After Zach Short was severely shocked and burned in a farm accident on Oct. 25, 2014, a family member started a drive to help defray medical costs. In 14 months, 681 people contributed $63,620.
Salina performer Les Lankhorst needed an infusion of cash to produce his next album – “Love and Lullabies” – and raised $13,500 in 30 days.
How did they do it? They used crowdfunding, or raising money from many people, usually with the help of the Internet, to start up a business, help someone in a crisis or invest. The online sites make money by charging fees. “It certainly is a great way to raise some capital when you’ve got a really solid project,” Lankhorst said.
He used Kickstarter, the second-ranked crowdfunding site, according to crowdfunding.com. GoFundMe is No. 1. The Zach Short campaign is listed on that site.
Money donated through GoFundMe and an account at First Bank Kansas has been a blessing for the Shorts, who often travel to medical appointments. More surgery is ahead for Zach, not to mention continued medical checkups, said his wife, Jodi Short, and insurance doesn’t cover all of the costs. “We wouldn’t have been able to make it. Neither one of us are working right now,” Jodi Short said. “Donations have helped us get through it all.”
Online crowdfunding portals numbered 53 in 2009, but today they’ve grown to nearly 1,100, exceeding $34 billion in money raised during 2015, according to the Wall Street Journal.
Forms of crowdfunding include asking for donations, seeking investors who can own a piece of a company, and peer-to-peer borrowing from a pool of investors who earn interest in return, according to Wikipedia.
Success isn’t guaranteed
But merely opening an account doesn’t guarantee success. An effort to upgrade the Clay Center Zoo has amassed $350,000 of the $500,000 goal, said Bill Callaway, director of the Clay Center Public Utilities Commission, which built the zoo in the late 1940s as a gift to the community.
Of the total, he said, roughly $500 has come from the campaign’s GoFundMe account, far short of expectations. “GoFundMe has not been very successful at all. I can’t explain it,” Callaway said. “Our best way to raise money has been by word of mouth, personal connections and going out and talking to people.”
Clay Center’s lack of success with crowdfunding is quite the opposite of what others have experienced. Pitched as the “world’s most popular crowdfunding site,” by Kelsea Little, the firm’s media director, GoFundMe reported it raised $1.09 billion from 1.7 million campaigns in 2015.
She declined a phone interview, but agreed to give written answers to emailed questions. “While other platforms have popularized crowdfunding for creative projects, GoFundMe is the leader in personal crowdfunding. Our most popular categories are medical, education, emergencies, volunteerism, memorials, sports, and animals & pets,” Little wrote. “We are happy to be able to provide a platform that allows those in need to raise money from family and friends when they need it most.”
The advantage of GoFundMe over “more traditional methods of fundraising, such as spaghetti dinners or bake sales,” she wrote, “is that it removes the awkward barrier and makes the fundraising process easier for both the donor and the organizer.”
Donors can swiftly make their contributions and “spread the word even further,” Little wrote. “GoFundMe allows communities to come together online quickly and efficiently to support a common cause.”
Process was an education
Lankhorst’s first Kickstarter experience was an education. “It can be really stressful. Before you can do it, you have to agree to policies. One of them is keeping in constant communication with donors. It was actually a lot more work than I expected,” he said. “You have to be able to sell yourself, be a businessman and an artist; wear all those hats from the beginning.”
Once all of the fees are paid, Lankhorst estimated that 10 percent went to Kickstarter and 10 percent to Amazon.com, which handled online payments.
“You have to raise all the money, or else you don’t get anything at all,” he said. “Once you get funded, the money goes into escrow. I believe it was two weeks before I got the actual deposit, and it really shoved my project back, schedule-wise. I’m just now getting into the studio, working on the first three songs.”
Thanks to a “strong fan base” and family, Lankhorst said, raising the money was easy. Donations averaged $150 each.
Donors of at least $10 were promised “A GREAT BIG virtual HUG for your support,” but incentives became sweeter for higher pledges. “For 25 dollars, you get a CD mailed to you (and a digital download),” he wrote.
Eight backers gave $10 or more, and 37 gave $25 or more. The ultimate incentive comes with a donation of $5,000 or more, which includes a live show within 600 miles of Salina.
Tim Unruh is a reporter for the Salina Journal.