Rebecca Wates became the American Cancer Society’s first crowdfunded scientist in June.
Back in February, the organization tried a different approach to raise money: It started a crowdfunding campaign to fund the work of young cancer researchers such as Wates, who works at the University of Kansas Medical Center. The online campaign made it easy to donate, and there was a running total of the money raised.
All in all, the campaign brought in $1.18 million. Wates received $111,500 to help her develop a drug for ovarian cancer.
Wates, a Kansas City native, has studied cancer for some time. Her personal experience with the disease influenced her decision to become a cancer researcher. Wates’ aunt died from ovarian cancer in 1999, and her mom is a breast cancer survivor. She’s worked at KU Med for four years now.
Wates didn’t know the American Cancer Society grant would be crowdfunded.
“It’s extremely meaningful to know that people found out about my work and were enthusiastic enough that they were willing to donate their money,” Wates said. “There are a lot of causes that we can donate to. It’s meaningful to know that people out there are so supportive of scientific research.”
In recent years, crowdfunding has become a popular way to raise money for nonprofits, businesses and personal causes. If you scroll through the popular crowdfunding site, GoFundMe, you’ll see a variety of stories.
Some people ask for help with hospital bills or college tuition. Others look to the community to help their businesses. According to GoFundMe, $4 million is raised by users every day.
GoFundMe is one of the easier sites to get started on, but it’s not the only one. The three most popular sites —G oFundMe, Kickstarter and Indiegogo — take 5 percent of the funds raised.
Kickstarter and Indiegogo help creative projects get off the ground. Crowdrise, which the cancer society used, is geared toward nonprofits, but it’s open to individuals. Other platforms are designed for businesses looking for investors. The Jumpstart Our Business Startups Act passed by Congress in 2012 loosened regulations for public companies that want to use crowdfunding to generate capital.
The crowdfunding sites have different rules and guidelines. Kickstarter, Indiegogo and GoFundMe have ways for users to report fraudulent campaigns. In 2015, the Federal Trade Commission settled its first crowdfunding case.
As far as taxes go, the Internal Revenue Service hasn’t provided clear instructions on what to do with money you give or receive as part of crowdfunding campaigns.
Wates found out about the American Cancer Society’s grant in an announcement during a video chat. The video of the announcement ended up on the society’s Facebook page.
“It encourages people who crowdfund science to do it again because then they see the product out of their donation,” she said of the video.
When she’s not in the lab, Wates works with Urban Ranger Corps, an organization that helps young men in the urban core. This grant was her first experience with crowdfunding, but she said she plans to use it to raise money for the corps’ annual fundraiser.
“And that’s something that came to me because I received crowdfunding,” Wates said.
Here are the stories of four other people around the Kansas City area who have turned to crowdfunding sites.
Drew Cobb and Zach Henderson, North Kansas City coffee shop owners
Drew Cobb and Zach Henderson, the team behind the Colony, North Kansas City’s new coffee shop and bar, didn’t reach their $20,000 goal on Kickstarter.
“Any Kickstarter campaign is ambitious, but I think we might’ve been a little too ambitious,” Cobb said.
Looking back, Cobb said they should’ve taken Kickstarter’s advice, which was to set a goal of $10,000 or less. They raised $13,359, but Kickstarter has an all-or-nothing requirement. If a campaign isn’t fully funded, the backers aren’t charged for their pledges, so Henderson and Cobb didn’t see any of that money from Kickstarter.
But the campaign that ended in March still worked out for Cobb and Henderson. When they didn’t reach their goal, they reached out to their 122 backers and directed them to the Colony’s online store, where they could purchase similar items to the rewards on the Kickstarter campaign.
“We ended up getting a lot of funding through that,” Henderson said. “It worked out even better.”
Private investors mostly funded the Colony, Henderson said. The Kickstarter money got them to the finish line.
The coffee shop at 312 Armour Road opened two months ago, and Cobb said they already have a following.
“We had a lot of people who were personally invested, not necessarily financially,” Henderson said. “They were committed to being our regulars before we even opened our doors.”
The campaign was crucial to building that customer base.
“The Kickstarter gave us the opportunity to share a little bit about ourselves and what we were passionate about,” Cobb said. “They could see that we’re just normal guys who really love coffee and beer, and that we want to hang out with people who really love coffee and beer.”
The Colony crew isn’t done with Kickstarter. They want to start brewing their beer, so in the near future, they plan on launching another campaign to buy the necessary equipment.
