Study: People in Most Need Least Likely to Benefit from COVID Crowdfunds

A recent study has found that online crowdfunding campaigns in the United States during the pandemic were more successful in affluent and educated individuals compared to communities that had fewer resources available.

While millions of people crowdfund to help pay for emergencies, particularly medical costs, the campaigns are not guaranteed to be successful. Even when they are, the help they offer is only temporary.

The study, published in Social Science & Medicine, evaluated COVID-19-related campaigns on the crowdfunding platform GoFundMe from January to July 2020.

The researchers observed that many top-earnings campaigns had connections to wealth and privilege. These connections allowed them to garner more support for their beneficiaries, which included the employees of high-end restaurants or exclusive social clubs.

The findings highlight how inadequate crowdfunding is as a tool for responding to crises—especially for marginalized communities. While it’s important to understand how barriers to crowdfunding reinforce existing social inequities, it’s also crucial to address the lack of social safety nets that compel Americans to use crowdfunding in the first place.

Factors That Affect Crowdfunding Success

The study found that more than 90% of the crowdfunding campaigns did not reach their target amount—43.2% did not receive any donations While the campaigns were similarly driven by COVID-19 needs, the researchers noted that their creation and success often required financial and social capital such as income and education.

“Our paper shows that people who live in areas with lower income or levels of education in the United States tend to do worse with their crowdfunding campaigns,” Mark Igra, lead author of the study and a graduate student at the University of Washington Department of Sociology, tells Verywell. “We also showed that people who lived in areas with higher education tended to create new crowdfunding campaigns in response to the effects of COVID-19 more frequently than people who lived in areas with lower levels of college education.”

People living in wealthier and more educated communities can tap into existing social networks to raise money for campaigns. Plus, their connections are more likely to have the financial capability to donate. In contrast, lower-income individuals are less likely to have connections to affluent donors.

“Requests for some of the most basic needs like rent were some of the least likely to be funded,” says Igra. “Because of the severe inequities in who actually gets funded, crowdfunding isn't a good solution for addressing basic needs.”

Crowdfunding Amplifies Existing Socioeconomic Divides

According to the study, crowdfunding campaign creation and outcome heavily revolves around privilege. Lower-income communities may have greater needs, but if they have the chance to start a campaign, they face additional barriers to crowdfunding success.

“Relying on crowdfunding, particularly for medical care, requires us to set aside personal privacy and sell our painful stories,” Paul Shafer, PhD, assistant professor of health law, policy, and management at the Boston University School of Public Health, tells Verywell. “The same biases of who is seen as deserving, given existing inequities by race, ethnicity, and gender identity, and whether you are popular enough on social media can make a big difference in how much help you get."

Research has shown that natural disasters and other crises exacerbate inequalities. Vulnerable communities are more severely impacted by crises because of structural inequality, which further strips them of resources and opportunities.

“The COVID-19 pandemic took the existing inequities and struggles of our economy to a whole new level with unemployment rising and difficulty in accessing regular non-COVID medical care,” says Shafer. “Needing the right brand and network to be successful in getting help to make ends meet because our economy and social safety net leave millions in poverty doubles down on all of the inequities already present in our society.”

A 2021 study revealed that more than $3.5 billion was raised through online medical fundraisers in the U.S. from 2010 to 2018, demonstrating that crowdfunding for healthcare needs has grown steadily over the years. More recently, the scope of crowdfunding has extended to basic needs such as groceries or utilities.

“In my opinion, there are no advantages to relying on crowdfunding to solve social and economic problems,” says Shafer. “Crowdfunding is a symptom of an underdeveloped social safety net and economy that relies on poverty wages for many. It is great that these platforms and social media crowdfunding campaigns have evolved for giving and receiving financial help, but they are just a Band-Aid on a very broken system.”

What the U.S. Government Can Do

“As vaccination rates rise and COVID-19 cases and deaths fall, there have been rumblings about letting the federal public health emergency declaration expire,” says Shafer. "I hope the Biden administration will hold off as long as politically possible because many flexibilities created during the pandemic will go away once that happens, chief among them Medicaid coverage.” 

The Families First Coronavirus Response Act prohibited states from terminating people’s Medicaid coverage during the current public health emergency. The provision allowed people to keep their coverage for a set time, which was particularly beneficial for lower-income individuals whose eligibility often fluctuates. It also kept states from adopting more restrictive eligibility criteria and procedures.

“Once the public health emergency ends, states will be free to restart their eligibility redetermination processes that were suspended during the pandemic,” says Shafer. “This process often weeds out many people who still qualify, for as little as missing a single letter that goes to an old address.”

Terminating the nationwide moratorium on evictions issued by the Centers for Disease Control and Prevention (CDC), set to end on July 31, would only "make things more dire for lower-income people who have been barely hanging on during this crisis," says Shafer, "[who are] often at jobs with high exposure risks for themselves that they take home to their families."

In the meantime, the U.S. government can maintain the safety, security, and overall well-being of vulnerable populations by prolonging these frameworks that benefited them the most.

“We do think that some of the broad-based programs that provide income and unemployment support were extremely helpful,” says Igra. “We hope that support will continue long enough to get people back on their feet because as we have shown, the people who might need the most support are some of the least likely to be helped by online crowdfunding.”