Marshall fire GoFundMes earn more for rich Colorado families

GoFundMe campaigns helped wealthy households significantly more than low-income households in the aftermath of the Marshall Fire, according to new research from the University of Colorado Boulder.

Researchers found people with higher income received more in GoFundMe donations overall, more in average donations and more donations from a wider geographic net.

“We tend to be connected to people like us, we tend to trust people who are like us,” said CU Boulder Finance Professor Tony Cookson. “My friends and friends of my friends, that’s roughly where people are going to want to be putting their giving.”

People with high income have friends who are also high income, and people with lower income have friends with similarly low income, Cookson said. These disparities in crowdfunding are a natural consequence of how people form their social networks.

“These crowdfunding campaigns seem to draw pretty heavily from people’s personal networks, which likely explains this disparity,” CU Boulder Finance Professor Emily Gallagher said.

A similar disparity presented itself in individual funding through the Federal Emergency Management Agency, said Michelle Stinnett, recovery and resiliency division manager for Boulder County. To receive FEMA individual funding at the time of the fire, residents had to navigate a “relatively onerous” application process, and people with the means to complete the application received the most amount of funding.

Stinnett said the results of the CU Boulder study are “frustrating but not surprising.”

“I’m a firm believer that disaster aid should first and foremost go to those most in need of funding and least able to recover on their own,” Stinnett said.

Tatiana Hernandez, CEO of the Community Foundation Boulder County, said the foundation raised more than $43 million with more than 82,000 donations for Marshall Fire victims. The Community Foundation is focused on distributing aid equitably and filling gaps left by FEMA assistance and crowdfunding.

“I completely understand the motivation to help family that someone may have a direct relationship with, and that is completely understandable,” Hernandez said. “There are also other ways to give to ensure people they may not know who are similarly affected and may have larger needs … are helped.”

Gallagher and Cookson lived in Boulder County during the Marshall Fire. While their homes were spared, many others were not.

“We knew people who had lost their homes, so I was spending a lot of time looking at GoFundMe campaigns and noticing just how different some of the amounts raised were,” Cookson said.

For instance, a couple of days after the fire, some GoFundMe pages raised more than $50,000 and others raised $5,000. They wanted to understand why there were such large differences across different campaigns.

“In the aftermath, we started to see what an important role crowdfunding was playing in people’s recoveries and the sheer amount people were able to raise,” Gallagher said.

‘Who you know’

The study examined 975 GoFundMe campaigns for survivors of the Marshall Fire, focusing on those who experienced a total loss of their homes. Researchers matched names from the campaigns with public records of homes destroyed in the fire. Working with the credit bureau Experian, they produced an anonymized data set matching crowdfunding and housing data with personal credit characteristics to estimate recipients’ pre-fire income.

The results showed the households that received the most funding were more likely to be those with earnings above $150,000. Beneficiaries who earned more than $150,000 received 28% more support than those with incomes below $75,000. Wealthier households also received $1.50 more per donor on average for each 10% higher income they had.

However, the average donation amount wasn’t as large of a factor compared to having more donors, especially more donors from outside of Boulder County. Additionally, higher-income households were more likely to have broader geographic networks.

“That geographic diversity helps when you think about it,” Gallagher said. “If you know more people from outside the disaster-affected area, then you can get resources from people who are not affected themselves by the disaster or receiving dozens of GoFundMe campaign requests.”

The researchers could see the number of times the link was shared on social media, which also doesn’t explain their findings because lower-income pages were shared more.

“One thing that did surprise me was that high-income people were more likely to have a GoFundMe campaign than lower-income people,” Cookson said.

This pattern, Cookson said, is because higher-income people were more likely to have a friend or colleague to start the campaign for them.

“Who you know and how well connected you are with them matters beyond just monetary means,” Cookson said.

Within a few weeks, GoFundMe campaigns raised $23 million for Marshall Fire victims compared to the $2 million in grants issued through FEMA.

“It was a big source of support, even big compared to government programs that are designed to help in cases like this,” Cookson said.

‘Who’s able to rebuild’

The amount of money raised through a GoFundMe campaign was also linked to how quickly someone could rebuild their home.

“We can say people who raised more than $30,000 in their GoFundMe campaigns have been able to start rebuilding between four and eight months faster than people who raised less than that,” Gallagher said.

Because various construction permits are required to begin rebuilding, the researchers were able to test how quickly people obtained them.

Rebuilding homes following the Marshall Fire is still an ongoing process, Stinnett said. In unincorporated Boulder County, 157 homes were destroyed. Since then, 85 rebuilding permits have been issued, and 21 of those applicants have been granted certificates of occupancy to move back in.

In Superior, 184 households have moved back in out of 283 issued building permits. There were 395 destroyed homes in Superior. There were 550 homes destroyed in Louisville and 395 building permits were issued. Of the permits issued, 161 have certificates to move home.