I think the best thing to do is encourage people by complimenting them on the points about their singing that are good. Saying nothing about their shortcomings is the best message. The more advanced a performer is the more they want to know how to improve and sometimes will judiciously ask certain people who are constructive in their attitude
what they think, honestly. Singarounds can be a helpful laboratory for those interested in pursuing a performance career. Sensitivity to gauging audience reaction is very helpful.