In the meantime, you can find Henderson and Cobb behind the counter at the Colony.
“Some coffee shops aren’t geared toward staying and hanging out, but we very much wanted that,” Henderson said. “We wanted that community. We wanted to stay and spend time with other people.”
Alex Stuart, Overland Park college student
Alex Stuart, a senior at the University of Kansas, wanted to study abroad in Brazil, a country he’s been fascinated with since his early teens. The fall semester trip, which is through the university, would cost about $13,000.
“I would have to pay for the whole trip by loans,” said Stuart, who is from Overland Park. “No one wants to do that.”
To help fund the trip, Stuart set up a page on GoFundMe at the suggestion of his study-abroad adviser. He raised $10,205 over four months.
“I really didn’t (expect to get so much),” Stuart said. He knew most of the 25 donors.
Stuart is the vice president at the Brazilian Students Association. It’s been a dream of his to visit Brazil.
Stuart credits his story with helping him raise the money. On the page, Stuart explains why he picked Brazil and gives some of his backstory.
Stuart said he was bullied when he was younger. He was introduced to Brazilian culture when he attended a Brazilian martial arts, or capoeira, class. He said the Brazilian community accepted him for who he was.
This was Stuart’s second try at a GoFundMe page aimed at helping him cover a study-abroad trip. He admits that he wasn’t as invested the first around.
“Last time, I didn’t share” the page on social media, he said. “I didn’t want to bug people. I didn’t say a whole lot.”
This second go-around, he shared the page all the time.
To further entice people, he rewards backers. For example, a $100 donation gets you a postcard and a keychain.
Stuart took off for Brazil in late August.
Quinten and Elizabeth Sepe, dog park entrepreneurs
For Quinten Sepe, opening a dog park was a pipe dream. But then he and his wife, Ellie, decided to just go for it and open a park.
They are planning to open an indoor dog park with a bar and coffee shop attached at 79th Street and Wornall Road in the Waldo neighborhood. That way people can hang out with friends or get some work done while their dogs play in the field. The indoor aspect is essential given the Midwestern climate, Sepe said.
The two have big plans for the space, including a dog hotel. The park is scheduled to open in 2017. But before they start construction in November, the Sepes launched a Kickstarter campaign to gauge community support for the dog park.
They had received positive feedback on the idea, but he and his wife wanted to see “if people are going to put their money where their mouth is.”
“We go about this with the mentality that people might not want a dog park,” Sepe said. “We were ready for the fact that we could be wrong.”
The Kickstarter campaign had a goal of $5,000. In 30 days, 105 people pledged $6,022.
Small businesses might notice a ripple effect from crowdfunding campaigns. Sepe, for example, noticed the Kickstarter helped in ways beyond funding. It added legitimacy to the dog park and was a marketing tool to show they were serious about the endeavor.
Sepe said the Kickstarter helped to build buzz about the park and bring into customers. Through the Kickstarter, people could prepurchase time at the park and other items.
“The idea for the space is that’s it meant to be a community space,” Sepe said. “It will be successful if the community embraces it. It’s not really our park; it’s Kansas City’s park.”
Jenessa Collins, gymnastics studio owner
Jenessa Collins, owner of a gymnastics studio in the Waldo neighborhood, owed her landlord money and was faced with closing her gym.
So a year ago, she set up a GoFundMe page to help keep the gym at 217 E. Gregory Blvd.
She said she turned to the crowdfunding platform out of desperation.
Collins, a single mom, opened the gym in 2012. Through GoFundMe, she raised $824, which was enough to make it over the hump.
“The GoFundMe page was pretty good for us,” Collins said. “It got people who didn’t know about the gym involved.”
Collins’ gym is for kids under 18 who are beginners.
Collins also found that the GoFundMe page was a good way to engage parents who don’t want to buy any more wrapping paper, magazine subscriptions or cookies.
“Some parents are so over fundraising,” she said. “They were looking for another way to donate to the gym.”
Collins said the gym is going strong now, especially with the upcoming Rio Olympics. She calls it the “Olympic bubble.”
The tax implications
Most websites advise talking to a tax expert before making donations because the situations vary. H&R Block has these takeaways:
▪ If you give to a charity with 501(c)3 status, then the donation is tax-deductible.
▪ For businesses, money raised through crowdfunding counts as taxable income.
▪ If you are an individual raising funds to cover life events such as medical bills, then the money could be counted as a gift, which isn’t taxable.