New digital safety net or just more ‘friendfunding’? Institutional analysis of medical crowdfunding in the United States

Abstract

Crowdfunding is becoming a popular way of financing healthcare. Some commentators suggest that crowdfunding could serve as a new institution that fills gaps in conventional safety nets. Others suggest that crowdfunding is simply another way of obtaining help from family, friends, and local associations, and has little transformative potential. We provide one of the first quantitative analyses of medical crowdfunding, and the first to model the broader societal context in which campaigns are situated. We scraped data on US medical campaigns from the leading platform and combined them with county-level socioeconomic data, to model predictors of campaign frequency and success. Our findings suggest that many seek help from crowdfunding when both formal and informal conventional safety nets fail them. Significantly more campaigns are initiated in US counties with poorer private insurance coverage, lower social security provision, fewer social associations, and weaker cultures of giving. However, few campaigns reach their goals where most needed. More successful campaigns are found in counties that are wealthier and healthier and have more social associations. Crowdfunding is not merely 'friendfunding': fundraisers can increase their chances of success by having their appeals widely shared on social media. However, the returns to sharing are greater for campaigns initiated in wealthier areas. Overall, our findings suggest that medical crowdfunding is an entrepreneurial safety net: one where protection is not afforded universally or on the basis of need, but on the basis of one's ability to appeal to the audience and outcompete rivalling needfuls.

Donor Financial Capacity Drives Racial Inequality in Medical Crowdsourced Funding

“…Operationalizing Network Financial Capacity. Statistical modeling of crowdfunding has often included covariates derived from the demographics of the administrative geography surrounding the location where the campaign is based (Duynhoven et al 2019;Lee and Lehdonvirta 2020). Because my focus is on the resources available to donors, I instead derive covariates using a synthetic social geography based on the locations where friends of the campaign organizer are likely to live.…”

“…1 Studies have shown that use of medical crowdfunding is concentrated among those with existing privileges. Among medical crowdfunding beneficiaries, White Americans are over-represented as are residents of higher income locations in both Canada (Duynhoven et al 2019) and the United States (Lee and Lehdonvirta 2020). Even for those who clear technological barriers to entry, technology continues to play a role in crowdfunding success because promotion of campaigns on crowdfunding and social media sites is controlled by unaccountable proprietary algorithms.…”

“…This paper begins to address the mechanisms behind disparate results by turning the focus away from crowdfunding beneficiaries and onto the networks of potential donors whose actions are directly responsible for crowdfunding success. Research into networks and medical crowdfunding to date indicates that many campaigns make explicit appeals to friends and families, that success depends on online sharing, and that county-level variation in income is reflected in returns (Lee and Lehdonvirta 2020;Snyder et al 2017). The work I present here uses granular estimates of network financial capacity based on social geography and estimated racial homophily in the donor pool of each campaign to evaluate the extent that racial inequality in crowdfunding is a product of structural inequality in the distribution of financial resources in the United States.…”

Systematic Review of Socio-Emotional Values Within Organizations

“…This is a solid alternative to these strategies because institutional resources are often delayed by bureaucratic procedures, while spontaneous fundraising by a private organization depends on the individual willingness of organizational associates. This strategy, which is more efficient, has been used in different areas, such as social entrepreneurship (Morell et al, 2020;Figueroa-Armijos and Berns, 2021;Motero et al, 2021), research (Dalrup et al, 2020), and start-up development (Lee and Lehdonvirta, 2020;Shi et al, 2021), to help different small investors support international entrepreneurial activity (Tiberius and Hauptmeijer, 2021) or cope with international crises, due to ecologic emergencies (Predkiewcz and Kalinowska-Beszczynska, 2020) or pandemics (Saleh et al, 2021). Previously, these areas could be treated in a sufficiently short time because, while public institutions are dedicated to managing problems that are potentially harmful to the community, they are sometimes limited by bureaucracy, political dynamics, priorities on interventions, and temporary or permanent lack of resources; meanwhile, private organizations have difficulty managing some national crises that make it necessary to switch from a profit-making to a social mindset.…”

Predicting the Success of Internet Social Welfare Crowdfunding Based on Text Information

“…Social welfare crowdfunding activates the social participation power of Internet platform users; however, not every project can be successful. Existing studies have examined the factors contributing to the success of social welfare crowdfunding projects from the perspectives of project environments, crowdfunding mechanisms, presentation elements, and intrinsic motivation [6][7][8][9][10][11]. As a non-equity-based form of crowdfunding, traditional economic theories, such as transaction costs, reputation, and market design can explain factors influencing social welfare crowdfunding to some extent [12].…”