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Crowdfunding: The Financial Resource You Need to Be Using
Meet Julie, a woman who has spent the last two years taking care of her Alzheimer's-stricken mother, who recently passed away.
A few weeks after her mother's death, Julie began experiencing a series of intense migraines that eventually sent her to the hospital. The cause of her pain turned out to be a brain tumor roughly the size of a tennis ball.
Surgery to remove the growth was only partially effective. In order to prevent additional damage to Julie's brain, her doctors could only extract about 70 percent of the tumor.
The surgeon's play-it-safe approach didn't prevent Julie's brain from becoming inflamed, and she still has to undergo radiation and chemotherapy treatment to try and eliminate the rest of the tumor.
The cost of such care is staggering. Even for the insured, chemotherapy co-payments can quickly soar into the thousands of dollars. There are precious few ways to reduce these medical expenses.
Julie's plight inspired one of her close friends, Yen Nguyen, to attempt a novel approach to raise money for Julie's medical bills: crowdfunding.
What is crowdfunding?
"Crowdfunding" is a newly-minted term used to describe the emerging trend of online fundraising by individuals and small groups.
Crowdfunding websites, such as GoFundMe, The Human Tribe Project and GiveForward, help people raise money for a particular cause or project. Individuals seeking outside donations use these sites to set up profiles where they can tell their stories, communicate with donors and send their requests for funds into the Internet ether.
These sites have been used to finance a countless variety of endeavors, including: start-up companies, independent art projects, and charitable causes.
Some people, like Nguyen, also tap into the power of the crowd to help themselves or a loved one pay for personal expenses, such as medical bills, or school tuition.
Online fundraising is a rapidly growing trend, according to Brad Damphousse, whose crowdfunding website, GoFundMe.com, experienced a 500 percent growth rate in 2012 alone.
Nowhere is this growth more glaringly obvious than in the beleaguered realm of health care costs. Medical care-related fundraising campaigns are some of the most popular crowdfunding endeavors. GiveForward.com, a site dedicated specifically to helping people raise money for medical expenses, estimates that crowdfunding sites raised $2.8 billion for various medical causes in 2012.
Indeed, the "Medical, Illness & Healing" category on GoFundMe is by far the most popular section on the site, says Damphousse; accounting for 17% of their overall fundraising activity.
Connecting those who care
The particular appeal of crowdfunding sites is that they provide a method of connection for people who are otherwise separated by distance or a lack of awareness, and getting them to take action in support of a cause they care about.
"The issue with modern society is that people are sick behind closed doors," says Buckley Fricker, J.D., G.C.M., a geriatric care manager and president of Buckley's For Seniors, a companion care company for seniors. "We don't know our neighbors and family members are spread far and wide."
For Fricker, the power of the crowdfunding movement lies in its ability to use the internet to overcome these issues of distance and virtually build awareness for a cause. Not only do people have a place to tell their stories, they can also update and appreciate their donors via blog posts, social media and e-mail, deepening the personal connection.
The power of emotion-driven donations
The ability to interact with real people in real time on a crowdfunding site creates tightly-knit mini-communities of individuals who share a passion for a given cause. It also infuses these relationships with one crucial element that is so often lacking in modern interactions: trust.
"People are compelled to give because of their desire to support someone they know and trust," says Damphousse.
While it is often friends and family who initially fork over funds, a compelling story and an established community of donors can compel even complete strangers to part with cash for a cause they identify with.
"People are more likely to actually provide assistance to someone they feel ‘close to' than to a large not-for-profit with invisible recipients," Fricker points out.
Caregivers can benefit from crowdfunding
Crowdfunding can be a useful resource for caregivers or seniors struggling to pay for everything from hospital bills, to wheelchairs, to adult day care.
One of the benefits of crowdfunding is that, according to Fricker, any money you receive is considered a gift, and is thus tax-exempt. (For more important tax information, visit the Tax Tips for Caregivers section)
However, it's important to make sure you fully understand the policies of whichever site you decide to post your profile on. Some sites take a portion of the money donated to each cause (generally somewhere between 5 and 20 percent) or charge fees for processing payments.
Here are a few tips for starting a successful crowdfunding campaign for your loved one's care:
Pick the right site: The first step is to do your research and make sure whichever site you choose to use is the right fit for you. There are literally hundreds of different crowdfunding sites on the internet. Some things to consider before creating a profile:
- How long the site has been operating: In the fast-paced world of online start-ups, new sites can come and go in a heartbeat. Make sure the site you choose has been around for at least a year.
- How successful the site has been in raising money for health-related causes: Scope out the various profiles on the site to see how long a typical campaign lasts, and whether or not users generally reach their monetary goal. Also, be sure to select a site that at least includes a health care category. Examples of such sites include: GiveForward, GoFundMe, and FundRazr.
Involve the younger generations: This is one area of caregiving where younger relatives can play an important role. According to Fricker, one of the biggest challenges of crowdfunding for older adults is that these individuals are less likely than their younger counterparts to have friends and family who are online, which makes it a bit harder to get the word out. Since individual donations are typically smaller, Fricker says a person may need around 200 social network connections in order to raise enough money online. That's why you should tap into the expertise of teenage and young adult relatives, who are likely to be more adept at creating online profiles and connecting with people via the internet. Ask your sons, daughters, nieces, nephews and grandkids to help you sign up for a site and spread the word about your loved one's struggles.
Sell your story: In order to run a successful crowdfunding campaign, you can't be afraid to don your marketer's hat.
- Compose a compelling headline: The headline you choose to introduce your story to the world can make a huge difference in the number of donations you receive. Most crowdfunding sites have page after page where they list the headlines of member profiles, along with a picture; that's it. You have to pique a potential donor's interest with your headline in order to convince them to click on it and visit your profile. Here are a few real-life examples of click-provoking headlines, "Fight for a Warrior," "Marcy Ketelsen, Not Running from Cancer," and "Help Kate Bornstein Stay Alive."
- Pick a good picture: Try to find a good shot of your loved one to upload and include in your profile. People are more likely to trust and connect with a cause if they can see the person they're helping.
Keep lines of communication open: Try to personally thank each individual who donates to your cause, no matter what their contribution is. It doesn't have to be anything elaborate or long-winded, just let people know you're aware of and are grateful for their help. Most sites have tools that make it easy for members to send a message, thanking people for contributing. And, as an added bonus, there are research has shown that cultivating a sense of gratitude can change your life for the better.
As with any fundraising effort, there are no guarantees when it comes to crowdfunding campaigns. But, the rising popularity of this form of online altruism is promising.
In the month since Nguyen created the profile for Julie, her crowdfunding endeavor has raised over $1,700 of its $2,000 goal.
As Fricker says, "Human beings are driven to help one another, but we have lost the ‘awareness' factor that is a catalyst for people to know what is needed and how to help. Crowdfunding can be an excellent way to get back to easily helping one another."
In other words, people are willing to help; all you need to do is ask.