INTRODUCTION
Research background
Crowdfunding has emerged as a powerful micro-financing tool in the wake of the industrial revolution 2.0, benefiting both for-profit and social project founders (Mollick, 2014) Defined by Lambert and Schwienbacher (2010), crowdfunding is an open call on the Internet for financial resources, which can be in the form of donations or rewards, to support specific initiatives One notable model within this framework is donation-based crowdfunding (DCF), which focuses on raising funds through voluntary contributions.
DCF has been gradually become a popular fundraising method to financially support charitable projects According to recent studies, the global value of DCF in
In 2016, the fundraising volume through Direct Charitable Funding (DCF) reached $0.56 billion, with the Americas, particularly the US, leading at $290 million, followed by the Asia-Pacific region at $53 million This trend is expected to continue growing DCF supports a diverse range of charitable initiatives, from providing free meals to the needy to promoting the arts and pursuing sustainable goals Notably, DCF has proven to be an effective mechanism for fundraising in disaster recovery and medical aid efforts.
Digital crowdfunding (DCF) sets itself apart from traditional charitable fundraising by leveraging the internet to overcome geographical barriers (Choy & Schlagwein, 2016; Zhao & Shneor, 2020) With just a single click, individuals can share information about those in need with a vast audience, resulting in a more diverse and abundant pool of beneficiaries Furthermore, social networking sites (SNS) enhance the outreach of fundraising efforts, allowing information to spread beyond the fundraiser's immediate connections and connect with potential donors who were previously unknown.
2 donors’ side, DCF, thanks to search engines, may tap to donors who is actively seeking for the right project to support
Digital crowdfunding (DCF) significantly enhances the chances of funding charitable projects by reducing coordination and transaction costs associated with donation collections The internet has streamlined the fundraising process into a standardized format, allowing campaign initiators to easily broadcast their appeals and engage with donors through real-time updates, comments, and live streams Additionally, the widespread use of wire transfers and e-banking enables donors to contribute from anywhere at any time Consequently, DCF lowers the barriers to participation and activism, making it accessible for anyone wishing to raise funds or donate.
In recent years, Vietnam has seen a growing trend of direct crowdfunding (DCF) through individual calls for voluntary contributions for charitable causes online A notable example occurred in October 2010 when renowned MC Hoang Phan Anh raised an impressive 24 billion Vietnamese dong via a Facebook post to aid those affected by flooding in the central provinces of Vietnam.
In 2020, pop singer Thuy Tien raised approximately 178 billion Vietnam dongs for charitable causes, showcasing the power of online platforms in fundraising The DCF model has proven effective not only for celebrities but also for everyday individuals like Hoang Hoa Trung, who, through social networks and mobile applications, connected with 12,000 donors to fund 77 voluntary construction projects These efforts provided lunch for 20,000 children in mountainous areas, valued at 1,450,000 per school year Alongside figures like Phan Anh and Thuy Tien, many others are leveraging online networks to launch both short-term and long-term charitable initiatives.
The rise of Direct Charity Fundraising (DCF) by individuals raises significant concerns, primarily due to the presence of asymmetric information between donors and beneficiaries This issue is exacerbated by the prevalence of unverified and unappraised information on online platforms Recently, national television news highlighted a case where an individual fraudulently acquired 7 billion Vietnam dongs by soliciting charity donations through social networking sites Additionally, unofficial reports of fraud related to DCF practices are becoming increasingly common.
The challenge of effective distribution arises when large sums are raised for charitable causes, as seen with Phan Anh and Thuy Tien Phan Anh allocated half of the 24 billion VND raised to emergency assistance, while the remainder funded breeding programs, clean water facilities, heart surgeries for children, and flood-proof housing Despite transparency in his distribution methods, he faced criticism for deviating from his initial fundraising intentions Similarly, Thuy Tien encountered backlash when proposing to use donations to assist Vietnamese laborers in Japan during the pandemic, later clarifying that funds would instead support 61,532 flood-affected households Experts warn that distributing large amounts without aligning with government support can lead to disparities, where some households receive excessive aid while others miss out on essential assistance.
In Vietnam, the regulation of voluntary donations is governed by Decree 64/2008/ND-CP, which limits the organizations authorized to mobilize, receive, distribute, and use these donations to the Vietnam Fatherland Front, the Red Cross Society, registered social and charity funds, and local media agencies for terminally ill patients The emergence of DCF practices has highlighted gaps in this legal framework On October 23, 2020, the Government Office issued Official Correspondence No 8876/VPCP-QHĐP, directing the Ministry of Finance to urgently draft a new Decree to replace Decree No 64/2008/ND-CP, aiming to address these issues.
The primary goal is to enhance the efficiency and timeliness of mobilizing, receiving, distributing, and utilizing voluntary contributions to assist individuals facing challenges from natural disasters, epidemics, and serious illnesses Additionally, it aims to recognize and foster an environment that encourages organizations and individuals to embody solidarity and mutual support, ultimately stabilizing lives and aiding in the restoration and development of the community's daily activities and production.
