Crowd-Funding Draws Donations for Sandy Relief

In the aftermath of Superstorm Sandy, some who lost their homes or businesses have turned to crowd-funding websites to elicit a faster and more direct response than they could expect from the government or traditional charities.

While Congress considers a $60 billion disaster aid package for the storm victims, hundreds of them have gotten quicker results by creating personalized fundraising campaigns on sites including GoFundMe, IndieGoGo and HelpersUnite. These individual efforts have totaled a few million dollars – enough to show the funding model can work. GoFundMe leads the way with $1.3 million raised by about 320 individual campaigns from more than 14,000 donors.

Crowd-funded campaigns have also been started in recent days to benefit families affected by the school shooting that killed 26 in Connecticut, though those efforts are on a smaller scale than those that benefit the thousands hit by Sandy.

“There’s always going to be some sort of gap between when a storm or natural disaster or accident or tragedy happens and when larger organizations can step in and help, whether that’s an insurance company or FEMA or what have you,” said Brad Damphousse, CEO of San Diego-based GoFundMe. “Our users get their money as it comes in, and donors know exactly where the money is going.”

By comparison, the Red Cross has more than $200 million in donations and pledges for Sandy – which includes donations through crowdsourcing website CrowdRise – and the Federal Emergency Management Agency said this month it has distributed about $2 billion in aid to 11 states struck by Sandy. Successful applicants can receive up to $31,900 from FEMA for home repairs, though lawmakers have said it’s often not enough to rebuild.

Using GoFundMe, Doreen Moran set out to raise about $5,000 for her friend Kathy Levine of Long Beach, New York. Moran said she had been sick but wanted to do something to help after Sandy’s destruction. So she set up a page on GoFundMe, linked her Facebook page and started spreading the word. She had a birthday coming up but asked for gifts for her friend, instead of for herself.

“Donate what you can,” she wrote. “I will make certain it all gets to her fast. Because she needs it fast.”

Moran has raised more than $15,000 in a month and has been posting pictures of repair work that has begun.

The crowd-funding site HelpersUnite considers its personal fundraising campaigns as secondary to the Red Cross or FEMA relief efforts. A percentage of each donation can be directed to a charity of the donor’s choice, such as the Red Cross. The site’s chairman, Steve Temes, said its model of fundraising can help victims cover costs that aren’t paid for by insurance or government aid. The site didn’t immediately provide a total for its Sandy-related campaigns.

IndieGoGo’s site says $965,443 has been raised through 161 Sandy campaigns.

Sandy represents a breakthrough for the charitable model since it’s the first major disaster since the sites were set up and is expected to be the biggest domestic relief effort since Hurricane Katrina in 2005.

The charitable sites are modeled after Kickstarter, the top crowd-funding site in traffic and volume, though Kickstarter is devoted to films, music and other creative projects. The pioneering site launched in 2009 can’t be used to raise money for individuals to spend on themselves.

Still, those who monitor charities advise would-be donors to exercise extreme caution when choosing whether to donate to an individual’s page. The Department of Justice also has issued cautionary notes about the tendency for abuse after a disaster. Charity watchdog Charity Navigator said crowd-funding sites are ripe for abuse.

“We think that it’s a crapshoot,” said Ken Berger, president of Charity Navigator. “If you know the person personally and you can eyeball the effort, that really is the only way that I think you mitigate your tremendous risk.”

Otherwise, the group recommends giving to a charity with a demonstrable track record, Berger said.

The rise in crowd-funding may be a response to notions that some charities are inefficient, but for every bad charity, there are many good ones, Berger said.

Damphousse said GoFundMe has several safeguards to ensure campaigns related to Sandy are legitimate. His team is constantly monitoring accounts, looking for signs of fraud or abuse. Users must link their campaigns to their accounts on Facebook – which itself works constantly to verify users’ identities. And they must raise at least $100 in online payments from friends or family before being listed on the public search directory.

“Of course we’re well aware that people can try to take advantage of a natural disaster like this, so we really stepped up our game, trying to be that extra layer of protection between those collecting money and donors,” he said.

Donors make online payments through WePay in the United States or through PayPal internationally. The funds are delivered directly into a payment account for those seeking help. Then they link their bank accounts to the payment sites to withdraw the funds. The funds can arrive within three to five days, or checks can be cut within a week. Damphousse said the payment sites are skilled at detecting risky transactions.

GoFundMe charges a 5 percent fee from each transaction for the service.

Successful campaigns typically start with friends and family, spread through acquaintances and draw only sparingly from complete strangers, he said.

“The friends and family are the ones who are going to support you no matter what,” he said. “If you’ve got friends or family who are across the country and are out of power, of course it’s easier for you to support them online with a credit or debit card, rather than mailing a check or sending a card.”

Initial donations give a campaign credibility, or “social proof,” he said. Then friends and family can ask their friends for support as well through Facebook, Twitter or e-mail.

Some who lack power or Internet access have had friends set up their campaigns.

For Phyllis Puglia of Staten Island, New York, who lost her home and belongings, crowd funding has meant about $52,000 in support after her cousin, Josetta Maurer launched a campaign. Maurer created a page to tell Puglia’s story online. It was later featured on NBC’s “Rock Center.” Her initial fundraising goal was just $15,000.

The Good Fork restaurant in New York City’s Red Hook neighborhood has raised more than $53,000 through GoFundMe after telling how water filled the restaurant’s basement and continued up to the dining room.

Donors often leave comments of support on the fundraising sites.

“We’re seeing individuals taking care of one another before some of these bigger organizations can get involved,” Damphousse said. “The process of giving is just so much more intimate and impactful sometimes than just throwing money into a larger organization and being unaware of where that money might be used.”