Crowdfunding Sites Helping Raise Millions for California Wildfire Victims

Hundreds of people whose lives were uprooted by the Northern California wildfires are seeking financial help on sites such as GoFundMe.com, YouCaring.com, PlumFund.com, Facebook Fundraisers, Indiegogo's Generosity.com and others. People across the Bay Area and country have donated millions of dollars, aided by the ease of giving with a click.

There's no doubt that the money -- and the psychological boost of feeling supported by a community -- will help fire victims on the long path to rebuilding. But this type of feel-good donating has stirred controversy. Philanthropists worry that they siphon money from established nonprofits such as the Red Cross, whose services are available to all disaster victims. And the 5 percent fee charged by GoFundMe, the biggest site, is under attack.

Although the sites are relatively new -- GoFundMe started in 2010 -- their use after disasters is now an indelible part of the recovery process.

"Crowdfunding has proven to be a remarkably powerful, fast, effective way to rally a community struck by hardship to raise much-needed relief for victims," said Dan Saper, CEO of San Francisco's YouCaring, which began in 2011.

There are campaigns to help soccer families, schoolteachers, firefighters, nurses and an Uber driver; to rebuild a school for autistic children and a horse ranch; to help feed victims and first responders. Former major-league ballplayer Jonny Gomes and current Los Angeles Rams quarterback Jared Goff, both North Bay natives, are spearheading general-relief drives. The Bay Area's seven professional sports teams have pledged $450,000 for the Red Cross and set up a YouCaring site to raise more.

"It's become culturally normative; when there's a tragic event, you create a site and people can donate," said Richard Swart, a visiting fellow at UC Irvine who studies the social impact of alternative finance methods. "We already hang out in tribes online. This transfers that sense of belonging."

Millennials are particularly keen on the sites, Swart said, because they "like extreme transparency; they want direct insight into how the money is applied."

But caveats apply.

"It feels almost weird in disaster situations when you have a variety of people competing," said Ethan Mollick, an associate professor of management at Penn's Wharton School of Business, who studies online crowdfunding. "When there is a charity as an intermediary, more people get help, and it's based on who needs it. The Red Cross is accountable for what they do."

Still, the sites may be generating funds that wouldn't otherwise have been donated. People see a heart-tugging story, feel a personal connection and "it shakes more money from the tree," he said.

The sites may also be diverting money that otherwise would have gone to established charities, Mollick said. But Swart said there haven't been any empirical studies to prove or disprove this theory -- and many major nonprofits themselves use the sites for fundraising.

GoFundMe's 5 percent fee, which is subtracted from donations, is attracting scrutiny. All the fundraising sites pass along payment processing fees, generally about 3 percent; they don't make any money on that aspect. But to generate revenue, GoFundMe charges a fee, while others, such as YouCaring.com, Generosity.com and PlumFund.com, do not take mandatory fees, but ask for voluntary contributions.

As of Wednesday, some $6.6 million was donated to wildfire-related causes via GoFundMe, said Eric Kim, a Sebastopol resident, who tallied the 500 top campaigns. That translates to more than $330,000 in revenues for the San Diego company.

Kim started a GoFundMe campaign for his son's third-grade teacher, who lost her house, and was dismayed when he realized what GoFundMe's cut would be. "The more money that gets raised, the more money they make," he said. "I'd bet that this will be a record profitable year for GoFundMe, capitalizing on all the disasters this year."

He's among more than 86,000 people who signed a Change.org petition asking GoFundMe to waive its 5 percent fees for California wildfire victims.

But GoFundMe -- and some outside experts -- said that it needs fees to make the business model work. "You can't build a sustainable company without revenue," Mollick said. "But GoFundMe (and other fundraising sites) doesn't substitute for charities through which more people get help."

