It happened almost instantaneously: The city and state banned dining in at restaurants and bars indefinitely to curb the spread of COVID-19, and within days, social media was flooded with restaurant groups promoting GoFundMe fundraisers for thousands of staffers who had just been laid off.
The fundraisers offered a crucial first response to the devastating economic blow that had been dealt to NYC’s restaurant industry. Organizers launched campaigns to raise money as both financial support and a morale booster for their staff, they say. The funds were earmarked to help pay for rent and groceries while an out-of-date unemployment benefits system broke down under overwhelming demand — and as many restaurant workers didn’t get access to unemployment benefits at all.
But, as with other tech systems that unexpectedly became essential amid the global pandemic, dealing with GoFundMe has been stressful and frustrating as the platform struggles to meet sudden demand, restaurateurs say.
Some groups that have raised tens of thousands of dollars for their staff have yet to be able to start withdrawals on the platform, despite repeated efforts and automated warnings from GoFundMe that the funds may be reverted back to the donators if cash isn’t withdrawn quickly enough.
The platform’s fundraising guidelines — intended to prevent misuse — are also opaque, restaurateurs argue, and have led to account suspensions and extra time spent filling out additional questionnaires to prove organizers’ intentions. Figuring out exactly what they’re doing incorrectly has been hard as well, as GoFundMe’s communications have been sporadic or cryptic, owners say.
“It feels like you’re being held hostage by them,” Kevin Hooshangi, the managing partner of popular bar American Whiskey, with locations in Midtown and Tribeca, tells Eater. “And this money is not going toward the proliferation of a business — it’s a lifeline.”
Many restaurateurs say they chose GoFundMe because everyone else was doing it, and few other options seemed to exist. Hooshangi likened it to signing up with restaurant reservations platform OpenTable — there might be better options out there, but GoFundMe seemed like the most visible platform with the largest reach.
As a benefit, the fundraisers encourage staff and give diners a way to support their favorite spots more directly, rather than buying merchandise or ordering delivery or takeout. Hooshangi says that while the money American Whiskey raised on GoFundMe only amounts to about half of the company’s payroll expenses for one week, it’s a public sign of support for the restaurant’s staff. The Dead Rabbit’s Samantha Casuga agrees: Two regulars donated $15,000 to the popular FiDi cocktail bar after the GoFundMe went live, and the staff saw it as a sign of validation of their work at the bar.
But once fundraising kicked off, some campaigns that raised large amounts of money quickly started seeing issues. Ariel Arce, of nightlife hot spots Tokyo Record Bar and Air’s Champagne Parlor, started a GoFundMe for her staff March 12; within a week, the campaign had reached its stated goal of $20,000. When Arce went to get the money, she was notified that the earliest she could start withdrawing funds was March 31 — even though GoFundMe stipulates that, once banking information is confirmed, withdrawals can start within one to seven business days.
Each subsequent day that Arce tried to withdraw funds, that start date kept getting pushed back. By Thursday, April 2, she was told that her earliest possible withdrawal date was April 10, nearly three weeks after the campaign hit its total fundraising goal. She ended up finally receiving her funds, after many emails with GoFundMe’s support team, on Tuesday, April 7.
The unexpected delays were shocking, Arce says. She had been planning to distribute the funds among her 35 employees as a buffer while they waited for lagging unemployment benefits to kick in. “I’ve been personally paying people in small increments because I want them to have money,” Arce tells Eater.
The Epicurean Group — including West Village Italian restaurant L’Artusi and nearby wine bar Anfora — has not been able to make any withdrawals from its GoFundMe campaign, which has raised more than $43,000 to date, despite trying 10 to 12 times, owner and operating partner Kevin Garry tells Eater.
Melissa Rodriguez, the head chef at fine dining Italian restaurant Del Posto and the organizer of the staff’s $85,000-plus GoFundMe campaign, says that she hasn’t been able to access any of those donations despite repeated attempts and efforts to resolve issues. And Dan Kluger, the chef and owner of popular seasonal American spot Loring Place, has had the same hiccups with his $50,000-plus fundraiser. “I have emailed twice and messaged them on Twitter. Nothing,” Kluger says.
Both Kluger and Rodriguez heard back from GoFundMe shortly after Eater reached out to the company about their restaurants’ issues.
Even more stressful, restaurateurs say, is that GoFundMe requires organizers to start withdrawing funds within 30 days of launching a fundraiser. If the funds sit in an account past that deadline, GoFundMe will pause incoming donations and may start refunding donors. Now, as restaurateurs struggle to get money from fundraisers launched in mid-March, they are simultaneously receiving automated messages from the company saying that they have to start making withdrawals soon or else lose the cash, they say.
