United States: What School Districts Need To Know About Crowdfunding

Last Updated: September 3 2019
Article by Sarah J. Moore and Lauren C. Tompkins

Crowdfunding, in the most basic sense, is the practice of raising money from a large number of people through any number of internet-based platforms. It has become an increasingly popular way for individuals, businesses, charities, and organizations to raise money for specific goals and objectives.

There are a number of crowdfunding platforms out there, but some of the most commonly known sites are GoFundMe, Adopt-A-Classroom, Kickstarter, IncitED, and Donors Choose. The popularity of these sites has grown in recent years, and millions of dollars have been raised for the benefit of those in need – including schools, teachers, and students.

The Benefits Of Crowdfunding For Educational Purposes

The crowdfunding process is quite simple. A teacher can set up a campaign in minutes and immediately begin to receive funding from all over the world. The funds can be used to raise money for classroom supplies, enrichment programs, and field trips, among other things.

Some of the crowdfunding websites raise money and transfer it directly to the teacher or the school. Other websites will raise money that is paid to a specified vendor, who ships the product or good to the school when fully funded. This way, the teacher and school never receive any cash at all.

When it works, crowdfunding can produce large amounts of money very quickly. It can also get that money into the hands of teachers and students who need it the most. Seems simple enough, right?  Hold up, don't get too excited.  Of course, as with anything that sounds this great, it is a bit more complex for anyone using it, but especially for schools. 

Proceed With Caution: Crowdfunding Concerns

Crowdfunding can produce substantial risks for schools if not properly regulated, such as confidentiality concerns related to potential Family Educational Rights and Privacy Act (FERPA) violations and liability under the Individuals with Disabilities Act (IDEA). For example, imagine if a public school teacher creates a post asking for donations to acquire laptops for the students. She describes her 10-student classroom in detail, explaining that four students are boys, six students are girls, and two of the students are non-verbal. She posts a picture of her students on the page and identifies which students are non-verbal. On her page, she explains the laptops will help with the non-verbal students' communication skills, prevent further disciplinary issues for those non-verbal students, and also generally assist with overall classroom education.  

While photographs of students may be considered to be Directory Information under FERPA, posting a picture and referring to the pictured students by their specific disabilities would be a FERPA violation. Additionally, the need for the devices as technology to assist in the proper education of the students, as well as the fact that the students are being disciplined for conduct related to their lack of communication skills, are potentially significant IDEA issues for which the school could be held liable. This same analysis applies to charter schools and private schools covered by FERPA.

In addition to FERPA and IDEA concerns, crowdfunding can cause financial record concerns as it deals with money and items of value. Money received by a school needs to be recorded and deposited properly. This is of particular importance for public schools where such failure can violate recordkeeping compliance laws.

Imagine another scenario where a teacher requests $1,000 for classroom supplies through a crowdfunding site. The teacher sets up the proposal so that the money earned from the campaign goes directly to him rather than the school. Once the money is received, the teacher does not report it to the school but instead uses $500 for the school supplies and puts the rest of the money aside for later use. The school year comes to an end, and the teacher deposits the money into his personal bank account rather than purchase school supplies. Here, the teacher has potentially created liability for the school by having the money given directly to him from the campaign, failing to use the money for the stated purpose, and depositing the money into his personal account.

Finally, a school's reputation can be put at risk through the use of crowdfunding proposals. For example, imagine a teacher posts a proposal asking for donations to help her 5th grade students because the school district "lacks significant funding and does not provide any support to the students and their learning needs." This type of post undermines the school's public image, values, goals, and objectives, and likely causes people to question the school's ability to deliver sound education.

The Solution: Establish Clear Policies

Because of these potential legal ramifications, schools should consider establishing a policy either allowing or prohibiting crowdfunding. The easiest choice is to adopt a policy prohibiting any employee from crowdfunding in relation to their employment or school operation. A policy banning crowdfunding should be specific and state that the school does not allow, support, or condone any type of crowdfunding, in any manner and on any platform, and should include a reference to disciplinary action that could result from a violation of the policy. A school choosing to create a policy that allows for and regulates crowdfunding must make sure the details of such a policy minimize the significant risk of allowing this type of activity. The following is a list of suggested best practices for developing a policy that permits crowdfunding:

  • 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.
  • 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.
  • 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.
  • Require donations to be used for the stated purpose and include follow up procedures to ensure that the donations are in fact used for the stated purpose.
  • Specify that the donations are the property of the school and 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.
  • The policy should specifically note that the proceeds or donations from any crowdfunding proposal remain with the school.
  • Require documentation of donations in financial ledgers for monetary donations or inventory for items.
  • Include a statement that a violation of the policy could result in disciplinary action, up to and including termination of employment. Of course, be sure to address any union-related concerns or processes as needed.


Crowdfunding is growing in popularity and has become a source of significant funding that is being widely used by the education community. Because of this, schools need to take measures to regulate the crowdfunding by developing a policy that specifically addresses the issue. Schools should also keep up to date on ever-changing legal issues, legislation, and best practices that will inevitably follow as this source of funding continues to grow in popularity.   

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Similar Articles
Relevancy Powered by MondaqAI
In association with
Related Topics
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions