Big controversy can mean big business for crowdfunding platforms

Lately, it seems that every time a local news story goes viral, a crowdfunding campaign is quick to follow — helping foster a new type of political engagement and sometimes raising prodigious amounts of money for both the cause and website that hosts its campaign.

In August 2014, for example, supporters of Darren Wilson, the white police officer who fatally shot unarmed black teen Michael Brown in Ferguson, Missouri, donated hundreds of thousands of dollars to an online fund for “any financial needs [his family] may have including legal fees."

And in March, when an Indiana pizza parlor said it would decline to cater same-sex weddings because of a religious objection and then received an outpouring of vituperation in response, supporters of the state’s “religious freedom” law used a crowdfunding website to raise more than $800,000 for the business’s owner.

Most recently, people supportive of Ramsey Orta — the man who recorded video of a New York City police officer putting an unarmed Eric Garner in a fatal chokehold — pooled tens of thousands of dollars online to help bail him out of jail.

Of course, political fundraising isn’t novel, but the rise of these rapid-fire crowdfunding campaigns is. Sites like Indiegogo and GoFundMe have opened up new frontiers when it comes to raising cash for activist crusades.

But such sites aren’t simply uninterested conduits for other people’s money, they also mediate interactions between campaigns and donors — as well as collect a share of the revenue.

“They have some say in the campaigns that go up there,” said Rodrigo Davies, a researcher and head of product at Neighborly, a platform for allowing citizens to invest in municipal bonds. “That also tells would-be creators something about the platform and what’s acceptable, so I think they have a responsibility to think about the ethics."

The major crowdfunding platforms all police the fundraising drives that occur on their sites to some extent. GoFundMe’s terms and conditions, for example, prohibit a litany of potential abuses, such as “[m]aterials including bigotry, racism, sexism, or profanity” and “[c]ampaigns in defense of formal charges of heinous crimes.” This week, the website took down a campaign intended to raise funds for the police officer who fatally shot Walter Scott in South Carolina. A similar fundraiser through Indiegogo also appears to have been taken down.

In an email to Al Jazeera, a spokeswoman for GoFundMe emphasized that any campaigns on the site need to be compliant with its terms and conditions, while downplaying some of the more incendiary fundraisers that have occurred.

“The vast majority of giving on GoFundMe occurs between personal friends and family,” she said. “Occasionally there will be a campaign that receives media attention, and those viral campaigns will sometimes receive the support of strangers. However, this is an anomaly and not the norm on GoFundMe."

But Daren Brabham, a professor in USC Annenberg’s School for Communication and Journalism, said crowdfunding platforms are “making significant fees” from politically charged fundraising campaigns. GoFundMe collects a 5 percent cut on donations, while Indiegogo usually receives between 4 percent and 9 percent depending on the funding model and the success of the campaign.

“I don’t know of any instances where GoFundMe is trying to stoke results and get people to start these campaigns,” said Brabham. “I think they start on their own.” However, he added, the very existence of these sites has fostered the creation of a new type of political engagement.

“If people want to express their opinion, they can vote with their dollars, so people who are in support of that anti-gay pizzeria can say, look, they raised how many hundreds of thousands of dollars,” he said. “It’s almost a form of political expression because people can support these causes no matter what their leanings are."

David Karpf of George Washington University’s School of Media and Public Affairs said he feared the effect such political expression would have on norms of public behavior. If a small business can get rewarded with hundreds of thousands of dollars for announcing that it would prefer not to cater a same-sex wedding, he said, that could incentivize other business owners to be similarly forthright with their beliefs.

“I think if we see a trend of that, then that starts to encourage people to behave less politely and more aggressively and act in a performative manner because that creates a celebrity which isn’t just, hey, you’re going to show up in the news, but also people will give a bunch of money to you,” he said.

Sometimes one campaign can trigger a crowdfunding arms race. Such is the case with the Memories Pizza fundraiser, which inspired a counter-fundraiser to collect money for LGBT rights. That fundraiser hasn’t come anywhere near matching the original, but in any case, Brabham said similar competing campaigns can be a “win-win” for crowdfunding platforms.

They “get to scoop fees from both sides,” he said.

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Correction: A previous version of this story misidentified the title of Rodrigo Davies. The proper title is head of product at Neighborly.