Know Before You Donate, Probably Not Fraud Just Stupid

[UPDATED] This Billionaire Putting Up a GoFundMe to Save a Failing Business is Everything Wrong with GoFundMe

Toys R Us GoFundMe campaign

So, perhaps you heard — or, better, you’re one of the vultures cruising the mall parking lot waiting to pick the carcass clean of liquidated merchandise — Toys R Us is closing its doors after 70 years. Let’s be real here, 70 years is a good run.

Of course, some nostalgia-drunk folks are broken up about the news. I’d be curious how many of those people actually set foot in a Toys R Us in the last decade, but I digress. In January, Toys R Us announced it was closing 180 stores around the U.S. in a desperate attempt to save itself from the yoke of $5 billion in debt. Read that again slowly. Five. Billion. Obviously that plan didn’t work to correct the company’s rapid swirl down the toilet bowl, and it recently announced it would be closing more than 700 stores.

Toys R Us is not alone in its plight, and every single one of us with an Amazon Prime account is “to blame.” Rather, that would be the easy finger to point. The bigger issue here goes back over a decade: debt.

Per The Atlantic:

After Toys “R” Us was taken private by KKR, Bain, and Vornado in 2005, it took on a lot of debt, leaving the company with repayments that have crippled it in a period of declining sales. Toys “R” Us has spent more than $250 million annually to pay back $5 billion in long-term debt. These repayments became unsustainable once revenue started to decline consistently, as it has each year since 2012. That left one option: for the company to declare bankruptcy and renegotiate the terms of its debt.

That, kids, is what we call unsustainable. This isn’t the rapid implosion of a 70-year-old brand brought on by tech-loving couch potatoes and soccer moms with no time to cruise toy store aisles. Nope, this was a long time coming and Toys R Us did it to themselves.

Despite that, a billionaire toy maker is asking the guilty, nostalgic, Amazon-loving public to shoulder the financial burden of picking what meat might be left off Toys R Us’ bones when all is said and done.

That man is Isaac Larian, CEO of the company that makes Bratz dolls; you know, those bug-eyed, makeup-shellacked, trampy little dolls made for future scene girls and drag queens. Clearly spurred by his own inner child and definitely not some half-cracked plan to shift the majority of financial risk to a bunch of GoFundMe users $5 at a time, Larian got the bright idea to put up what, if it succeeds, would be the most successful GoFundMe campaign of all time. Asking for a modest one billion dollars, and lacking any solid plan beyond “a bid to acquire some Toys“R”Us assets through the bankruptcy process” if the campaign attracts enough suckers, Larian put up $200 million of his own cash — well, his and some other investors who don’t want their name on this mess — to get the ball rolling.

Note Larian has *pledged* $200 million to the campaign. He hasn’t actually put any of it into the GoFundMe itself. Instead, it’s an “offline donation” he manually entered. A campaign organizer can put any value into their campaign this way, it doesn’t mean the money is actually in the system. In this case, it isn’t.

Isaac Larian GoFundMe contribution

“I’m pretty sure we will achieve it,” Larian told Forbes by phone, referencing his lofty $1 billion goal. He thinks fellow billionaires like Amazon founder Jeff Bezos and Facebook co-founder Mark Zuckerberg will also cough up their cash for the cause. “They all were kids at one time,” he said. “Who doesn’t want to be a Toys R Us kid? So, I hope they do. I really hope they do. It’s a good cause.”

Remember when GoFundMe was all about wholesome charitable ventures like helping sick kids, funding the retirement of hard-working elderly Latino popsicle vendors and the occasional 420 forehead tattoo removal? Yeah, no more.

The beauty of this stupid plan is that not only does it further GoFundMe’s growing reputation as the financial dumpster fire of the Internet, but I can’t think of any better way to get regulators and lawmakers to start analyzing just how dangerous a totally unregulated and unsupervised $5 billion platform like GoFundMe can be for fleecing the public, uninformed investors, and grandmas too smart to be outwitted by Nigerian princes but not smart enough to avoid throwing their Social Security away on crowdfunding cluck missions such as this one. This campaign, however, is particularly insidious in that it is blatantly manipulating both the ignorance of the general public and human beings’ natural tendency toward nostalgia to bilk potential donors out of their cash, all while offering nothing sure in return.

Larian was sure to include less-than-fine print that makes it clear this is not some philanthropic exercise, rather a “donation” to a commercial venture organized by a bunch of investors to save a company that’s been on debt-fueled life support for years.

At the end of the GoFundMe campaign he writes:

PLEASE READ BEFORE DONATING: Be advised that this is not a donation to a charitable cause, and there is no tax deduction available. It is a donation to a potential commercial venture. The funds raised would be added to other capital being gathered by the potential purchasers of some or all of Toys“R”Us. A donation to this campaign doesn’t qualify you to claim equity in any potential acquisition; it simply means you want future generations to be Toys“R”Us kids.

Therefore, before donating, please note that there is no guarantee that the offer to purchase Toys“R”Us described above will be made or accepted. You are donating “at your own risk.” If your donation is not used to achieve the purchase of Toys“R”Us in some form, it will be returned to you.

In other words, it’s pretty much like any other GoFundMe campaign in that it can’t guarantee your money will go toward what you think it will go toward, but unlike donating to a sick kid or a dog with a broken leg, in this case you’re merely handing over cash to people you don’t know so they can suck any marrow left out of a dying company’s bones when it finally dies. How admirable.

My advice? Save your money. Go to Target and buy yourself some LEGO if you’re feeling particularly nostalgic toward your toy-loving youth. No corporate bankruptcy can kill the joy that comes with unboxing a new toy.

The Save Toys R Us GoFundMe campaign is archived here.

This post has been updated to clarify that Isaac Larian has not contributed directly to his GoFundMe campaign but rather typed in his $200 million dollar “pledge” as an offline donation. Meaning it has not been processed through GoFundMe/WePay as a legitimate contribution to the campaign.