On December 25, 2020, the Ministry of Finance proposed two options for regulating individuals involved in the mobilization, receipt, distribution, and use of voluntary contributions The first option suggests implementing a reporting regime for these activities, while the second option allows the Government to provide legislative support for individual DCF initiatives, without specifying detailed requirements.
Since Vietnam attained low middle-income country status in 2010, foreign donors have shifted their focus to assisting nations with lower income levels With a decline in foreign development assistance, it is crucial to mobilize voluntary contributions within Vietnam to tackle both existing and emerging development challenges However, regulations can be a double-edged sword; overly burdensome rules may discourage charitable initiatives Therefore, it is vital to conduct research on Domestic Contribution Financing (DCF) by individuals in Vietnam and assess the need for a legal framework to regulate these activities This analysis will lead to recommendations that ensure new laws support resource mobilization for charitable causes while maintaining an effective distribution process.
Problem statement
In the Web 2.0 era, individuals are transitioning from being mere donors to active fundraisers through the DCF model However, this model currently lacks official regulatory oversight, raising concerns about potential fraud and ineffective distribution that could harm society.
To effectively mobilize societal resources for government charitable initiatives, it is essential to investigate the practice of Direct Community Funding (DCF) by individuals and assess the need for new legal regulations in this area.
Research purpose
This research explores the current landscape and analyzes draft regulations regarding the mobilization, receipt, distribution, and utilization of voluntary donations from individuals, utilizing the DCF model It focuses particularly on aiding those affected by natural disasters, serious incidents, and terminally ill patients Based on this analysis, the paper will propose policy implications aimed at facilitating individual participation in fundraising activities while ensuring the effective management of voluntary contributions.
Research questions
The main research question is “Is a legal framework regulating online donation based crowdfunding necessary in Vietnam?” To clarify this matter, the paper focuses on answering the following sub-questions:
What is the current legal status of DCF in Vietnam?
Does the government need to issue new regulation to regulate DCF in Vietnam?
Is there any alternative to mandatory regulation of the State?
Research scope and time
A desk review was conducted to analyze regulation theories, DCF, and the current legal system in Vietnam Additionally, data on online fundraising campaigns from 2015 to 2020 was collected to highlight the potential of DCF in the Vietnamese context.
In May 2021, an online questionnaire was conducted among Vietnamese residents and expatriates to gain insights into the current practices of DCF (Donor Contribution Framework) in Vietnam, while also examining the potential effects of proposed regulations on donors.
6 behavior as they are the subject of the regulations The population is selected randomly by providing a survey link accessible to everyone
The in-depth interviews are carried out with three fundraisers and one lawyer in Hanoi via telecommunication channel and in person.
Research significance
This research aims to explore the under-researched practice of DCF among individuals in Vietnam, contributing valuable insights to the academic community Through surveys and in-depth interviews, the study identifies and compares perspectives from various stakeholders with international theoretical foundations By reviewing the similarities and differences between DCF practices in Vietnam and those globally, this research sets the stage for future studies grounded in relevant theories.
This research aims to provide diverse perspectives on the proposed regulations regarding the mobilization, receipt, distribution, and use of voluntary donations, aligning with the Government's review of legal documents By analyzing the viewpoints of donors and fundraisers within a theoretical framework, the study seeks to foster favorable conditions for individual participation in these processes Additionally, it aims to enhance the mobilization of societal resources for pro-social missions, especially in light of the declining foreign development aid.
Structure of research
The thesis will contain five chapters with the contents as follow:
Chapter 1: Introduction This chapter will illustrate the research background and clarify the research problem The research questions, research scope and time, and significance of the research are also presented in this part
Chapter 2: Literature review and methodology The content of this chapter focuses on reviewing available literature history of research on DCF in the world and Vietnam The second part will clarify the methodology applied in the research
Chapter 3: Current legal status of donation based crowdfunding by individuals in Vietnam Chapter 3 will first present theoretical foundation for the intervention of the Government Then, a glimpse of current legal status of DCF and analysis of available laws and regulations that can applied to manage DCF in Vietnam as well as the proposed draft regulating DCF by individuals are provided
Chapter 4: Findings This chapter shows the findings resulting from online survey and in-depth interviews These finding will then be analyzed and discussed in this part
Chapter 5: Conclusion and recommendations This is the final chapter of this research which summaries all the main findings and discussions from the analysis in the above chapters Then, the author will provide suitable recommendations to the draft of new regulations relating to the mobilization, receipt, distribution and use of sources of voluntary donations by individuals in Vietnam
LITERATURE REVIEW AND METHODOLOGY
Literature review
Crowdfunding, which evolved from the idea of crowdsourcing in micro-finance (Mollick, 2014), serves as an informal method for raising funds directly from the public to finance various ventures or projects, bypassing traditional intermediaries like banks or venture capitalists It typically involves an open call for financial contributions from individuals or groups over a specified period, often facilitated by web-based platforms (Belleflamme et al., 2012) According to Massolution (2012), crowdfunding is categorized into four main models based on the type of returns offered to backers: donation-based, lending-based, reward-based, and equity-based, which is widely accepted in the literature on the subject (as detailed in Table 2.1).
