Alternative Finances

Ferguson Turns To Crowdsourcing To Rebuild Broken Business

In the months and weeks after the shooting of Michael Brown by Ferguson police, the waves of protests and riots that followed have left the small business owners in the area with an expensive set of problems.

As many as 26 businesses in the greater Ferguson area are claiming damages from the unrest and are using a uniquely modern solution to solve the problem – crowdfunding. So far, those 26 businesses have raised a combined $447,198 – with the average business clocking in at around  $17,000, according to reports in The Wall Street Journal.

By comparison, The Journal found that 69 small businesses in Ferguson and other affected communities have been awarded $9,525 apiece in no-interest loans or grants from the Small Business Relief Program. That public-private partnership fund raised about $1 million from private sector and government sources; around $600K has been awarded to local business for capital projects.

Crowfunding can be an expensive choice – GoFundMe takes a 5 percent cut of donations and charges a 3 percent processing fee. It also won’t be enough – crowdfunding has raised just a fraction of what most businesses need to rebuild.

There also some concerns about fraudulent crowd funds, since it is hard for donors to make sure their funds are going to the desired location.

“With millions of campaigns, it’s not feasible for GoFundMe to investigate the claims stated by each campaign organizer,” said company spokeswoman Kelsea Little.

Crowdfunding has also been of limited use for some business. Some have brought in much with crowdfunding, others have struggled.

“It could have been, or should have been, a good resource,” James Knowles, Ferguson’s mayor, said of crowdfunding. “Not everyone took full advantage of the opportunity,” he said, “and the businesses that benefited the most were those who found a champion.”

 

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