Disaster reliefCrowdfunding disaster relief gaining in popularity

A new way to raise funds for disaster victims is gaining in popularity. It is called crowdfunding,.

John Sexton Braun started an online campaign after the home of a friend of hers was destroyed in the tornado that ripped through the town of Moore, Oklahoma last week. Her Web site, GoFundMe.com, has raised more than $6,000 for Braun’s friend and her husband.

CNN reports that the crowdfunding effort is starting to take-off. The industry has so far raised more than $2.7 billion, and the crowdfunding approach has also been successful in raising funds fr startup companies, art projects, and movie.

Thousands of fund-raising campaigns are being set up for victims of the Oklahoma tornados, making it easy for people to give to a disaster-related cause of their choice rather than to a  blanket cause.

“Giving to the Red Cross is great, but this way you’re giving to someone whose story you know, and it’s more personal,” Braun, a marketing specialist, told CNN.

The various campaigns have raised more than $500,000 in donations for tornado victims, and funds have been raised for other disasters. Last year, more than $2.5 million was raised for Hurricane Sandy relief efforts, and so far this spring, about $250,000 has been raised for victims of the Boston Marathon bombings.

The majority of crowdfunding Web sites take a 3 percent to 8 percent cut of the money that is raised — far less than the 25 percent cut most large charities take, experts note.

These experts note that crowdfunding is an alternative to the slow, bureaucratic process of larger charities, but it is not a solution.

“There is a desire to move money as quickly as possible and get as much money to the victims as possible,” Ken Berger, president of Charity Navigator, which offers advice on charitable giving told CNN. “But the danger is that the faster the money moves, the greater the chance of abuse and scandal.”

There are some negatives to crowdfunding. The money reaches those need it faster, and those who give know exactly where their money is going, but the campaigns struggle to provide for the long-term needs of the victims or help with the resources for first responders.

Also, the credibility and reliability of crowdfunding sites are difficult to verify, thus creating more opportunities for fake charities and for people’s money to be stolen.

“You don’t know what’s going to happen to your money and whether it’s really going to be passed on,” Allan Bachman, education manager for the Association of Certified Fraud Examiners told CNN. “There are no guarantees.”

In an effort to protect against fraud, many crowdfunding sites are now working with larger non-profits and charities. Some crowdfunds are now working with campaign organizers for tornado victims to contribute the money directly.

Family victims and donors are also working with Congress to develop the National Compassion Fund, which will send the majority of donations straight to those who need them. Boston Mayor Tom Menino and Massachusetts governor Deval Patrick, have started the One Fund, which has raised more than $31 million.