Table 2.1 Classification of crowdfunding model Donation-based crowdfunding
Crowdfunding model where funders donate to causes that they want to support, with no expected compensation (i.e, philanthropic or sponsorship based incentive”)
Crowdfunding model in which funders receive compensation in the form of fundraiser’s equity-based or revenue or profit-share arrangements
Crowdfunding model in which funders receive fixed periodic income and expect repayment of the original
Crowdfunding model in which funders’ primary objective for funding is to gain a non-financial reward such as a token or in the case of a manufactured product, a first edition release
A typical crowdfunding model involves three key stakeholders: project initiators seeking funding, backers willing to contribute, and crowdfunding platforms that serve as intermediaries Project initiators set pledge amounts and promote their projects on these platforms to attract support These platforms, often operated by established institutions, have specific rules such as minimum pledge amounts and fundraising principles like all-or-nothing or keep-it-all They facilitate connections between projects and potential backers based on preferences and receive a commission based on the total pledges Notable crowdfunding platforms include Kickstarter, Indiegogo, and GoFundMe, among others.
Crowdfunding initiators can effectively promote their campaigns by utilizing social networks and various online channels In mainland China, major platforms like Weibo and WeChat offer dedicated features for charity fundraising, known as "weigongyi" and "qingsongchou." Additionally, fundraising posts are commonly found on popular social media sites such as Facebook and Instagram, making it easier for campaigns to reach a wider audience.
Between 2013 and 2017, the global crowdfunding market surged dramatically, increasing from $11.06 billion to $418.52 billion—a growth of 40 times During this period, the share of donation-based crowdfunding (DCF) reached $0.47 billion It's important to note that these figures are derived solely from formal online, peer-to-peer, or crowd-led marketplaces, and do not account for individual crowdfunding initiatives, which are fundraising campaigns organized outside of formal platforms As of now, comprehensive statistics on these individual efforts have not been reported (Ziegler et al., 2020).
2.2.2 Studies on donation based crowdfunding
In the realm of DCF, researchers emphasize understanding the motivations driving funder behavior, as highlighted by Bagheri et al (2019) Key theories utilized to analyze the psychological and social factors influencing donors' decisions and actions include self-determination theory (SDT) and social exchange theory (SET).
Self-Determination Theory (SDT) is a psychological framework that has been widely applied to understand donor behavior in traditional charity settings (Zhao & Shneor, 2020) It differentiates between intrinsic motivation, driven by personal enjoyment and satisfaction, and extrinsic motivation, which is influenced by external outcomes (Ryan & Deci, 2000b) A key aspect of SDT, known as Cognitive Evaluation Theory (CET), indicates that social and environmental factors can either enhance or diminish intrinsic motivation (Ryan & Deci, 2000a) Recent studies in crowdfunding suggest that extrinsic motivations can amplify intrinsic motivations among backers by fostering feelings of competence and relatedness (Allison et al., 2015; Choy & Schlagwein, 2016; Deci et al., 2017).
In the realm of DCF, backers are often driven by impure altruism, which combines elements of pure altruism and the warm glow effect (Zhao & Shneor, 2020) Pure altruism is defined as a motivational state aimed at enhancing another's welfare, where donors contribute with the belief that their support can alleviate the suffering of beneficiaries This act of giving often brings donors pleasure and satisfaction, known as the warm glow effect, which highlights the empathetic connection between the donor and the recipient While this positive feeling encourages donations, it also intensifies feelings of guilt when individuals choose not to contribute Intrinsic motivations stem from the inherent joy of doing good associated with impure altruism, while extrinsic motivations may include the desire to meet group expectations, foster social belonging, and gain peer recognition or enhance one's image.
In a study by Bagheri et al (2019), the motivations of donors in Donation Crowdfunding (DCF) in Iran were examined through semi-structured interviews with 13 individuals who donated via the Hamijoo platform The analysis of the interview transcripts, alongside project information from Hamijoo, revealed that individual donors are driven by a blend of intrinsic and extrinsic factors, operating at both personal and societal levels A summary of the indicators for each motivation category is illustrated in Figure 2.1.
Figure 2.1 Sources, levels and dimensions of donors' motivations to invest in crowdfunding projects
Wang et al (2019) explored donor intentions in donation crowdfunding (DCF) in China through a framework of intrinsic and extrinsic motivations alongside conceptual factors Intrinsic motivation is characterized by the joy and personal value donors derive from their contributions, often linked to a sense of self-worth In contrast, extrinsic motivations encompass concerns about social perception, the effectiveness of donations in addressing issues, and a sense of moral obligation Additionally, conceptual factors such as social interaction and the size of the referent network highlight the importance of communication between donors and fundraisers, as well as the perceived scale of the crowdfunding platform.
The author conducted a five-point Likert scale survey to gather empirical evidence on various variables related to donation intent This survey was published on an online survey platform and shared across random online forums identified through search engines, focusing on DCF activities It ran from June 23 to July 12, 2019, garnering responses from 632 participants nationwide in China, with 588 valid responses used for correlation testing The results indicated that both self-identity and social identity significantly influenced the intention to donate, with all variables positively associated with one or both identities.
