'Crowdfunding' sites pay medical bills, raise hopes

6:54 AM, Jan 13, 2013   |    comments
(Photo: Laura Segall for USA TODAY)
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But two years ago, when his daughter Mia was 5, she was diagnosed with a brain tumor called a medulloblastoma. She had surgery, months of chemotherapy and radiation treatment, which left Mia, now 7, with permanent memory, mobility and endocrine issues.

"They cured the cancer, but at a heavy cost," says Foutz, 40, of Phoenix. "She's going to need tons of rehab, and insurance only goes so far. In this day and age, there's no recourse for families that are going through this, because insurance companies raise your rates and there's nothing you can do about it."

Nothing, that is, except try fundraising. More and more people are turning to crowdfunding sites such as the Human Tribe Project (humantribeproject.com), FundRazr (fundrazr.com), GoFundMe (gofundme.com), GiveForward (giveforward.com) and others to ask friends, and friends of friends, to consider making a donation, or, in the case of Human Tribe Project, purchasing a necklace or key chain, where the item's cost includes a donation. These can include situations such as fundraising for a loved one's cancer diagnosis, aftercare following an accident, fertility treatments or even replacing a pair of eyeglasses held together with duct tape.

Through crowdfunding, Foutz has raised $11,520 to date for Mia over two years.

GiveForward, which notes that medical costs are the No. 1 reason for bankruptcy in the USA, estimates that more than $2.8 billion will be raised by crowdfunding websites for medical costs in 2012.

Crowdfunding is "doing what has always been done, but taking the technology we have to make it viral," says Catherine Chapman, a philanthropic consultant with Fullanthropy, a Louisville, Ky., consulting firm that advises non-profits on charitable best practices. People give on these sites often because they have been asked to do so by a friend or a friend of a friend.

"The personal element is a lot more compelling than sending a check to a charity," Chapman says. "Doing that is anonymous and you can't relate, but if it's your friend who has cancer, you want to help."

Typically, people can use a crowdfunding site to tell their story about why they need money, using blogs and updates to keep potential donors informed.

"People know who they are donating to," says Daryl Hatton, the founder and CEO of FundRazr. "But one of the big surprises is that people saw how many complete strangers were donating to them." "The message has to really resonate with your friends, or else it won't go anywhere," says Hatton. "If you don't get that social proof, then people don't get donations. Our natural skepticism kicks in, and they hold back on hitting that button."

Scams seem to be rare. "GoFundMe relies on its community of users and visitors to report any suspicious or inappropriate fundraising campaigns," says Brad Damphousse, the site's CEO. "Scammers tend to lack social-media followings, as they don't want to identify themselves," says Hatton. "Those with integrity have networks. To give you scale, approximately one in 5,000 medical FundRazrs get shut down."

Most sites collect donations and forward them directly to the person in need. Sites can take out a small portion of the donation for administrative and other costs, which can range from 5%-20% of funds raised.

Recipients typically have many bills when dealing with medical issues. "Beyond medical bills, money is often raised to assist with family travel, rent/mortgage/utilities and other daily living expenses during the recovery period," says Damphousse.

The sites are not typically non-profits themselves, and donations are not considered tax-deductible unless a non-profit organization itself has set up a crowdsourcing request.

What the recipient does with the money is their choice, says Jaclyn Foutz, one of Human Tribe Project's co-founders. The idea came after her friend Kindra McLennan was diagnosed with ovarian cancer, and she helped raise $10,000 through the sale of necklaces and cards, as well as holding a garage sale, while her friend was sick, over a six-month period. McLennan ultimately used some of the funds raised on the site to take a trip to Las Vegas for her 30th birthday, four months before she died. "If that's what you feel you need to use the money for, that's one of the things you can do when you know the people who are donating to you," Jaclyn Foutz says. The site launched six months after McLennan died in early 2009.

Tips for effective crowdfunding

The concept of online crowdfunding is fairly new, but there are many websites that will help you reach out to others to raise money.

Some sites, such as GoFundMe and FundRazr, raise money for anything, including creative and artistic ventures, or recovering from natural disasters. Others, including Human Tribe Project, are focused more closely on health and medical issues. It's crucial to know how sites operate before picking one to work with.

Advice from those in the field:

Do your research, says Vera Alexander, a non-profit consultant based in Los Angeles. "Know what the sites have funded, and look up any reviews of the site. It's the same as any other initiative. Things can look pretty online, but you have to do your due diligence."

Look for online tips. FundRazr, for example, offers tips on how to write a compelling narrative about why you are asking for money, and why that money is important, says Hatton.

Give frequent updates. "The more updates you give your tribe, the more awareness that's out there and the more successful your fundraiser will be," says Human Tribe Project's Jaclyn Foutz.

Look for staying power. New sites launch every day, but those that have been around longer than a few months are more likely to to be credible, and to have fewer customer-service issues, says GoFundMe's Damphousse.

And finally, know that you are your best advocate - but that fundraising can be exhausting.

"You have to find a way to have the energy to survive it," says Matthew Foutz. "It's all-encompassing. That's why (using a crowdsourcing site) is so good - it connects you. I don't have to have the conversation in person - I can put it on the blog on my Human Tribe Project site. It's easier to type, and I get feedback from others that tells me, 'We're listening.' "

(Copyright © 2013 USA TODAY)

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