Risky Business

It’s called crowdfunding and it occupies a spot on the Internet somewhere between venture capitalism and electronic panhandling.

It is quite simply the practice of raising money, be it for a start-up business venture or to pay for a vacation, from a large number of people through Internet-related registries.

Often referred to as alternative financing, it beats hell out of trying to extract money from a gimlet-eyed loan officer or skeptical entrepreneur. But the “alternative” in “alternative financing” means that you need to convince the cyberspace collective to open their hearts and/or wallets.

And, of course, it’s not really new. In 1885, when government sources failed to provide funding to build a monumental base for the Statue of Liberty, a newspaper-led campaign attracted small donations from 160,000 donors.

These days, thanks to the Internet, crowdfunding is raising ridiculous amounts of money. The current record is $65 million from 700,000 backers hauled in by Cloud Imperium Games which is developing a PC game called Star Citizen.

Less spectacular but noteworthy: The "Coolest Cooler" raised a total of $13,285,226 from 62,642 backers. The cooler features a blender, waterproof Bluetooth speakers and an LED light.

In a more serious vein, GlobalGiving allows individuals to browse through a selection of small projects proposed by nonprofit organizations worldwide, donating funds to projects of their choice. 

DonorsChoose.org, founded in 2000, allows public school teachers in the United States to request materials for their classrooms. Individuals can lend money to teacher-proposed projects, and the organization fulfills and delivers supplies to schools.

All told, the crowdfunding industry reportedly raised over $5.1 billion worldwide.

I became intrigued by this phenomenon when I read a recent story about a grisly traffic fatality on the 5 Freeway. A car driven by a 20-year-old Burbank man who police said was driving recklessly struck another vehicle and rolled over. The driver, who was not wearing a seat belt, was ejected, his body landing on a freeway sign 20 feet above the road.

A friend of the victim set up a page on the GoFundMe website, asking for $50,000 to cover his family’s "unexpected financial burdens" and the cost of the funeral.

That seemed like a lot of money, considering the foolhardy circumstances surrounding the young man’s death. So far, $19,000 has been collected meaning there was a sympathetic audience out there somewhere.

But I had to wonder if the pledges actually materialized and if the money will in fact get to the family.

And that’s the problem with sites like GoFundMe. The rules are loose and quality and truthfulness are not guaranteed. You can raise money for almost anything. And you get the cash whether you meet your goal or not -- minus a 5 percent take from GoFundMe and additional processing fees.

It’s the user’s responsibility to decide which campaigns are worthy of their hard-earned cash.

Fraud is not unknown here.

An account was set up on GoFundMe that claimed to raise money for a family whose mother had died shortly after giving birth to her third child. The page received over $4,500 in donations—but it wasn’t set up by the family or even by anyone they knew. It was started by a sister of one of the dead woman’s co-workers. 

But after the money was raised, the woman cleaned out the account and disappeared, according to the Texas Monthly. She was later arrested.

According to an ABC News report, a man collected $6,500 for a baby who needed a heart transplant. The money never materialized and the baby’s parents had to start a new campaign while trying to explain that money raised by the first one had disappeared.

A Nashville family whose daughter was murdered said a GoFundMe page to raise money for her two young children was established but the grandparents, who are now raising the children, said they have never seen a dime of the $1600 that was raised.

Then, there’s the bizarre:

A woman in Portland addressed a funding request to “Dear white friends…

“The stress of living as a Thai-Cambodian woman in such a white city replete with constant interpersonal and institutional racism has a big toll on my health and well being. I see an amazing therapist to cope with this…but I spend $100/month on therapy for bi-weekly appointments. Now it's your turn to pay!”

A New York woman sought donations to help pay the vet bill for her sick cat.

Amber Roof, the sister of the alleged Charleston church shooter, Dylann Roof, asked the public for donations asking for $5,000 on a Go Fund Me page to pay for her and her fiancé’s wedding, which was originally scheduled for June 21.They canceled the wedding after her brother was accused of the shooting and killing nine members of the Emanuel AME church just three days earlier.

Once in a while, however, there’s a fundraiser that reaffirms your faith in humanity.

After months of walking several miles a day to his customers’ homes to mow their lawns 83-year-old John Joyce got a break -- when customers surprised him with a new truck, according to an ABC report.

Longtime customers Robert and Nikki Norton met the hardworking man eight years ago when he was mowing a yard down the road from their home in St. Petersburg, Fl.

About a month ago, the transmission on Joyce’s 1994 truck died, and the Nortons realized how troublesome it had become for Joyce to make a living.

So, the soon-to-be newlyweds created a GoFundMe account and used the power of social media to spread the word on Joyce’s situation.

“And in just a few weeks people donated more than $13,000, but that wasn’t all -- a used car dealer, Automax, sold them a 2004 truck, leaving them with money to spare,” the Nortons said.

The very next day Joyce's stepdaughter sent a heartfelt text message. She said the day he received the truck was the greatest day of Joyce's life, because "he's not used to good things happening to him."

Robert Rector is a veteran of 50 years in print journalism. He has worked at the San Francisco Examiner, Los Angeles Herald Examiner, Valley News, Los Angeles Times and Pasadena Star-News. His columns can be found at Robert-Rector@Blogspot.Com. Follow him on Twitter at @robertrector 1.