In the run-up to the passage of last month’s coronavirus relief bill, GoFundMe CEO Tim Cadogan repeatedly criticized Congress for not moving fast enough to provide aid to struggling Americans. Congress’ inaction, he said, was forcing people to crowdfund for basic needs like medical care, housing, and food.
While Cadogan ’s advocacy was justified — and probably welcome to the millions of Americans who were desperate for support — it also masked an awkward truth: GoFundMe has almost certainly profited handsomely from the Covid-19 pandemic, and it will likely continue to do so as the country slogs out of its current economic slump.
To be clear, profiting from the pandemic isn’t necessarily wrong. If mask, vaccine, and ventilator manufacturers can provide necessary services at a reasonable profit, we should all be glad, as they are responding to real needs created by the pandemic. So, too, is GoFundMe, which has helped hundreds of thousands of people weather the economic storm of pandemic lockdowns. As of last August, the platform’s users had already raised $625 million for coronavirus-related crowdfunding campaigns, money that has made a real difference in people’s lives.
But, as Cadogan rightly argues, the job of providing a social safety net should fall primarily to the government. Although GoFundMe can help fill the gap, the platform “was never meant to be a source of support for basic needs,” he said.
That’s true in the narrow sense, but some self-reflection is also in order. Even before the pandemic, GoFundMe was leaning into its role as a place many Americans turned to for help with basic necessities, and the company shows no sign of stopping. As a researcher who focuses on ethical issues in the health sector, I’m deeply concerned.
Medical fundraising has long been GoFundMe’s largest category. In early 2019, it accounted for one third of all campaign donations. Last year, the platform instituted a new rent, food, and monthly bills category — a move that the company billed as a response to the economic impacts of the pandemic, but that also might be seen as a recognition of the many people who have long used GoFundMe to meet their essential needs.
The business model is almost certainly a lucrative one. Until 2017, GoFundMe levied a 5 percent fee on every donation made on its site. It has since switched to a tip-based model, but as the platform recommends 12.5 percent as the default tip amount, there’s little reason to suspect its profits have waned. And, as Cadogan acknowledges, GoFundMe has been “a lot busier” during the pandemic.
Even before the pandemic, GoFundMe was leaning into its role as a place many Americans turned to for help with basic necessities, and the company shows no sign of stopping.
Perhaps a bigger problem, however, is that GoFundMe campaigns are highly inequitable. There is growing evidence that while the campaigns help people in genuine need, they do the most for people who are already relatively privileged. A recent analysis found that GoFundMe campaigns to cover medical expenses tend to be less successful for people of color, and Black people in particular, than they are for White people. A 2019 study, which I coauthored, looked at GoFundMe campaigns in Canada and found that a disproportionate number of them went to benefit people in areas with high incomes, high education levels, and high rates of home ownership.
In these ways, crowdfunding echoes existing social biases: It rewards people who are familiar with online technologies, who can tell a sympathetic story, and who have vast, relatively wealthy social networks. In return, crowdfunders must publicize their medical information, financial situation, and family dynamics, often accompanying their story with personal photos and videos to encourage giving.
There are fairer and less invasive ways to do charitable crowdfunding. For example, the platform Watsi partners with hospitals in low-income regions around the world to create crowdfunding campaigns for specific patients who need help paying for their medical care. The hospitals vet prospective recipients, ensuring that campaigns target those most in need. This additional layer of vetting also allows for better protection of patient privacy.
GoFundMe has embraced a similar model of charitable crowdfunding through its GoFundMe.org platform, a nonprofit arm of the company that promotes specific causes rather than individual fundraising campaigns. Most recently, these causes have included aiding small businesses, addressing food insecurity, combating anti-Asian racism, and helping people impacted by Covid-19. For the food insecurity campaign, donations are doled out, in the form of grants, to partnering organizations who then provide material support to needy individuals. For other causes, including the Covid-19 campaign, the money in many cases goes directly to individuals based on GoFundMe’s own assessment of need.
There is growing evidence that while the campaigns help people in genuine need, they do the most for people who are already relatively privileged.
GoFundMe.org is a promising initiative that addresses equity concerns by pooling donations rather than requiring individual campaigners to go it alone. And it promotes causes that benefit groups that might be less successful in the much larger GoFundMe.com ecosystem.
But in its current form, GoFundMe.org is essentially a Band-Aid, not a cure, and serves to mask the underlying problem. To receive funds from one of the nonprofit’s causes, for example, an individual often must first create a standard fundraising campaign at GoFundMe.com and include keywords or hashtags to qualify for additional support from GoFundMe.org. Thus, even nonprofit campaigns are subject to the biases and intrusions that are part and parcel of the for-profit GoFundMe site. Moreover, by hosting many of the nonprofit campaigns on its much larger for-profit website, GoFundMe is effectively ensuring that the for-profit site remains the most visible way to support underfunded causes. This may be one reason why, as of last month, GoFundMe.org’s Covid-19 relief cause, launched in March 2020, had raised just $528,000— a tiny fraction of the $625 million that was reportedly raised through Covid-related GoFundMe campaigns in the first six months of the pandemic.
Cadogan should be commended for calling out Congress for its failures to help Americans get through this crisis. But if GoFundMe is serious when it says it does not want to be Americans’ go-to resource for essential needs, it should start to raise the profile and independence of its nonprofit arm, which has the potential to distribute funding more equitably and less invasively than its for-profit counterpart. The nonprofit arm should also distribute more of its donations — especially those for basic needs— through partnering aid organizations, instead of only to individuals who have created fundraisers at GoFundMe.com. Partnering with organizations that have experience addressing essential needs equitably would still leave plenty of space for GoFundMe’s for-profit arm to continue helping individuals fundraise for other, nonessential activities. In this way, the company could get back to its stated goal of addressing “more positive” needs, like honeymoons, youth sports, and study abroad trips, while simultaneously becoming a more powerful and equitable force for charitable giving.
Jeremy Snyder is a bioethicist and professor in the Faculty of Health Sciences at Simon Fraser University. His book “Exploiting Hope” is available from Oxford University Press.