A study by Jiao et al (2021) utilized a Likert scale survey to investigate the motivations behind Chinese support for online charitable crowdfunding via WeChat The research examined eight independent variables—Reputation, Reciprocity, Sense of Belonging, Joy of Giving, Altruism, Financial Constraints, Social Influence, and Social Tie with the Initiator—using an OLS regression model to assess their impact on the Intention to Donate (ITD) Analysis of 617 valid responses revealed that, aside from Reputation and Social Influence, six of the variables significantly influenced ITD.
The online feature of DCF mirrors the dynamics of an online transaction, where participation hinges on the principle of social exchange theory (SET) According to SET, individuals are motivated to engage in a transaction when they perceive the benefits to outweigh the costs involved (Sidel, 1997) In the context of DCF, the costs associated with making a donation are often considered in this decision-making process.
Trust is crucial in reducing the perceived risk of fraud in uncertain online transactions, such as crowdfunding Research has consistently shown that the levels of trust and perceived credibility significantly influence the intentions of backers in crowdfunding initiatives.
Liu et al (2018) investigated the impact of empathy from Self-Determination Theory (SDT) and perceived credibility from Social Exchange Theory (SET) on Intent to Donate (ITD) using the stimulus-organism-response (S-O-R) framework Their study integrated various factors, including technological characteristics like website quality and transaction convenience, along with project characteristics such as initiator reputation, project popularity, and project content quality, while controlling for variables like altruism, income, past donation experience, and social ties with project initiators Data was gathered from WeChat, Weibo, and other social networking sites in Mainland China through a seven-point Likert scale survey conducted from May 12 to May 26, 2016, yielding 205 valid responses The results indicated that both empathy and perceived credibility significantly influence ITD, with technical characteristics and project content quality positively correlated with these factors Altruism and past donation experience also played a significant role in ITD, while initiator reputation was linked to perceived credibility but not to empathy Conversely, project popularity was found to significantly affect empathy but not perceived credibility.
In a qualitative study analyzing comments from Reddit about the credibility of medical crowdfunding campaigns and data from semi-structured interviews with 20 DCF participants, Kim et al (2016) identify ten key indicators of credibility These include two indicators related to the legitimacy of beneficiaries, such as details of external financial support and beneficiary merit Additionally, three indicators focus on project quality, including off-site verification details, realistic funding goals, and redundancy in campaign descriptions, multimedia, and external resources Other important factors are the verification of fundraiser and beneficiary identities, communication between donors and fundraisers, the presence of personal comments, and an appropriate level of emotion.
CURRENT LEGAL STATUS OF DONATION BASED
Theories behind government’s intervention
Charitable and philanthropic services create positive externalities, allowing beneficiaries to enjoy benefits while the costs are borne by philanthropists To support and encourage these practices, the government implements tax exemption policies, reflecting its role as a guardian of public interest in a mixed economy, as outlined by public interest theory (Dũng Bùi Đại, 2018).
Information asymmetry is a significant issue in philanthropy, particularly affecting the dynamics between fundraisers and donors (C Cordery, 2013; C Cordery & Deguchi, 2018; C J Cordery et al., 2017; Shleifer & Jones, n.d.) Charities serve as intermediaries that redistribute resources from donors to beneficiaries without receiving material benefits, which can reduce the efficiency of managers and create opportunities for opportunism Additionally, charitable contributions are often seen as unreciprocated and altruistic (Weisbrod, 1989), leading to a high level of information asymmetry within charities To address this, governments typically implement regulations that require charities to disclose financial information publicly Such measures aim to ensure that resource redistribution aligns with the public interest and enhances trust and confidence in the charitable sector Moreover, increased transparency can foster fair competition among organizations, ultimately driving greater efficiency in the charity market.
Governments regulate charitable activities by implementing registration mechanisms that restrict market entry to "qualified" charities and philanthropists This ensures that only eligible organizations receive tax exemptions as a reward for their positive societal impact, preventing financial abuse To address public complaints and findings from regulatory investigations, authorities can de-register or penalize those who violate the rules.
Public interest theory faces significant criticism, particularly regarding the limited scope of market failures that cannot be addressed by private orderings For instance, effective reporting and publicity by charities can enhance their appeal to donors, encouraging a self-regulated market through positive word-of-mouth referrals Additionally, the theory's reliance on the competence and benevolence of government officials is problematic, as public servants may be incompetent or corrupt Public choice theory highlights that regulations often serve as tools for addressing perceived issues rather than genuinely promoting the public interest, with regulators sometimes prioritizing personal gain and political returns over economic considerations.
The government faces the challenge of implementing policies that are both effective in achieving their goals and efficient in minimizing costs, particularly in the context of charities Amid public concern over issues like miscreants, theft, and fraud, regulators may impose stricter reporting and accounting requirements, leading to increased compliance costs for charities without necessarily enhancing public benefits Despite this, donors often contribute out of altruism, highlighting the complex interplay between regulatory demands and the charitable sector's operational realities.
