Crowdfunding Growing in Popularity as Source of Aid

Crowdfunding Growing in Popularity as Source of Aid

Individuals looking to raise money for disaster relief, to cover medical bills or expenses arising from job loss, and/or to address other personal challenges increasingly are turning to online crowdfunding platforms, the New York Times reports.

In September, devastating floods along Colorado's Front Range destroyed the home and T-shirt printing business of Wyl and Jessie Collins. With no flood insurance and limited access to credit and small business loans, the Collins family turned to an online crowdfunding platform called GoFundMe to help raise money to get themselves back on their feet. In just two months, the site, which processes donations via credit and debit card and passes them on to the beneficiaries after taking a 7.9 percent fee, has helped the family raise more than $8,000 in donations from seventy people. Combined with money from the Federal Emergency Management Agency, Wyl Collins said he had enough to rent space with a partner and order a new press and supplies. "A lot of them are family and friends," Collins said of the donors. "Most of the donations, probably half of them, are from clients who want me to go, go, go. About a quarter of them are from complete strangers."

Since Kickstarter was launched in 2009 as a way for people to support arts and other creative projects, other popular crowdfunding platforms, including GoFundMe and Indiegogo, have emerged, enabling people to raise money for all kinds of projects, from school field trips to global clean-water initiatives.

According to Brad Damphousse, co-founder and CEO of GoFundMe, Hurricane Sandy last fall was the first national disaster for which he saw a spike in people using the platform to help out. "It is changing the way we give," said Damphousse. "When people have the option to give to someone in a very targeted way and give to someone they know, love, and care about, they are going to choose that path over a traditional charity or nonprofit." About $1.3 million was raised through GoFundMe after Sandy, he said. In addition, $3.4 million was raised through such platforms to help victims of the Boston Marathon bombings.

Still, it's unlikely that these and other funding platforms will replace the American Red Cross, United Way, and other large traditional charitable organizations anytime soon. The Red Cross estimated that as of October 30 it had received $5.6 million in donations and pledges for Colorado flood aid. Jennifer Elwood, vice president for consumer marketing and fundraising for the organization, said she didn't view such platforms as competition. "We have a completely new audience of people," she said, "who care about the mission but are looking to help in a way that is relevant to them."