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Crowd-funding draws donations for Sandy relief

Sunday - 12/23/2012, 9:38am  ET

This Dec. 19, 2012 image shows a frame grab of gofundme.com. This web page solicits donations to rebuild a New York restaurant, The Good Fork. In the aftermath of Superstorm Sandy, some who lost their homes or businesses have turned to crowd-funding websites. (AP Photo/gofundme.com)

BRETT ZONGKER
Associated Press

WASHINGTON (AP) -- In the aftermath of Superstorm Sandy, some who lost their homes or businesses have turned to crowd-funding websites to elicit a faster and more direct response than they could expect from the government or traditional charities.

While Congress considers a $60 billion disaster aid package for the storm victims, hundreds of them have gotten quicker results by creating personalized fundraising campaigns on sites including GoFundMe, IndieGoGo and HelpersUnite. These individual efforts have totaled a few million dollars -- enough to show the funding model can work. GoFundMe leads the way with $1.3 million raised by about 320 individual campaigns from more than 14,000 donors.

Crowd-funded campaigns have also been started in recent days to benefit families affected by the school shooting that killed 26 in Connecticut, though those efforts are on a smaller scale than those that benefit the thousands hit by Sandy.

"There's always going to be some sort of gap between when a storm or natural disaster or accident or tragedy happens and when larger organizations can step in and help, whether that's an insurance company or FEMA or what have you," said Brad Damphousse, CEO of San Diego-based GoFundMe. "Our users get their money as it comes in, and donors know exactly where the money is going."

By comparison, the Red Cross has more than $200 million in donations and pledges for Sandy -- which includes donations through crowdsourcing website CrowdRise -- and the Federal Emergency Management Agency said this month is has distributed about $2 billion in aid to 11 states struck by Sandy. Successful applicants can receive up to $31,900 from FEMA for home repairs, though lawmakers have said it's often not enough to rebuild.

Using GoFundMe, Doreen Moran set out to raise about $5,000 for her friend Kathy Levine of Long Beach, N.Y. Moran said she had been sick but wanted to do something to help after Sandy's destruction. So she set up a page on GoFundMe, linked her Facebook page and started spreading the word. She had a birthday coming up but asked for gifts for her friend, instead of for herself.

"Donate what you can," she wrote. "I will make certain it all gets to her fast. Because she needs it fast."

Moran has raised more than $15,000 in a month and has been posting pictures of repair work that has begun.

The crowd-funding site HelpersUnite considers its personal fundraising campaigns as secondary to the Red Cross or FEMA relief efforts. A percentage of each donation can be directed to a charity of the donor's choice, such as the Red Cross. The site's chairman, Steve Temes, said its model of fundraising can help victims cover costs that aren't paid by insurance or government aid. The site didn't immediately provide a total for its Sandy-related campaigns.

IndieGoGo's site says $965,443 has been raised through 161 Sandy campaigns.

Sandy represents a breakthrough for the charitable model since it's the first major disaster since the sites were set up and is expected to be the biggest domestic relief effort since Hurricane Katrina in 2005.

The charitable sites are modeled after Kickstarter, the top crowd-funding site in traffic and volume, though Kickstarter is devoted to films, music and other creative projects. The pioneering site launched in 2009 can't be used to raise money for individuals to spend on themselves.

Still, those who monitor charities advise would-be donors to exercise extreme caution when choosing whether to donate to an individual's page. The Department of Justice also has issued cautionary notes about the tendency for abuse after a disaster. Charity watchdog Charity Navigator said crowd-funding sites are ripe for abuse.

"We think that it's a crapshoot," said Ken Berger, president of Charity Navigator. "If you know the person personally and you can eyeball the effort, that really is the only way that I think you mitigate your tremendous risk."

Otherwise, the group recommends giving to a charity with a demonstrable track record, Berger said.

The rise in crowd-funding may be a response to notions that some charities are inefficient, but for every bad charity, there are many good ones, Berger said.

Damphousse said GoFundMe has several safeguards to ensure campaigns related to Sandy are legitimate. His team is constantly monitoring accounts, looking for signs of fraud or abuse. Users must link their campaigns to their accounts on Facebook -- which itself works constantly to verify users' identities. And they must raise at least $100 in online payments from friends or family before being listed on the public search directory.

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