“warm glow”, which suggests low demand for charities’ performance (Andreoni,
Charities frequently view regulatory requirements, particularly in reporting and accounting, as burdensome due to the financial and expertise demands they impose (Burt & Taylor, 2004) Therefore, it is essential for the government to develop an approach that balances the needs of donors while minimizing the burdens placed on fundraisers.
Glen Hepburn (n.d.) advocates for the government to explore alternatives to command and control regulations, such as market-based instruments, self-regulation, co-regulation approaches, and educational initiatives Market-based instruments leverage economic incentives to influence stakeholder behavior, while self-regulation often includes third-party quality certifications, codes of conduct, or private rating systems to ensure accountability among participants.
Developing self-regulation can involve feedback from professional groups, entrepreneurial associations, or informal networks (McConville & Cordery, 2018) Co-regulation combines self-regulation with government involvement to enhance effectiveness Additionally, information and education initiatives aim to influence behavior by providing individuals with the necessary information to make informed decisions.
Legal documents and framework relating to donation based crowdfunding in
Current laws of Vietnam only regulate the philanthropy activities of organization including non-profit organizations and party-related mass organizations
Article 12 Decree No 116/2013/ND-CP introduced by the Government on October 04, 2013 on detailing implementation of a number of articles of law on anti- money laundering stipulates that: “Non-profit organizations which are juridical persons or organizations with key operation being mobilization or distribution of capital for the charitable, religious, cultural, educational and social purposes or similar purposes, not for profit purpose, include: Foreign non-governmental organizations, social funds, charity funds established and operate in accordance with Vietnamese law.” Decree 93/2019/NĐ-CP issued by the government on November 25,
In 2019, regulations were established for the organization and operation of social and charity funds, defining a "Social fund" as a non-profit entity aimed at promoting culture, education, healthcare, sports, science, and agricultural development Similarly, a "Charity fund" is defined as a non-profit organization focused on alleviating hardships caused by disasters, epidemics, and other social challenges Additionally, Decree No 116/2013/ND-CP and Decree 95/2014/ND-CP, along with the Law on Science and Technology from June 18, 2013, recognize funds dedicated to scientific and technological development as vital components established by organizations and individuals.
A not-for-profit organization aims to establish a fund dedicated to offering non-refundable sponsorships, low or no-interest loans, and loan guarantees to support scientific and technological development for both individuals and organizations This development fund will be financed through non-state budget contributions from its founders, as well as voluntary donations and other legal sources.
In addition to officially recognized nonprofit organizations (NPOs), Vietnam's voluntary sector encompasses various party-affiliated mass organizations, including the Fatherland Front, Women's Union, Youth Union, Farmers' Union, General Confederation of Labor, Peasants Association, and War Veterans Association This sector also includes business and trade associations, professional and socio-professional groups, policy research organizations, social activist groups, service organizations, religious institutions, clans, private and semi-private universities, and other entities.
Organizations must register with the state management agency and submit a charter of operations outlining their specific objectives Registered non-profit organizations (NPOs) can receive donations from individuals and other entities to achieve their goals They are also required to fulfill reporting obligations, including submitting an annual financial report to the licensing authority in accordance with Decree 93/2019/ND-CP Violations may result in a six-month suspension and administrative fines Additionally, a license may be revoked if the ownership of assets contributed to a fund is not transferred within 45 business days, with a grace period not exceeding this timeframe.
20 days) after obtaining the establishment license and acknowledgment of the fund’s charter
Not all non-profit organizations (NPOs) are authorized to mobilize, receive, distribute, and utilize voluntary donations aimed at assisting individuals affected by natural disasters, fires, serious incidents, or terminal illnesses According to Articles 4 and 5 of Decree 64/2008/ND-CP, only specific legal entities, including the Vietnam Fatherland Front, the Red Cross Society at all administrative levels, and social and charity funds registered under Government Decree No 148/2007/ND-CP, are permitted to handle relief funds and goods.
Only designated central and local mass media agencies are authorized to receive donations for terminally ill patients No other organizations, units, or individuals are permitted to accept relief money and goods.
In 2016, MC Phan Anh raised 24 billion VND to support flood victims in Central Vietnam, sparking public debate over the legality of individual fundraising efforts Legal experts noted that while there are no specific laws governing individual fundraising, such activities may fall under tort law provisions related to representation Specifically, donors authorize fundraisers to distribute donations to designated beneficiaries or for specified purposes outlined in fundraising messages When pop singer Thuy Tien initiated her own fundraising campaign, similar legal concerns emerged, highlighting the absence of regulations for individual crowdfunding Consequently, in cases of fraud or misconduct, individuals may face criminal charges such as fraud, abuse of trust, illegal property seizure, and other relevant administrative penalties.
The Discounted Cash Flow (DCF) model is not yet recognized in Vietnam, highlighting the nascent legal framework for crowdfunding, which currently consists only of a draft from the Ministry of Finance concerning a pilot program for Fintech.
