Crowdfunding pages effective, but, donors, beware

In our instantaneous digital age, online fundraising — known as “crowdfunding” — has become mainstream, fashionable, and, most important, quick. GoFundMe is by far the most popular of a growing number of these companies whose goal is to raise money for individuals who have been injured, afflicted with serious conditions or the victims of fires or natural disasters.

While millions have been raised for worthy causes, there have been instances of fraud and deception, so, donors, beware!

GoFundMe is right up front with its warning: “There is no way to 100 percent guarantee that a user’s donation page contains accurate or truthful information. Donors should contribute only to users they personally know and trust.”

You work hard for your money, and you have a good heart, so you will want to make sure that your donations are used for their intended, legitimate purpose. Consumer officials urge donors to do research before donating.

GoFundMe prominently explains that it takes a cut of all donations — 2.9 percent of all cash raised for individuals or groups and 30 cents per donation. If the GoFundMe donation is made to an existing charity, such as the American Red Cross or the Salvation Army, the fee is 7.9 percent and 30 cents per donation.

Donors get a receipt indicating that their donation is tax-deductible, assuming, of course, that it has been made to a 501c(3) nonprofit organization.

We Pennsylvanians are a generous bunch when it comes to creating GoFundMe pages. According to a recent study, Pennsylvania had the sixth highest number of pages in the country.

One of the most recent pages begun locally had been for Richard Labar, 58, a Domino’s Pizza driver, who was shot early Monday near East Stroudsburg University, allegedly by three people who phoned in a phony pizza order. Labar died in a Lehigh County hospital a day later, and the three assailants have been charged with homicide.

Lambda Iota, an ESU sorority originally set up the page for Labar. The sorority president said the funds raised will help with Labar’s funeral expenses and to assist his family. Last week, $4,524 had been raised toward a goal of $10,000.

A GoFundMe account was started in June for Lexie Antonini and Ryan Koch, parents of a 4-year-old Chestnuthill Township, Monroe County, boy who accidentally died from a self-inflicted gunshot wound. The $5,000 goal was exceeded.

Koch, 21, was charged with involuntary manslaughter and endangering the welfare of children, in connection with the incident.

Bowmanstown Fire Co. established a page to support its building program, but the volunteer organization has raised just $110 toward its $5,000 goal.

According to studies of crowdfunding campaigns, the average successful ones are about $7,000, while the average campaign lasts about nine weeks. Campaigns that earn 30 percent of their goal within the first week are more likely to be successful.

Social media is a major factor in a campaign’s success. Spreading campaign information through Facebook friends, for example, can be very effective, the studies show. The more friends, the more successful a campaign is likely to be.

Crowdfunding campaigns tend to attract younger donors: Those 24 to 35 are more likely to participate, while those older than 45 are less likely to do so. Those earning more than $100,000 are the most likely donors.

Some of the high-profile successful GoFundMe campaigns include: $59,380 for Emily Scott’s Dream 2014 Sochi (for her trip to the Olympics in Russia to represent the U.S. on the women’s speed skating team); $809,310 Bucks for Jeff Bauman (lost two legs in the Boston Marathon bombing in 2013) and $183,259 for Support Officer Darren Wilson (police officer who shot and killed Michael Brown in self-defense in Ferguson, Missouri, in 2014).

GoFundMe got its start in 2010 and was founded by Brad Damphousse and Andrew Ballester, who sold a majority stake in the company to Accel Partners and Technology Crossover Ventures. In making the deal, the company was valued at $600 million in January of this year.

The company, whose headquarters is in San Diego, is big and getting bigger. It receives upward of $150 million in revenue each month.

Despite its success, the company has its detractors. A number of users complained in social posts that it is taking too long for beneficiaries to get the donated funds. Company officials insist that they must first do due diligence to make sure that instances of fraud are kept to an absolute minimum.

Others posted their amazement at the success of their campaigns and how the donations in some instances made the difference between solvency and bankruptcy for the recipients.

By Bruce Frassinelli | tneditor@tnonline.com