Philly’s coronavirus response

With relief hard to access, GoFundMe was a small biz lifeline in Philadelphia

It was a pinnacle year for crowdfunding. Experts say the trend is unlikely to continue.

Reading Terminal Market in April. Some stands were open, but customers were few.

Reading Terminal Market in April. Some stands were open, but customers were few.

Mark Henninger / Imagic Digital
michaelawinberg-2020-2

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Online crowdfunding was effectively legalized in the United States by the Jobs Act, signed into law almost nine years ago. It was designed to start new ventures — not sustain existing ones.

That’s not how Justin Moore used it in 2020.

General manager at Uncle Bobbie’s Coffee & Books, Moore started a GoFundMe to support staff at the 3-year-old shop when the city shut down nonessential businesses in March. The popular Germantown biz managed to bring in more than $90k, from which Moore sent cash payments directly to employees while they waited for the bogged down unemployment system to catch up. He was also able to pay vendors — mostly other small businesses — and repair the shop’s windows after a few break-ins.

Like countless other Philly small businesses, Moore came to rely on crowdfunding.

“It was the bridge that kept us afloat,” Moore said. “Without that, I’m not quite sure what would’ve happened.”

This year, Philly small businesses faced obvious challenges. Forced to shut down to stop viral spread and save lives, many lost almost their income without comprehensive aid programs in place.

Though entrepreneurs have had access to some relief at the local, state and federal level, many programs ran out quickly or had eligibility requirements local biz owners couldn’t meet. Others were loans that had to be paid back, with confusing or difficult-to-comply-with rules around spending.

Instead, many relied on their customers to contribute out of the goodness of their hearts, without receiving any services in return. Bar industry staples like Dirty Frank’s and Fergie’s Pub started GoFundMe pages. Black cultural centers like the Robeson House and the Colored Girls Museum crowdfunded $100k+ to adapt their spaces to be COVID friendly. Even centuries-old institutions like Reading Terminal Market got in on the action.

Globally, GoFundMe campaigns this year raised more than $625 million for COVID relief, according to the company, and funding via this method outpaced last year by more than a third, per stats firm Fundera.

“Crowdfunding in the pandemic, it’s really entrepreneurial financing,” said Wayne Williams, accounting professor at Temple’s Fox School of Business. “It has evolved into this patchwork survival technique for existing business owners.”

Uncle Bobbie's Coffee & Books on Germantown Avenue

Uncle Bobbie's Coffee & Books on Germantown Avenue

Michaela Winberg / Billy Penn

From neighborhood cafes to century-old institutions

Blew Kind, founder of Kensington coffee shop Franny Lou’s Porch, lost every single one of her wholesale vending contracts over the course of just seven days in March — amounting to $8,000 of monthly income that evaporated. Even when she could reopen for takeout and outdoor service, her daily profits came in around $50 per day, instead of $700.

“All the people that work for us are marginalized people — Black, brown, queer folks,” Kind said. “Our numbers still were not coming up, and we had to reduce their hours. We really needed to take care of our staff.”

Kind set up a GoFundMe. She asked for $5,000, and surpassed the goal, bringing in more than $11k. It helped cover the loss in sales, and afforded the staff a mental health retreat on a Pennsylvania farm.

It worked so well that Kind did it again. When she discovered the building housing her 5-year-old shop was for sale, she and her co-owners crowdfunded another $60,000 to buy it.

“We raised all of it in a week,” Kind said. “I was really impressed with our community.”

A business more than 100 years older did the same thing. Despite his fear of looking “desperate,” Reading Terminal Market Board Chair Al Mezzaroba agreed to set up a GoFundMe for the Center City institution. Including contributions sent offline, the market raised more than $250,000 to support vendors. It was able to subsidize rent and stay open seven days a week.

“It just gives us more breathing room,” Mezzaroba said. “Had we not done the GoFundMe, we would still be in decent shape financially, just with a shorter runway until we run out of cash.”

Franny Lou's Porch in 2019

Franny Lou's Porch in 2019

Michaela Winberg / Billy Penn

Don’t count on this going forward, experts say

Going into 2021, accounting prof Williams doesn’t recommend proprietors rely on crowdfunding.

Removed from the context of the pandemic, these campaigns aren’t usually that successful. During normal times, only about a third of them reach their goals, Williams said, and few regular people are experienced enough to manage a huge influx of cash for the long term.

“It’s not for the faint of heart,” he said. “In and of itself, it’s not going to be the best approach for growing your business out of the pandemic.”

Some help is on the way — though it’s mostly more of the same. With the new stimulus package passed by Congress this week, there will be more funding available via PPP. There are still some grants and loans available on the local level. And earlier this month, the city passed a six-month eviction moratorium for small businesses.

Even though the Uncle Bobbie’s campaign was super successful, general manager Moore is not looking to depend on it.

The coffee shop and bookstore has deep connections in the community, and folks were willing to support without getting a product in return because this year brought a true crisis. He’s not rushing to incorporate crowdfunding into the business model.

“Asking for free money, if you don’t need it, it can damage your relationship with the community,” Moore said. “I’d much rather sell people a book.”

Want some more? Explore other Philly’s coronavirus response stories.

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