The GoFundMe Recession Is Here

Early last week, City Winery, a New York-based winery and live entertainment venue, told its employees that it was closing its seven locations across the country because of coronavirus. Like many other businesses in America, the company had determined that it had no other choice but to lay off a majority of its workforce indefinitely because of the pandemic.

Soon after, City Winery announced something else: To do its part to help out, the company set up a GoFundMe for its laid-off workers too.

GoFundMe was founded in 2010, almost a year after the end of the world’s last global financial crisis. Since then, it has grown to become the world’s largest fundraising platform, and it and other crowdsourcing platforms have come to serve as the country’s ad-hoc safety net of sorts, exposing all the ways in which our country’s actual safety net—health care, welfare benefits, rent assistance—fails miserably to fulfill people’s basic needs. But as the economy collapses around us, that means the U.S. is entering something entirely new: its first GoFundMe recession.

Since the economy began to shut down this month, organizations and businesses all over the country have begun to set up GoFundMe pages as a way to help their suddenly struggling workers. A flood of coronavirus-related campaigns have popped up on the site over the last two weeks—35,000 by GoFundMe’s own count. “At no other time in GoFundMe’s ten-year history have we seen such an urgent need or such an incredible outpouring of support in such a short time,” CEO Tim Cadogan wrote in a note last week. In total, more than $60 million has been raised. But as one worthy cause after another compete for people’s attention, from relief for skin therapists to sex workers, it’s clear that most won’t reach their goal.

Well-intentioned as they are, these crowdfunding campaigns reflect a society-wide pattern of shifting the burden of the coming recession onto individuals already suffering from the economic crisis, rather than a government that has once again failed to protect workers. But GoFundMe isn’t any kind of replacement for universal social programs. Donors with their individual biases, which can reflect entrenched racist and classist ideas about welfare, will often prioritize those with more social clout. And even when campaigns are filled, they’re still often wholly insufficient.

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Take City Winery, for example. Two former employees told VICE that they didn’t get any severance when they were laid off, although one of them has continuing health care from the company as of now. They’re both able to file for unemployment, but states have recently been strained by the influx of claims. (Both requested anonymity given that City Winery has promised to re-employ its workers once they reopen.) So far, the company’s GoFundMe has only raised a little over $31,000 of their $250,000 goal.

One of them, a former manager, said that they understood why City Winery had to lay people off. And when the GoFundMe was created, both employees were initially grateful. But when they saw that Michael Dorf, the company’s CEO, and Anum Ganju, the company’s CPO, had only donated $250 each to the fund, they felt shocked and deflated.

“I understand where they’re coming from, but they offered us nothing,” the former employee told VICE.

For his own part, Dorf told VICE that he’s selling his own shares in the company to keep the 74 people left on payroll and City Winery afloat. “I’m diluting my ownership in order to pay staff to stay and cover their bills so we can try and survive,” Dorf said, asserting that he’s not a millionaire with cash on hand. “I don’t know what more anyone can do.” He framed the GoFundMe as a gesture to allow customers who love the brand to offer some support, and a small part of what he’s trying to do overall for his employees. “Ninety percent of the support we’re spending is coming from us,” Dorf said.

“I understand where they’re coming from, but they offered us nothing,” a recently laid-off employee said.

City Winery’s circumstances are an example of the tricky situation that many businesses are now finding themselves in: Low-level staff take the biggest hit and are rightfully upset that they only have a GoFundMe as a lifeline, while executives scramble to keep the company alive so that they can ostensibly reopen and rehire. While there’s no comparing the situation of someone working a service job and a company’s CEO, the lack of a safety net screws everyone.

But during this crisis, a pattern has emerged of wealthier people or larger corporations shifting the responsibility of their employees’ welfare to crowdfunding. Amazon, a company worth nearly $1 trillion and run by the richest man in the world, is only offering two weeks of paid sick leave to employees if they test positive for coronavirus or are placed in quarantine. For its contract workers—who work at fulfillment centers and deliver packages—the company launched a separate relief fund. Contractors who are diagnosed with coronavirus can apply to the fund for sick leave. While Amazon seeded $25 million into the fund, it’s also soliciting individual donations.

Amid backlash, Amazon reportedly amended its solicitation for the fund to say that “they don’t expect anyone” to donate—but didn’t change its sick leave policy.

Over the weekend, celebrity chef Bobby Flay organized a GoFundMe to cover employees that were laid off at his restaurants. He promised to personally match $100,000, a gesture that seems more generous if you don’t consider that’s what the wealthy Flay can reportedly make from a single public appearance. Other restaurateurs have also had to close their doors. Danny Meyer’s Union Square Hospitality Group laid off 2,000 workers last Wednesday, writing in a statement that “in the absence of income, restaurants simply cannot pay our non-working team members for more than a short period of time without becoming insolvent. In that scenario, no one wins.” Meyer also noted that they couldn’t rely “simply on the generosity of our community alone” and called on the government to provide “a full emergency relief package for restaurant and bar workers.”

