"it's a shame you were singing off-key"?   does seem to be a blunt and insensitive criticism; that is how some people are. However, allowing people to believe they are good singers leads to the X Factor syndrome, where artists have been convinced by family and friends that their singing is great, only for their illusions to be shattered in a public humiliation.
Over the years, I have seen singers in various folk settings whose singing has never improved. I have sat and listened to dire singing and have of course dutifully clapped as a polite audience does.
I wonder whether this polite conspiracy of non-criticism has helped either the singers themselves or the perception of "Folk song" amongst the wider public.
john