Crowdfunding an online fundraising option


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While crowd funding isn’t a new concept, it is a changing one. Drawing on both charitable giving and microfinance, crowd funding — sometimes called crowdsourcing — has become a way for individuals to collectively donate funds for everything from artistic endeavors to college tuition to medical expenses and everything in between.

People and causes have long solicited donations from the population in general. In the mid-1880s, newspaper publisher Joseph Pulitzer asked for donations to help complete the pedestal for the Statue of Liberty and raised more than $100,000. Today, hundreds of websites have sprung up to allow individuals and organizations to raise funds through private donations, including ArtistShare, Indiegogo, GiveForward, Kickstarter and GoFundMe.

Some people resort to crowd funding because they’ve run out of options, while others are attracted to its simplicity. For those who give, there’s the gratification of being a part of something important and noble.

One major appeal of crowd funding: You don’t have to give a lot to help. If many give a little, it all adds up, which mirrors exactly the philosophy Pulitzer used to give Lady Liberty a place to hold her shining light.

1 woman’s struggle

In 2010, Chrystle Fiedler suffered an injury that left her with a severe concussion, as well as a disorder known as atypical trigeminal neuralgia.

“Up until then, I was very busy, writing for national magazines and working on a mystery series, going full throttle,” Fiedler says.

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In constant pain, Fielder, the author of the “Natural Remedies” cozy mystery series, found herself running behind on her bills. After exhausting her savings, she turned to crowd funding as a last resort to help supplement her income.

Fiedler launched a campaign on GoFundMe. Although she found it difficult to swallow her pride and ask for help, she knew she couldn’t make it without financial assistance.

“I think that if you’re willing to humble yourself and really be honest and put it out there, people really do want to help,” says Fiedler.

She is one of thousands of people facing tough times who are reaching out for help on the Internet. And it’s a big-bucks industry: According to a USA Today article, crowd-funding websites raised $2.8 billion in 2012 alone.

How crowd funding works

Ashley Groves, growth manager at GiveForward, one of the top money-making crowd-funding sites on the Web, says part of what makes this type of online fundraising so successful is that it’s virtually effortless for both the person in need and the donor.

“Creating a GiveForward page is a lot like creating a Facebook or LinkedIn profile, and the whole process takes less than five minutes,” she says.

Groves says donors can find worthy causes or people with whom they are acquainted by doing on a search on the site. Although she says the typical donor is invited by someone they know — a family member, close friend or fellow parishioner at their church, for example — one can also find deserving causes by going to the site’s home page and searching based on a certain illness, description or geographic location.

“Then you simply click the ‘Give Now’ button and make a contribution using your credit or debit card,” she says, adding that donors also have the option of leaving words of encouragement to the recipient. Some prefer to donate anonymously.

A senior success story

No one who saw it will forget that made-for-television moment when Barbara Garcia, an elderly Moore, Okla., woman, told a CBS news reporter how she had lost her little dog, Bowser, in the deadly tornado that destroyed her home last May. As Garcia and the reporter toured the wreckage on camera, the camera focused on a pile of rubble when it began to stir. Much to Garcia’s joy, a dirty but unharmed Bowser climbed shakily out of the debris.

Back home, viewers rejoiced to see a little bit of good news emerge from the tragedy, and one went a bit further: Erin DeRuggiero decided to help raise enough money to rebuild Garcia’s home.

DeRuggiero set up a campaign on GoFundMe with an initial goal of $60,000. DeRuggiero’s hard work paid off, and she surpassed her initial goal. Now Garcia, who had neither homeowners insurance nor enough savings to rebuild, has a new home under construction, and her benefactors can watch as it takes shape.

Tips for successful online fundraising

Buckley Fricker, who is both an attorney and a geriatric care manager, says seniors can use crowdsourcing to pay medical and pharmaceutical expenses, assist with hospice costs, help manage their bills when illness has made them unable to work — as in Fiedler’s case — and alleviate funeral expenses for a spouse.

There are some things to keep in mind:

  • The process builds awareness of a situation rapidly and with little expense.
  • Fundraiser organizers should have a social network of 200 people at minimum to launch a successful campaign.
  • Proceeds are not taxable because they are considered a gift.
  • Likewise, donations are not tax-deductible because individuals are not Internal Revenue Service-approved charitable organizations. Check the website’s fine print for details.
  • Crowd-funding websites take a percentage of the amount collected.

GoFundMe and GiveForward charge 5 percent and 7 percent, respectively, of the proceeds. Fricker says they vary from site to site and often include payment processing fees. Groves says some sites also charge an additional fee at the end of the campaign.

Fricker advises those interested in crowdsourcing to do their homework before choosing a site. How can a potential donor make sure they’re donating to a valid cause? Fricker says to stick with proven sites and donate to people whose identity and needs can be verified through friends, acquaintances and family.

When it comes to seniors raising money through crowd funding, Fricker says, “It’s hardly ever the senior who is on the forefront asking for these funds. It is going to be their caregiver, friends — whoever is taking care of them.”

Her tips for a successful campaign:

  • Have someone else manage the campaign.
  • Frequently post photos.
  • Do regular updates about their improvement.
  • If the site doesn’t have a way to do this, put this information on a personal website, so donors can see the results.
  • Make sure to humanize the recipient.
  • Know upfront the fees charged by the site.

“I’m really excited and hopeful that this virtual option is recreating in its own way the small communities of yesteryear, when everyone pitched in,” Fricker says.