Union Square Hospitality Group set up its own fund for employees where customers can buy gift cards that will go to employee relief—but only those sold between the week of March 17 to March 24. In a statement, the restaurant group said that Meyer was forgoing his “entire salary immediately and indefinitely” and that every executive team member “has taken a significant pay cut” to contribute to the fund. But they did not clarify how much this meant. It’s been reported that Meyer, who founded Shake Shack, is worth hundreds of millions of dollars.

Meyer and other restaurateurs pointed out in a New York Times op-ed on Tuesday that independent restaurants aren’t like other industries. “We don’t have shareholders or the ability to bank money for a rainy day when things are good” they wrote, noting that “90 percent of the money that independent restaurants earn goes straight back out to pay employees, vendors and rent.”

It’s hard to know, exactly, if those at the top of each individual company are in fact doing everything they can to help their employees—they very well might be. But it’s also worth pointing out which workers always fare the worst under the current system. Marshall Steinbaum, an economist at University of Utah, told VICE that the ultimate problem is that all companies under capitalism are “engineered in a certain way to protect the powerful at the expense of the powerless.”

There are huge variations between small businesses, medium-sized businesses, and large corporations in terms of how they are able to respond to and cushion their workers during a recession. A vast majority of companies are unable to stay afloat right now, and simply cannot pay their workers without revenue. And crowdfunding, which is the only current option for many small businesses and workers, is not in and of itself a bad thing.GoFundMe itself set up a small business relief initiative on Tuesday that it hopes will help support local businesses. Nevertheless, GoFundMe remains an insufficient tool for the crisis at hand. A collection of individual donors cannot possibly step in for government policies like universal basic income, rent freezes, universal health care, paid sick leave, and debt cancellation. And, as Nora Kenworthy, professor at University of Washington, told VICE, 90 percent of GoFundMe campaigns don’t meet their financial goal.

GoFundMe also comes with inherent disparities that perpetuate existing inequities. New research by Kenworthy found that in medical crowdfunding, campaigns for Black people receive an average of $22 less per donation than those for white people. “People come to these sites both as donors and campaigners with existing ideas of who and what is deserving of support,” Kenworthy said.

People with large social media influence are also able to funnel donations toward certain campaigns, which might not necessarily be the ones with greatest need. For example, the relief fund for Hollywood support staff, which was flooded with celebrity donors, has already made its $100,000 goal three and half times over. (Game of Thrones creator David Benioff donated $1,000, while other Game of Thrones creator D.B. Weiss donated $1,001.) It’s not that Hollywood support staff don’t desperately need these funds, but that the ad hoc method of providing relief requires the internet to pick favorites. An entertainment industry worker in Los Angeles might get help, while a service worker in Louisiana may not.

“As a society we’re facing hard choices about where we triage and how we identify the most acute needs and requests,” Kenworthy said. “I’m not sure that this is the best platform to help us make those decisions.”

This is exactly what a robust welfare state is supposed to address. “People who do well on GoFundMe are people who already have broad social networks and who have a sympathetic case, and that’s not actually a welfare state,” Steinbaum said. “The whole point of a welfare state is that it’s universal and that it provides a safety net for people who otherwise don’t have those social and economic resources to draw on.”

It’s not that Hollywood support staff don’t desperately need these funds, but that the ad hoc method of providing relief requires the internet to pick favorites.

At its best, GoFundMe can seem reflective of mutual aid, a long-standing organizational tactic for people to help each other as equals to meet their immediate survival needs. A number of such grassroots networks have sprung up since the pandemic began, with neighbors buying groceries or getting medication directly for each other. As Dean Spade, law professor at Seattle University and creator of the mutual aid fund Big Door Brigade, recently explained on Democracy Now, the concept of mutual aid is rooted in solidarity, where people are trying to help each other under a system that has purposefully left them out. This differs from charity, where “usually money’s coming from the rich, and they get to determine who is deserving.”

But amidst the flood of campaigns, it’s also easy to forget GoFundMe is neither a mutual aid platform nor even an altruistic one—it’s a for-profit company. While GoFundMe no longer takes a 5 percent fee from campaigns, it offers donors the option of giving the company a tip with their donation. The tip is automatically set at 15 percent, unless users opt out. In 2015, when the founders agreed to sell a controlling position of the company to an investors group, it was valued at $600 million.

In the end, though, GoFundMe is a symptom, not the cause, of the economy that we’ve built. Since the 1980s, the 400 richest Americans have tripled their share of the nation’s wealth, now owning more than the bottom 60 percent of Americans. And the country’s welfare state is patchwork at best, leaving a quarter without paid sick leave, nearly half of the population under- or uninsured, and more than half with no emergency savings. Without an entire restructuring of our capitalist system, we’ll keep finding ourselves in the same position.

Either way, it’s clear that we won’t be able to crowdfund our way out of this recession.

“Everyone is asking for money in the exact same way. How sustainable is that model?” a former City Winery hourly employee said. “I think it’s incredibly depressing that we have to rely on something like GoFundMe for something that should be a human right.”

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