Struggling Consumers Turn to Crowdfunding to Cover Basic Expenses
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What is the main topic discussed in this episode?
Here's your money briefing for Monday, December 21st. I'm J.R. Whalen for The Wall Street Journal. Stimulus checks and unemployment benefits have helped a lot of people get by during the pandemic, but many are still struggling to pay the bills and put food on the table. For help, more people are turning to crowdfunding campaigns on sites like GoFundMe.
What we're seeing a lot right now with people who are in a position to give money is that a lot of folks really are looking to give more locally. This is something that throughout history has kind of always been the case that people like to help their neighbors out.
Coming up, our reporter Ben Eisen will have more on how crowdfunding is being used to help cover basic expenses. Plus, we'll hear from a freelance photographer who's nearly doubled his funding goal. That's after the break.
How are people using crowdfunding to cover rent and groceries during the pandemic?
Crowdfunding sites like GoFundMe are often used to raise money for things like pet projects or sometimes something more serious, like the cost of an emergency room visit. But the economic downturn caused by the pandemic is leading some people to use these crowdfunding services in different ways. Our reporter Ben Eisen has been looking into this, and he's here with us with details. Ben, thanks for being here.
Thanks for having me.
So crowdfunding has been a popular fundraising tool for years, but how have these services changed in 2020?
What we're seeing right now with crowdfunding is that you have a lot more people who are struggling financially right now, and they're actually turning to websites like GoFundMe to raise money for basic needs like groceries, medical bills, and rent. A website like GoFundMe has always been used to raise money for life's ups and downs for, you know... honeymoons, backpacking trips on the upside and emergency medical bills on the downside. But really, now you're seeing a lot more people who just they can't make ends meet because of the recession. And GoFundMe is proving to kind of be their safety net. What we're seeing a lot right now with people who are in a position to give money is that a lot of folks really are looking to give more locally.
This is something that throughout history has kind of always been the case that people like to help their neighbors out.
Why are donors increasingly choosing to give to local fundraisers on platforms like GoFundMe?
But in this case, both where we are just in the way technology is developed and in society, In terms of the pandemic and that we can't see people personally, you know, a lot of it is happening through these crowdfunding websites instead. Somebody makes a fundraiser for their neighbor and sends it out on Facebook to all of their network and raises money that way. Or, you know, someone makes a fundraiser for themselves and shares it or shares it by email and, you know, really tapping into sort of their local network.
What are you hearing from the crowdfunding companies about this? Did they ever expect to see things go in this direction?
I think it would be hard for anyone to foresee just sort of what's happened with the pandemic, with the economic crisis, with the way that different people are disproportionately impacted. I think these companies would say that they're made for life's ups and downs. So they're there for, you know, whatever people need and want. And speaking with the CEO of GoFundMe, he said, you know, this is a reflection of society. It's sad that it's the case, but... That's what people need right now. People need to raise money for groceries and rent and bills, and that's what they're there for. It should also be noted that a lot of these crowdfunding platforms are for-profit companies. So they do make money when people fundraise on their platform.
They take a little bit of a cut oftentimes, or they receive donations that donors give as part of their giving. So they do make money, but they provide the service of kind of connecting the donors and the fundraisers.
All right, let's hear from someone who was able to raise money for expenses through crowdfunding. Jim Mimna is a photographer from the Denver area, and he's here with us now.
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Chapters
4 chapters
1
What is the main topic discussed in this episode?
0:05–0:54
2
How are people using crowdfunding to cover rent and groceries during the pandemic?
0:54–2:14
3
Why are donors increasingly choosing to give to local fundraisers on platforms like GoFundMe?
2:14–5:56
4
How has the pandemic changed the types of campaigns launched on crowdfunding sites in 2020?
5:56–8:48
Speakers
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