“I keep getting an error message [on withdrawals] and an email telling me I need to get it set up within 30 days — I have seven left — before the money is returned to donors,” Kluger says.
Some of the delays are due to safety measures that GoFundMe has put into place to make sure donations are going to the right place. The fundraisers will be flagged if descriptors are missing identifying information — such as who the organizer is, how the organizers are connected to the ultimate beneficiaries, and how the funds will be dispersed, according to the company.
But the detailed information that campaign descriptions can — and can’t — display is not clearly spelled out during the brief process of setting up a GoFundMe fundraiser, owners say, leading to headaches after fundraisers go live.
American Whiskey’s Hooshangi had his GoFundMe account suspended for a day when he tried to auction off bottles of rare whiskey in exchange for donations. Similarly, Del Posto’s Rodriguez had to remove offers to cook in exchange for donations after the platform threatened to suspend her account.
Restaurateurs say they’re trying to follow the rules — but GoFundMe’s support team only communicates via email, and many are finding it tough to get explanations without following up persistently. Del Posto’s Rodriguez had trouble after needing to switch the banking account information for her staff’s campaign. She was originally told that it would take three to five days to confirm the new account information, but she didn’t hear back from the company after that deadline, despite following up with multiple emails to GoFundMe’s support line.
She finally heard back from the company on Thursday, April 9, when a GoFundMe representative sent her an email claiming that Rodriguez hadn’t responded to one of their inquiries. But that claim, Rodriguez says, “is false.”
L’Artusi’s Garry said that at first, the support staff seemed communicative, with about 10 email exchanges. He was confident that the withdrawal problems would be resolved soon. Now, though, he’s less sure. After support staff told him for a week that there was a payment processing problem, the company is now telling him that the issue is actually that the campaign name for his company’s GoFundMe is “Epicurean Group,” while the official corporate name is “Epicurean Management,” he says. He still can’t access funds.
“I am happy that they have safety procedures in place to eliminate fraud and feel they should not relax those,” Garry says, “but it’s starting to get ridiculous.”
Not all campaigns have had trouble. Siobhan Spencer, the general manager of Bushwick Italian restaurant Faro, confirmed that she was able to access the restaurant’s $6,587 in GoFundMe donations without a problem. Egyptian fast-casual chain Zooba reported no issues with accessing the over $10,000 that the restaurant raised on GoFundMe. Williamsburg Guatemalan spot Claudia’s didn’t have any obstacles getting the $715 that the restaurant raised on the platform.
In an email to Eater, GoFundMe said that it is working to make sure campaigns receive their money, pointing to a “trust and safety” team that comprises about one-third of the company’s staff. The team reviews each campaign for clear descriptions of where the donations are going and how the money will be spent, and then reaches out proactively to campaigns that need more details.
One example of an issue, the company said in a statement, is if it’s not clear where the money will go, like if financial information doesn’t match documentation that the organizer provided. Emails from GoFundMe to campaign organizers also warn of delayed responses due to COVID-19.
“Our top priority is to balance speed and safety and ensure funds arrive as quickly as possible, and into the hands of those in need,” the statement says. “We have dedicated teams working around the clock to do everything we can to help as many people as possible and provide support along the way.”
Globally, the platform has raised $120 million for COVID-19 related campaigns. According to GoFundMe, the company makes money in two ways: individual tips from donors, plus credit card and processing fees that amount to 2.9 percent plus 30 cents per donation.
Still, even when GoFundMe does work, it’s not a perfect platform for restaurants. Because the businesses are not classified as nonprofits, taxation on donations is a concern. The Dead Rabbit’s Casuga has started exploring the process of partnering with a hospitality industry nonprofit, In the Weeds, to try and funnel withdrawals through the organization and avoid heavy taxes on the bar’s GoFundMe donations, which currently total $36,530 — but it’s not clear whether the approach will work. Caitlin Castellano, the assistant general manager at Chelsea cocktail bar Bathtub Gin, is trying a similar strategy with another industry nonprofit called Another Round, Another Rally.
What was originally meant as a relatively easy way to provide another line of support for staff has become yet another issue to stay on top of — just like the overwhelmingly delayed process to apply for unemployment benefits, and the ever-changing rules for applying for small-business loan support.
“It’s incredibly stressful,” Hooshangi tells Eater. “I can’t wait for the day when my job entails running a bar and a restaurant again.”
With additional reporting by Luke Fortney