Family and friends first began raising money for seven-year-old Jordan Feradi, a precocious hockey player from Calgary, when he was diagnosed with a rare and inoperable form of brain cancer in January.
The cancer struck swiftly, confining the once-active boy to a wheelchair. While months of radiation treatments restored some of his mobility, the chemotherapy became unbearable. Then came news of a ground-breaking trial in New York.
Jordan was accepted into the program, which is aimed at improving the quality of life for young patients with brain-stem glioma. But his family was left with a $200,000 bill.
Donations continued to flow in from various streams, and while Jordan's father, John, felt uncomfortable accepting the money, his friends told him that people would continue to give to Jordan's cause. "So I thought, if that's the case, why not funnel everything into one spot?"
Mr. Feradi turned to GoFundMe.com, a crowdfunding site that allows users to make financial contributions to causes organized by category. (It was Canadian multiple sclerosis patients seeking the controversial liberation treatment in the U.S. that created demand for a health category.)
He set up Jordan's page in June. Less than two weeks later, they reached their $200,000 target – and people continued to give. Mr. Feradi was surprised at the rapid response. "Just the fact that people have stepped up to help us out, it just takes a big weight off our shoulders. It's one less thing to worry about."
Jordan turned 8 on July 12, five days before undergoing surgery at the Memorial Sloan-Kettering Cancer Center in New York. The procedure injects a therapeutic agent directly into the tumour, bypassing the barrier that would normally prevent drugs from reaching it.
"They're not promising he's going to survive any longer, but he doesn't have to go to chemotherapy every day and get sick and lose his hair. It buys us a little more time so we can have a somewhat normal life," Mr. Feradi says.
Stories like Jordan's are fuelling the phenomenon of crowdfunding for health causes – harnessing social connections to attract small amounts of money from a large group of people. While the majority of donors have a pre-existing link to the person (Mr. Feradi estimates about 80 per cent of their funds came from people they know), some are strangers, drawn to a cause through the influence of social media and the sway of a powerful story. "It's word-of-text" communication, says Brad Damphousse, CEO of the San Diego-based GoFundMe.
Crowdfunding sites have different funding models, with some taking a percentage of the funds raised. GoFundMe, according to Mr. Damphousse the No. 3 crowdfunding site in the world based on traffic, takes a 5 per cent cut. The site raised close to $2-million for various causes in May, and expects to raise $37-million by the end of the year, he said.
The site launched in 2008, under CreateaFund. By 2010, it had enough data to understand how people were using the site. It was one of the first crowdfunding platforms to create a medical section, which makes up 17 per cent of user activity on the site, Mr. Damphousse says – the highest of all the categories.
On IndieGoGo, which also has a medical category, about 20 per cent of donations come from strangers, says CEO Slava Rubin. But there have been exceptions: A Florida couple seeking help funding in-vitro fertilization drew more than that.
These types of givers are "philanthropic-minded" people who regularly browse crowdfunding sites, looking for stories that resonate with them, says Mr. Damphousse. "When you give to a big, national non-profit, it's really hard to see the result of that money. … Being a part of a person's story in a more intimate way is really appealing because the whole experience feels that much more connected."
Those personally affected by a disease sometimes give as a cathartic release. "The story you hear from focus groups is that they say, 'That's the only way I can feel like my life is complete.' They just have to be connected to causes that took their loved ones away," says Jen Shang, a philanthropic psychologist and professor at the University of Bristol.
The success of Jordan's online campaign provided a lifeline for the family – but there are another 200 requests for donations on GoFundMe's site alone. Will all those people be as successful? "I think it really depends on how well they network themselves in the community," says Mr. Feradi.
"So many times, if we believe in a cause, we just expect others will believe in the cause," says Timothy Seiler, director of fundraising at the Center on Philanthropy at Indiana University. "And this is one of the big challenges of fundraising."
"We know from research that if you know one person, one identified person who has had a bad experience … you are very much likely to act," Ms. Shang says. But once you are exposed to pages and pages of people, the decision-making process breaks down. "That really hurts [donors] in a sense that they'd rather not give at all than give to one person and feel bad about the rest of the people."
Creating 'online coin jars'
Mr. Damphousse was intrigued by the idea of an "online coin jar" – making an easy way for people to save their own money and accept funds from others for a variety of causes. When his cousin died, leaving behind a wife and two children, the only way distant relatives could help was to send a cheque through the mail.
The experience, along with his original inspiration, led Mr. Damphousse and his business partner Andrew Ballester to create a crowdfunding site. Unlike other platforms such as Kickstarter, which focus on entrepreneurial and creative projects, GoFundMe remains largely a site where friends and family can finance personal needs.
For Mr. Rubin, the inspiration for IndieGoGo came from a need to overcome his own personal tragedy. His father died of cancer when he was 15. For the next 10 years, he had trouble coping, and decided to start a charity to raise money for multiple myeloma.
Mr. Rubin tried fundraising online but was frustrated with the tools available in 2006, like Paypal and MySpace. He shared his frustrations with two friends, Danae Ringelmann and Eric Schell. "Fundraising online just basically sucked. So we thought, why not do something about it and democratize the way people get money?"
Editor's note: Eric Schell was incorrectly identified in an earlier version of the story.