On October 23, 2020, the Government Office issued Official Correspondence No 8876/VPCP-QHĐP, directing the Ministry of Finance to urgently draft a new Decree to replace Decree No 64/2008/ND-CP This amendment aims to enhance the efficiency and timeliness of mobilizing, receiving, distributing, and utilizing voluntary contributions to assist individuals affected by natural disasters, epidemics, and serious illnesses Additionally, it seeks to encourage and honor organizations and individuals who foster solidarity and support, ultimately stabilizing lives and promoting the restoration and development of production and daily life for the community.
On December 25, 2020, the Ministry of Finance proposed new regulations concerning individuals involved in the mobilization, receipt, distribution, and use of voluntary contributions The proposal outlines two options, with the first option suggesting that these activities should be governed by a reporting regime.
“1 Regarding the mobilization and receipt of voluntary contributions
To mobilize, receive, and distribute voluntary contributions for natural disasters, epidemics, or incidents, individuals must inform their local authority about the purpose, scope, and methods of their efforts This includes detailing the mobilization and receiving account for monetary donations, as well as specifying the location for goods, in accordance with the prescribed form issued with the relevant Decree.
2 Regarding the distribution and use of voluntary contributions
Individuals must inform the local government about the scope, level, and duration of the voluntary contributions they receive, as outlined in the accompanying Decree This notification is essential for coordinating the distribution of these contributions and ensuring safety and social order.
3 Regarding the disclosure of voluntary contributions
Voluntary contributions gathered and utilized by individuals to address the impacts of natural disasters, epidemics, and incidents must prioritize transparency and public awareness It is essential for individuals to report and disclose the mobilization, receipt, distribution, and usage of these contributions when required.
The government may choose to offer legislative support for individuals to conduct disaster contribution fundraising (DCF), while leaving the specific requirements open-ended This approach would be governed by a single article stating that during natural disasters, epidemics, or other incidents causing harm to people and property, individuals are permitted to mobilize, receive, distribute, and utilize voluntary contributions to assist those in need.
FINDINGS
Survey results
The survey revealed valuable insights into donors' perspectives on the popularity of DCF, their willingness to participate, motivations, perceived credibility, and interest in information Respondents were classified into three groups based on their charitable giving experiences: Group 1 consists of individuals who have not donated money or materials in the past five years; Group 2 includes those who have donated but not to any DCF project; and Group 3 comprises respondents who have contributed to at least one DCF project within the last five years Detailed demographic data of the respondents is presented in Table 4.1 below.
4.1.1 Popularity of DCF and willingness to participate
In a recent survey of 28 respondents, 10.45% indicated that they had not contributed money or materials to charitable projects in the past five years Among those who did donate, a significant 73% contributed to at least one DCF project initiated by individuals Notably, workplace donations emerged as the primary channel for charitable giving, while donations to DCF projects and sending money or materials directly to beneficiaries closely followed as popular alternatives.
A significant portion of Group 1 expressed intentions to donate in the future but showed reluctance towards DCF projects, indicating a shift from neutrality to skepticism about the information provided Similarly, Group 2's survey revealed that 47.54% were unwilling to support DCF projects, while 34.43% maintained a neutral stance, reflecting a parallel attitude trend with Group 1 In stark contrast, an overwhelming 92.68% of respondents in Group 3 indicated a willingness to continue donating to DCF projects, demonstrating a positive shift from neutrality to complete trust in these initiatives.
Figure 4.1 The most popular donating channel
Group 3 voted the top three popular causes of DCF project were disaster relief (1 st ), assistance to people in adverse event (2 nd ) and assistance to terminally ill patient (3 rd ) Other causes include animal rescue, endangered species conservation, forestation,
30 religious purpose (building temple/church, casting statue, preparing offerings), educational purposes (scholarships, building schools), mental health projects
4.1.2 Donor’s motivations and perceived creditability
When considering donations, respondents prioritize three key factors: the cause, the authenticity of information regarding beneficiaries, and the trustworthiness of the project's initiator Among those who have not donated to DCF projects, the primary reasons cited include a lack of trust in the authenticity of beneficiary information (57.38%), uncertainty about how the initiator will utilize the donations (50.83%), and distrust in the project’s initiator (49.18%) Additionally, concerns about the positive impact of donations on beneficiaries were noted by 42.62% of respondents Notably, the uncertainty regarding the initiator's use of donations and lack of trust in the initiator emerged as the most significant deterrents While the legality of DCF was mentioned, only four respondents expressed concerns, and none deemed it the most critical issue.
Key factors enhancing the perceived credibility of the initiator include public information regarding past projects, endorsements from mass media such as television, newspapers, and online platforms, as well as references from third parties.
All groups identified "Public information about previous projects" as the most crucial factor Group 1 viewed the relevance of the subsequent three factors—"Verification from local authority," "Endorsement from mass media," and "Reference from third party"—as equally important, alongside the project's initiator's reputation In contrast, Group 2 prioritized "Verification from local authority" over endorsements from mass media and references from third parties.
Many respondents expressed a lack of intention to re-donate to the DCF project, primarily stating that they prefer to donate only to friends or individuals they know well Additionally, some indicated that they would thoroughly evaluate the financial records and reports, as well as the distribution and supervision mechanisms of donations, before deciding on future contributions.
