final assessment. Page 15.-- Indian power firm Lanco Infratech is on the verge of filing a counter-claim against Perdaman Chemicals. The latter has sued Lanco for A$3.5 billion over an alleged failure to honour a 25-year contract to supply coal for the production of fertiliser ingredient urea. A spokesman for the Indian group, however, said it would file a counter-claim if it did not receive clarification over a number of issues, including a claim by the West Australian-based company that it had outlaid A$169 million on engineering surveys before securing finance. Page 41.-- THE AUSTRALIAN (this site)Australia's major banks could face even further upwards pressure on their cost of funding, after a series of credit downgrades for nine European nations. Australia and New Zealand Banking Group raised 1 billion before the end of last year in a 10-year covered bond 240 basis points higher than swap rates. "It was not so much a matter of price but the availability of funding  With the markets having closed we wanted to make sure we did not get behind the curve," Phil Chronican, chief executive of the bank, said before the credit downgrades. Page 23.

-- The Australian Taxation Office has recovered more than A$1 billion in tax bills since it began targeting individuals with assets of more than A$30 million a decade ago. The amount is equivalent to the amount of tax bills issued by the multi-agency offshore tax probe, Project Wickenby. "It's interesting when you look at Wickenby and we talk about something like A$1 billion in liabilities  We have raised similar amounts as part of our high-wealth-individual taskforce," Tax Commissioner Michael D'Ascenzo said. Page 25.-- A confidential report for the New South Wales government has failed to support a proposal to merge the state's three electricity distributors into two entities, with the review instead suggesting the three companies be merged into one body to achieve better efficiencies. Insiders yesterday said they were not surprised Mr O'Farrell's election proposal was not preferred, with the "mothership" model having been aired for the last year and a half. Page 25.-- Katie Page, the wife of Gerry Harvey, yesterday said her husband had no intention of retiring as the chairman of furniture and electronics retailer Harvey Norman. "Gerry is as vibrant today as he was 30 to 40 years ago," adding that "we are a team - better to have two people than one." Ms Page suggested that Malaysia could be a possible target market for the company, due to its growing middle-class and plans by the retailer to expand its number of Asian outlets to 50 over the next decade. Page 25.

-- THE SYDNEY MORNING HERALD (this site)Fijian military dictator Frank Bainimarama has announced that gold producer Newcrest Mining will have to directly negotiate with him over the development of the company's A$1 billion-plus gold and copper venture. A statement on Mr Bainimarama's government website said that it was "imperative to be forward-looking to ensure a clean environment for future generations while trying to gain maximum benefit for landowners". Page B1.-- Futures markets have predicted the S&P/ASX 200 Index will fall by 17 points to 4163 points in early trading today after ratings agency Standard & Poor's downgraded the credit ratings of nine European countries over the weekend. Prime Minister Julia Gillard used the news to encourage European leaders to "swiftly undertake structural reforms to boost their economic potential and lift growth". Page B1.-- Tony Nash, co-founder of Booktopia, has said that the online book retailer's sales are growing by half annually as Australians become more accustomed to online shopping and that 2012 would be "the tipping point" for consumers purchasing goods through the internet. The company is the largest Australian online book retailer, shipping more than 1 million books a year. Page B3.

-- Operations at two Western Australian mines owned by Fortescue Metals Group resumed over the weekend after work was suspended due to flooding from tropical cyclone Heidi. Elisabeth Gosch, spokeswoman for the iron ore producer, said mining had restarted at "Cloudbreak and Christmas Creek", but she declined to detail the torrential rains' affect on production. Page B3.-- THE AGE (this site)A member of the British Government has publicly supported locally-listed miner Wolf Minerals' bid to become a tin and tungsten producer. Lord Green of Hurstpierpoint, who is also the Minister of State for Trade and Investment and a former chairman of investment bank HSBC, wrote in a letter to Wolf saying that tungsten "has unique properties that are impossible to replace in certain specialised industrial applications". The minister added that Wolf's project was a key wealth and jobs-building venture for the community. Page B21.-- Qantas Airways is being urged to provide more detail over its proposed expansion into Asia amid economic turmoil in Europe and rising fuel prices. Broker Macquarie Equities yesterday downgraded the carrier's stock to "neutral" from "outperform", saying it preferred Virgin Australia in the airline sector because the rival airline had a "better articulated strategy than Qantas". Page B22.-- The Hunter Environment Lobby has secured a legal win against a coalmine in New South Wales (NSW), with the Land and Environment Court ruling that Ulan Coal Mines should pay money to offset any greenhouse gas emissions generated from the site. Ulan Coal, argued that offsetting scope one emissions from the venture was biased given that more than 50 coalmines were operating in the state. Justice Nicola Pain, however, said "that this is the first such condition imposed on a coalmine in NSW  is not necessarily discriminatory". Page B22.-- Chrysler has spent the last year attempting to boost its brand presence in Australia, with the car manufacturer's Jeep brand recently acquiring the main naming rights for the Portsea Polo tournament last weekend from beer label Stella Artois. Sam Tabart, general manager of marketing for Chrysler Australia, said the move was part of the company's strategy to focus on the brand's history. "Jeep's the oldest four-wheel-drive in the world, it's the reason you see a four-wheel-drive and call it a jeep," Mr Tabart said. Page B24.--