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Is it legal to tell potential givers/donors that money sent to me is to be shared then with others?

For example, an incentive to receive any money at all could be the claims that money sent is then re-sent partially to others -- for example, donate $1 to me and I give 25 cents to someone else; donate $10 and I give $2.50 (or 25%) or 'X' percent.

Assuming I actually receive anything and do follow through with sharing this, could such a system be a good way to create something akin to a universal basic income system? Give some to all, and all share some with all, and then many people end up with some money even if some always end up with more -- at least it's in good faith though.

Not a pyramid scheme because there is no "recruiting" or such and just people -- if they are in good faith -- implementing donations and then giving some to others, who may or may not do the same. I'm fine getting a lot of money for nothing and then giving some to others to be somewhat fair rather than hogging nearly all of it all for myself (like big business may want to do).

Plus, morality and sharing are likely more plausible if one is receiving money anyways as opposed to getting none at all.

Just curious since no system is implemented in such a way. Could I do this earnestly and not face any legal issues? Just much like offering a PayPal link to donate with the expressed knowledge that I'll give a portion to another (presumable) PayPal user or etc. and so on (or via other donation methods like Skrill, Cashapp, and so on).

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    Legal questions require that you identify the country.
    – mhoran_psprep
    Feb 21, 2021 at 23:37

3 Answers 3

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I am ignoring the legality of it, because you haven't identified the country.

Why would somebody give money to you so that you promise to give 25% to somebody else? A charity that only used 25% of donated funds to help others would not be considered a good charity. A great charity spends 90% or more of their funds on their mission. It is even worse in your case if the 25% is going to random people and not even people in need.

If you want to be considered a charity you will have to follow the law for your jurisdiction.

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    I think this answer is too strict. The questioner could say "Please give me money for a new car, but I'll give 10% of what I get to a homeless shelter.
    – DJClayworth
    Feb 22, 2021 at 4:10
  • In fact people do that very thing, although more often it is something like "Give me money for a new iPhone/TV/whatever and I'll give anything extra to this very deserving charity". I've even seen the people who do that described as entrepreneurs (most often by themselves to be fair). They are not charities. It's more akin to begging.
    – Eric Nolan
    Feb 23, 2021 at 14:30
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You're creating your own charity with a very high expense ratio.

Sure that's legal, but (in the US, at least) involves legal work, accounting, paperwork and disclosure.

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No-one can answer the specific legality question because you haven't specified a jurisdiction, and even if you did it would be on-topic for law.SE but not here.

However, the general types of laws you should be aware of if you are considering doing something like this:

  • Fraud / misrepresentation: if you claim you will give some percentage of donations you receive to charity, you'd better be able to prove that you actually did so.
  • Tax: depending on jurisdiction, either you or the giver might be liable for tax on the transaction if it is treated as a gift.
  • Charitable organsiation: if there is any sense in which you are claiming to be using the money for charitable work, or claiming allowances associated with charitable work, you need to conform to the relevant laws for charitable organisations.

The reason that no-one would do this is because it adds an element of risk for the giver that there is simply no need to take / no upside. If I am considering giving £100 to charity and I see that you are crowd funding for a new house for your poor disabled mother whose house was just blown away in a freak hurricane, and that you promise to give 10% of what you raise to a homeless shelter, I could:

  • Donate you £100 and trust that your claims are legit - both that you will build your mother a new house and that you will donate £10 of my £100 to the homeless shelter
  • Donate you £90 and donate £10 to the homeless shelter myself
  • Donate £100 to a general hurricane relief fund
  • Donate £90 to the general hurricane relief fund and £10 to the homeless shelter
  • ... etc.

With the first option, I don't get to choose the proportion of my donation that is split between you and the homeless shelter, and I have to trust that you will do what you say you will do. There's no upside to me at all in taking that option. Additionally, if I can claim tax relief on charitable donations then (depending on the jurisdiction) I might only be able to claim that for donations to registered charities, which you are not.

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