According to the survey results, the primary sources of information about the DCF project for respondents were the social network homepage of the initiator, cited by 39.02%, and shares from acquaintances, which accounted for 34.96%.
71.49% respondent who have donated to DCF project (Group 3) never (16.39%) or sometimes (54.1%) check information regarding how the project’s initiator uses the contribution after making donation
Survey participants expressed a satisfaction rating of 3.7 out of 5 regarding the information provided by the DCF project initiator, indicating that the information meets their interests and expectations to a satisfactory degree.
A recent survey revealed that 58.46% of respondents support the project initiator's decision to deduct a portion of donations for reporting costs, while 23.59% oppose it and 17.95% are unsure Of the 94 participants who provided feedback on the acceptable upper limit for these costs, 59.57% believe that a maximum of 5% is reasonable.
4.1.4 Attitude toward the proposed regulation
Most participants expressed support or neutrality towards the local government's guidelines on the allocation and utilization of donated funds Additionally, the majority feel that mandating DCF project initiators to adhere to these regulations does not influence their willingness to contribute to DCF projects.
Interview results
4.2.1 From the perspective of fundraisers view
At the beginning of each interview, interviewees were asked to introduce about their fundraising experience and current projects Details were summarized in Table 4.2
Table 4.2 Summary of interviewee’s project
Facebook Email and Facebook Facebook
Assistance to terminally ill patient, house construction for the poor, etc
Provide breeding cows and house construction
Provide free meals for children in mountainous region in Ha Giang
Scale Total: ~1.5 to 3 billion VND/year
100 million VND) + 3 big projects/year
In specific: 150.000 VND/month/children x 50 children
The interview's second part examined attitudes toward proposed regulations for mobilizing, receiving, and distributing donations All participants concurred on the necessity of government intervention to combat fraud and enhance public trust Fundraiser 1 highlighted that some individuals exploit the goodwill of others by soliciting donations for personal gain, leading to several reported cases that erode community trust in online charity efforts As a result, projects aimed at assisting those in dire need struggle to garner sufficient support, underscoring the importance of government oversight in managing these activities.
33 control these cases is already a way to support the genuine online fundraiser community.”
All three fundraisers deemed it unnecessary to inform authorities of their residence prior to mobilizing, receiving, and distributing donations, citing a lack of purpose for such a requirement Fundraiser 2 emphasized that dealing with state authorities often involves lengthy and complicated administrative procedures They expressed concern that requiring approval for fundraising activities could be used by local authorities as a means to discourage participation among individuals.
Interviewees unanimously agreed on the necessity of informing local authorities about the scope, level, and duration of donations, emphasizing that this communication is essential even without a formal requirement Throughout the charitable project, local authorities were crucial in verifying beneficiary legitimacy and facilitating logistics, which included providing beneficiary addresses, contacting community leaders, and organizing distribution events.
While fundraisers generally agree that local authorities can provide essential insights into the needs of beneficiaries, their perspectives vary based on personal experiences Fundraiser 3, for instance, expressed no concerns about relying on the grassroots Women Union (WU) for both information and distribution, as they identified children in need and facilitated the donation process In contrast, Fundraiser 1, who managed distribution independently, acknowledged the value of local authority suggestions for reallocating donations, finding them reasonable and grounded in actual data.
34 information at site Nevertheless, it was the duty of the fundraiser in crosschecking the truthfulness of the information and suggestions from the local authority
Fundraiser 2 took a critical stance, arguing that local authorities should only offer guidance and suggestions rather than control how donations are utilized She highlighted that while her project shared goals with others that included local authority participation in their budgets, her project did not This allowed a larger portion of donations to reach beneficiaries, but it also made her initiative less appealing to local authorities Additionally, she recounted facing pressure from local authorities when she declined to provide breeding cows to beneficiaries they recommended, feeling there was no justification for such demands.
Transparency in fundraising is crucial, as emphasized by all respondents who highlighted the importance of openly reporting the mobilization, receipt, distribution, and use of donations Fundraiser 1 stated, “The most important thing in fundraising is transparency, publicity, and details,” noting that publishing donor lists and bank account information fosters trust and encourages ongoing support Fundraiser 2 echoed this sentiment, sharing that all donation-related information is disseminated via Facebook and email, allowing projects to gain traction through word of mouth without government interference, which poses risks of authority abuse Meanwhile, Fundraiser 3 mentioned that fundraising within a close circle of friends negated the need for government reporting or permission.
Fundraiser 3 expressed concerns about personal income tax laws, noting that only donations to government-registered charitable funds are tax-deductible Since her transactions were conducted through her personal account for personal use, she wanted to avoid legal issues In response, Fundraiser 2 suggested that the Government should develop a comprehensive master plan and information platform to connect stakeholders in fundraising activities For disaster relief efforts, the Government could gather data from grassroots to provincial levels to determine funding needs and project specifics An information hub should be established to publish these projects, allowing individuals and organizations to register for involvement Additionally, details regarding project operations and costs should be accessible to donors, enabling them to assess the effectiveness of each initiative before contributing.
