New research suggests that cash sent through GoFundMe disproportionately benefits the wealthy rather than those who most need help.
Researchers examined donations to hundreds of people who lost their homes in the 2021 Marshall Fire in Colorado, which destroyed more than 1,000 dwellings near Boulder. They found that those with household incomes above $150,000 received 28 percent more money, on average, than those with incomes below $75,000.
The authors concluded that the explanation largely revolves around social networks: Wealthier disaster survivors tend to be connected to more people, and those people often have more money to give.
“Crowdfunding gives higher-income survivors a bigger leg up,” said Emily Gallagher, an assistant professor of finance and real estate at the University of Colorado Boulder and one of the study’s authors. “We cannot count on this form of private charity to fill funding gaps.”
Dr. Gallagher and his colleagues said they plan to submit the paper to a peer-reviewed journal in March.
The authors concluded that the explanation largely revolves around social networks: Wealthier disaster survivors tend to be connected to more people, and those people often have more money to give.
The data comes as traditional sources of funding for disaster recovery buckle under the strain of climate shocks. Weather-related disasters pushed more than 3.3 million American adults out of their homes in 2022, census data show. Of those, at least 1.2 million people were out of their homes for a month or longer; more than half a million of them never returned, fueling a growing diaspora of domestic climate refugees.
Federal disaster aid already disproportionately helps the wealthy, data shows. The Federal Emergency Management Agency recently granted that its disaster programs often fail survivors, and pledged to overhaul them “to reach more people, provide more benefits and help them recover faster,” said Jaclyn Rothenberg, a FEMA representative.
And insurers, facing growing disaster costs, have restricted coverage and raised prices, leaving more Americans underinsured.
Crowdfunding is filling more of that gap. Ten years ago, in 2013, U.S. disaster recovery campaigns on GoFundMe raised a little more than $3 million, according to the company. By last year, that figure had jumped to more than $106 million. That’s about one-seventh of the amount that FEMA spent on grants for individual disaster aid — $765 million.
The growing role of crowdfunding can be seen in the aftermath of the Marshall Fire. Homeowners who got FEMA aid for property damage received an average of $2,564, the researchers estimated. By contrast, the average GoFundMe campaign for Marshall Fire survivors raised $23,744, they found. Among homeowners whose homes were destroyed in the fire, the average was $31,422.
Those donations were unevenly distributed.
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