BUSINESS

Rob Ford Crackstarter: Crowdfunders Defend Effort As Video Tape Remains Elusive

06/19/2013 09:05 EDT | Updated 06/19/2013 12:11 EDT

Gawker’s attempt to raise money to pay drug dealers for an infamous alleged video of Toronto’s mayor smoking crack cocaine raised no legal or ethical flags at the crowdfunding site that hosted the campaign, says its founder.

‘We treated it like we treat all of our campaigns,” said Danae Ringelmann, founder of the popular crowdfunding platform Indiegogo, which was created as an equal opportunity online platform to democratize fundraising.

Campaigns on its site range from raising funds for saving libraries in Timbuktu to an app camp for girls, but the site has gained notoriety in Canada for its role in the ongoing saga of Toronto mayor Rob Ford, who has been under siege from international media since Gawker and the Toronto Star claimed to have a video showing him appearing to smoke from a crack pipe.

“We don’t believe it’s our right to decide who has the right to raise money or not,” she said.

“Indiegogo was born out of this mission to democratize fundraising and to truly empower the world to fund what matters to them whatever that might be so that is very much why we don’t have a curation or gatekeeper process upfront,” she said.

That lack of oversight leaves crowdfunding sites using the model vulnerable to potentially illegal ventures, like fraud, or ethically questionable ones, like pornography, but Ringelmann says only one per cent of campaigns have to be removed because they violate its terms of service.

Gawker’s campaign to raise $200,000 through Indiegogo hit its target weeks ago, but the site’s editor John Cook said in a blog post Tuesday that he is increasingly discouraged about the odds of obtaining the video from its owner, who has apparently gone into hiding.

Cook is now searching for Canadian addiction charities worthy of the remaining $185,000 (the sum minus Indiegogo and PayPal fees).

We still hold out hope that a copy or copies of the video exist and, that someone who has access to one of those copies likes money enough to share it with us. But time marches on,” he said in the blog post.

The video was shopped around for “six figures” by two men involved in Toronto’s drug trade, reported Gawker and The Star, which viewed the footage but did not buy it or verify its authenticity.

Ford has denounced the allegations as “ridiculous” and accused The Star of having a vendetta against him, but the mayor has said little else and taken no questions from reporters.

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The outcome was to be expected, critics have said, given the predictable skittishness of drug dealers suddenly thrust into the spotlight. Others questioned the legality and morality of a campaign raising money for the stated purpose of paying off drug dealers.

Some in the crowdfunding community said the campaign was a test for the nascent industry, but Ringelmann said Indiegogo treated it no differently from any other campaign and she is happy with the way the site dealt with it.

“What this campaign was about was the people wanting to bring this video to light, to see what it really was about, what was on it,” she said.

“There was a widespread interest in this campaign and we did not receive one complaint about it from people or from the mayor’s office or anybody so it was a classic example of a campaign where people were funding what matters to them.”

It complied with Indiegogo’s terms of use, she said, adding that the website has removed campaigns in the past for illegality, though it wouldn’t disclose any of those campaigns nor their nature “in order to protect the rights of our campaign owners.”

The site doesn’t require an application to begin a campaign. Gawker’s editor John Cook took the additional step to verify his identity, she said.

“If anyone had of complained about the campaign we would have taken the exact same steps that we take with other campaigns if people complain.”

Indiegogo’s hands-off strategy is part of how it plans to survive in a crowded space of crowdfunding, which raises money by leveraging a massive number of small contributions to finance a project or venture, be it a charity, a start-up business, a film, an event, an album or journalism.

Crowdfunding is considered by some as the “wild west” of the investing world, leaving regulators scrambling to make up the rules from behind.

The industry is transforming rapidly on a project-by-project basis and as such, it is still up to donors or lenders to know the risks involved before committing to a specific campaign, said Craig Asano, executive director at the National Crowdfunding Association of Canada.

“People should be allowed to donate their money to causes and projects of their choice,” he said.

“Having said that, it can be argued that portals should be motivated to disallow certain projects that are deemed unfit for the communities they support or are in complete bad taste. It is up to the portal to differentiate themselves, from a business perspective, from other competing portals.”

Indiegogo is one of the biggest crowdfunding sites, and its open platform model seems to be working in Canada, as the country is its second-biggest market. The number of Canadian campaigns on the site has grown 213 per cent in the past year.

As user growth in this country skyrockets, Indiegogo is starting to hone in on the market with the launch of a new platform that allows funders to pay in Canadian dollars on their credit cards (which it says will save Canadians money) as well as workshop events in Toronto and Montreal this summer.