4.2.2 Lawyer – Fundraiser for disaster relief
Interview 4 is a more than 10-year experience lawyer who also have participated in several fundraising projects The interview results focused on her assessment of current legal framework on online individual fundraising and proposed draft by MOF
Decree 64/2008/ND-CP is the primary legal framework governing the mobilization, receipt, distribution, and use of donations in Vietnam, but its scope is limited to supporting victims of natural disasters, serious incidents, and terminally ill patients Under this decree, individuals are prohibited from engaging in fundraising activities, despite the tradition of mutual assistance being a fundamental aspect of Vietnamese culture At the time of its introduction, many Vietnamese citizens faced financial hardships, and only well-resourced organizations had the capability to facilitate donations, creating an information barrier that restricted broader participation in charitable efforts.
Charitable giving in Vietnam has evolved significantly, shifting from reliance on government and large organizations to a growing trend of individual contributions As the average income of Vietnamese citizens has increased, the desire to engage in charitable activities has become a personal necessity In response to negative perceptions surrounding bureaucratic inefficiencies and the management of charitable funds, more individuals are taking the initiative to organize their own fundraising efforts, often enlisting the support of friends and family through social media and word of mouth Consequently, grassroots fundraising for various causes is gaining popularity, highlighting the need for updated regulations, as seen with Decree 64/2008/ND-CP, which appears outdated in the face of this new reality.
The rise of individual participation in fundraising has brought both advantages and challenges, including the prevalence of fraud and embezzlement Although Articles 174 and 175 of the Penal Code 2015 address "Obtaining property by fraud" and "Abuse of trust to appropriate property," enforcing these laws proves difficult For instance, Article 174 requires proof of deception involving at least 2,000,000 VND, making it challenging to prosecute individuals who present legitimate cases for donations Meanwhile, Article 175 focuses on deceptive practices related to loans or contracts, complicating the legal landscape further Additionally, access to bank account information for verifying charitable transactions is restricted unless a criminal investigation is underway, and no specific enforcement agency oversees violations in this sector Consequently, due to the typically small amounts involved, fraudulent cases often go unreported, leaving online fundraising largely unregulated.
The interviewee emphasized the importance of government intervention, highlighting two key considerations Firstly, the government must recognize the legality of individuals soliciting donations online.
The approach aligns with the Constitution, civil law, and the nation's cultural traditions Additionally, establishing a transparent fundraising mechanism is crucial, achieved through a blend of robust legislation and effective enforcement.
The proposed draft regulations for individuals soliciting donations have been evaluated and deemed "sketchy" and "ambiguous" by the interviewee, who recognizes the need for a legal framework in this area.
Before mobilizing, receiving, and distributing donations, project initiators must clarify their obligation to either "inform" or "apply for approval" from the relevant authorities This includes outlining the necessary procedures, including required forms and clear timelines for responses, as well as identifying the appropriate authorities responsible for oversight Additionally, the notification must be made to the authority corresponding to the initiator's current residence or registered permanent address.
Major findings and discussion
A recent survey of donors highlights that while Direct Crowdfunding (DCF) is not the leading fundraising method, it is rapidly gaining traction and merits attention Donors express significant concern over the authenticity of beneficiary information and the trustworthiness of project initiators when participating in DCF projects Key factors influencing the credibility of fundraisers include details about prior projects and endorsements from third parties, such as friends, media, or local authorities For those new to DCF, verification from local authorities is deemed more valuable than other endorsements These insights align with existing literature on donor motivations.
The two primary sources of information for respondents about DCF projects were the initiator's social network homepage (39.02%) and shares from acquaintances (34.96%), indicating that donations often occur within social circles This trend is influenced by social networking sites (SNS), where posts from friends or interactions by friends appear in users' newsfeeds, fostering a sense of community Consequently, backers typically do not scrutinize how their donations are utilized, as the familiarity with fundraisers creates a level of trust Survey results show that donors expressed overall satisfaction with the information provided by fundraisers, giving it an average rating of 3.8 out of 5.
Fundraisers believe that the proposed draft requirements are unnecessary and could be misused by local authorities Instead, they advocate for a more effective individual tax policy and a transparent information-sharing mechanism that coordinates all stakeholders involved in the process.
In 2016, research revealed that fundraisers in a DCF face significant challenges related to legitimacy work, which involves persuading donors to support their projects This process includes justifying the project's legitimacy and the fundraiser's credibility, as well as establishing personal connections, maintaining donor interactions, and providing regular updates Additionally, it requires selecting appropriate social proof for the project and enhancing the quality of information presented to potential donors.
In the pursuit of building trust and support for projects, it is essential to recognize that achieving legitimacy and public transparency often requires a greater investment in accountability and tracking This process involves navigating trade-offs rather than adhering to strict boundaries (Star & Strauss, 1999) Tanaka & Voida emphasize the need for a system that offers resources to facilitate legitimacy work, focusing on the importance of supporting altruistic efforts rather than merely seeking legitimization.