A measure of inequality

On crowdfunding platforms, as in life, money begets money. Not only did nearly half of all campaigns raise no money, but the top 1% of campaigns in money raised gathered about 25% of all the funding (both in terms of number of donations and money). The researchers found that top campaigns raised money for the employees of Michelin-starred restaurant Le Bernadin in New York, and for golf caddies and employees of exclusive clubs. In those cases, it was mostly corporate executives or celebrities who started the campaigns.

Often, for-profit companies started or benefited from the campaigns, and were helped by GoFundMe highlighting the campaigns on their homepage or promoting them through their channels. GoFundMe even helped some campaigns for small businesses through matching donations as a form of support during Covid-19.

GoFundMe supports specific campaigns as a way to help give exposure to causes that might otherwise get overlooked, according to a spokesperson. Between March and August 2020, GoFundMe was used to raise $625 million for Covid-19 support, the company said.

The measure of inequality in the distribution of funding is striking. On the Gini coefficient, an index to measure the equality of wealth distribution where 0 is perfectly equal and 1.0 the most unequal, the Covid-19 campaigns registered as 0.88.

There is no reliable data on the demographics of those who start campaigns or benefit from them. However, campaigns launched in highly educated, wealthy counties did better. Higher levels of income and education were positively related to the likelihood of starting a campaign, too.

This suggests that on top of being unable to reach potential donors with bigger wallets, those living in lower-income areas might be facing barriers such as poor internet connections, or lack of familiarity with crowdfunding platforms.

GoFundMe is aware of this. In February, the company’s CEO, Tim Cadogan, published an op-ed in USA Today arguing the rise in crowdfunding campaigns for basic needs is a sign Americans don’t have enough government support to face emergencies. “The surge in these types of fundraisers is a direct result of government programs coming up short,” he wrote.

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