GoFundMe said its fees cover fundraising tools, a crowdfunding guarantee, trust and safety procedures, and customer service. The company has pledged $250,000 to Northern California wildfire relief. While fraudulent campaigns drew attention early in the industry's life, GoFundMe, YouCaring and other sites say they have strong protection tools and, if a campaign is identified as fraudulent, will quickly refund donors' money.

"Every campaign -- regardless of size or attention -- is critical to the person who started it," said GoFundMe spokeswoman Kate Cichy in an email. "This is why our 5 percent fee remains in place for all campaigns on our platform, even in times of disaster or emergency."

As of late last year, GoFundMe said it had helped raise more than $3 billion for a range of causes since its founding, with the contributions accelerating over time.

At YouCaring, Saper said being free is critical to its mission. The certified B corporation (a type of for-profit company that considers social good alongside profits) adds a voluntary "tip" onto donations that goes to the company. Donors can adjust the amount up or down to as little as zero. The company also says it gets some support from payment processors and other vendors.

While he wouldn't give specifics, he said the 50-person company brings in a comfortable amount to support itself and is on track for 100 million visitors this year. YouCaring's 500 fire-related campaigns had raised $2 million as of the middle of last week.

Facebook recently plunged into personal fundraisers, allowing its users to raise money for everything from personal emergencies to medical or educational needs. Its Crisis Response center also offers "Community Help" for people to ask for and offer help in real-time, said spokesman Aften Meltzer in an email, while nonprofits can add a Donate button to their page.

For those who receive donations from online campaigns, there are no tax consequences, said Craig Denlinger, a Denver CPA specializing in crowdfunding. For donors, the same is true as long as they don't exceed the IRS's $14,000 gift limit. However, unless the donors are giving to a nonprofit through the sites, "an unfortunate downside is that they don't get the benefits of the tax write-offs, as they would with any qualifying 501(c)3 charity," he said.

For many recipients, asking for help is a psychological adjustment.

Andrea Detrick, a third-grade teacher and single mom of two kids, lost her Santa Rosa house. So did her boyfriend, a fire crew battalion chief, and her parents. The whole family, plus her two dogs, are now crammed into her sister's house in an area of Santa Rosa that was spared. Her best friend since fourth grade set up a YouCaring fundraiser that's brought in over $7,000.

"It's all been very positive, but humbling," Detrick said. "I've never had to be on this side. I'm used to giving. I've never had to be in need of something."

Roland Tembo Hendel had a similar reaction when his campaign to raise money for his "hero dog" Odin went viral, bringing in over $77,000.

"I've always given to charity and done volunteer work," he said. It was quite enlightening to be on the receiving end of it. I realized it's just as important to be able to receive as to give. There is just as much dignity in it."

Hendel's story reflects some of the advice experts have about how to mount a successful campaign, although in his case it happened by accident.

He wrote a compelling narrative, illustrating it with photos and frequently offering updates. People who saw it shared it, resulting in media attention.

Hendel said he couldn't believe his eyes when he and his daughter Ariel, 14, returned to his 35-acre property in unincorporated Sonoma County after the wildfires. Their house, barn and all the other structures were smoldering rubble. But their Great Pyrenees dog, Odin, stood wagging his tail and coughing, his coat singed, his whiskers and eyebrows melted, as he guarded their eight rescue goats plus five stray deer.

"He plopped down and wanted us to pet his belly," Hendel recalled. As the fire raged late Sunday, Oct. 8, Odin had refused to evacuate without "his" herd -- "he and his sister Tessa were bonded with the goats; they slept with them and played with them," Hendel said. The flames were so perilously close that there wasn't time to hitch up a trailer and load the goats.

Hendel hopes to get Odin, Tessa and the herd back on the land by spring, so he started an online fundraising drive on YouCaring.com to raise money for a barn and a pump house for water. So many donations poured in that Hendel will earmark surplus for the nonprofit Sonoma County Wildlife Rescue.

"It went berserk with a huge outpouring of love, compassion and giving," he said.

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