Phil Balboni said James Foley's family hoped to raise $5 million. Associated Press
Until the day American journalist James Foley was killed by Sunni extremists in the Middle East, his family and friends were working to collect millions of dollars they hoped would secure his freedom.
They knew they couldn't raise the $123 million his captors had demanded. But they were still hopeful they could collect $5 million to offer for Mr. Foley's release, said Phil Balboni, the chief executive of GlobalPost, the online news outlet where Mr. Foley worked as a freelance journalist.

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Those hopes were quashed on Tuesday when militants with the Islamic State posted a grisly online video of Mr. Foley's beheading—an execution the group said was meant to be a warning to the U.S. to halt its airstrikes in Iraq.
"We're completely devastated," said Mr. Balboni. "It's the most horrific, terrible outcome that could ever be imagined."
The effort to raise a ransom for Mr. Foley faced another obstacle: The U.S. government considers such payments illegal funding of terrorist organizations.
During the course of Mr. Foley's captivity, the Federal Bureau of Investigation discouraged the family from paying a ransom because of concerns that paying money fuels the kidnapping industry, said one Justice Department official.
The Foley family couldn't be immediately reached for comment Thursday evening.
"The family worked with the FBI from the very beginning and there was never a moment of disagreement for our strategy for freeing Jim," said Mr. Balboni, who worked closely with the Foleys. "Our feeling was that we were able to pay a ransom and we were hard at work raising the necessary funds."
Mr. Foley's killing has exposed a largely hidden debate about the role ransom demands increasingly play in terror-group hostage situations. Mr. Foley disappeared in northern Syria on Nov. 22, 2012, while heading to the Turkish border after his latest reporting trip in rebel-controlled parts of the country. His family and friends searched fruitlessly for solid information about his whereabouts. It took nearly a year for his captors to make contact with a monetary demand.
In November, Mr. Balboni said, GlobalPost received an email from an untraceable account. The writer demanded $123 million for Mr. Foley's release. While the amount was astronomical, Mr. Balboni said, it was an encouraging sign.
Special Operations forces mounted an unsuccessful operation inside Syria this summer to try to rescue several Americans held by extremists, including James Foley, the journalist who was beheaded this week. Matt Bradley joins the News Hub from Baghdad. Photo: AP
U.S. Special Operations forces previously mounted an unsuccessful mission inside Syria to rescue American journalist James Foley. The operation sought to rescue several Americans held by Islamic State extremists.
The family asked the writer to prove they were holding Mr. Foley, said Rick Byrne, a GlobalPost spokesman. Mr. Foley's parents sent a series of "proof of life" questions that could only be answered by their son. The captors came back fairly quickly with the correct answers, proving he was alive, said Mr. Byrne.
But the line of communication quickly came to a halt. Mr. Foley's family didn't hear from the captors again until last week, when they received an ominous email from the group.
The group denounced the U.S. airstrikes in Iraq, which President Barack Obamaauthorized on Aug. 7, and left little doubt that Mr. Foley's life was in jeopardy, said Mr. Balboni.
The family wrote back with an urgent appeal, he said: Spare our son's life.
They didn't hear back from the militants.
The ransom efforts came even though such deals are illegal, a message that was conveyed to the Foleys and the families of other Americans still being held captive in Syria, said one person familiar with the discussions.
Officially, most European Union governments have aligned on the U.S. and U.K. standard policy of not paying ransoms when terror groups hold their nationals. Last year, Washington and London won a pledge by the Group of Eight leading nations, which includes France and Italy, not to pay hostage takers.
But the tales of former Western hostages suggest kidnappers draw a terrifying distinction between captives from continental Europe and those from the U.S. or the U.K.: The first have economic value, the latter have political value.
Italian reporter Domenico Quirico, who disappeared in April 2013 and was released in September after five months in captivity in Syria, said his nationality may have helped save his life.
"My captors said, 'You're lucky to be Italian because if you were American or English we would have killed you right away. We know Europeans will negotiate," Mr. Quirico said. "The desire for money was behind my kidnapping and the desire for money was behind my release."
The Italian government denied media allegations it paid a ransom.
In 2013, former U.S. Ambassador to Mali Vicki J. Huddleston said France had paid $17 million for the release of several French hostages long held by al Qaeda's North and Western African franchise, known as AQIM.
American journalist James Foley in Syria in 2012. Associated Press
At the time, French President François Hollande said his government was doing everything to obtain the release of French citizens but denied any ransom payment.
"We're trying to establish contacts but no financial question can be raised," Mr. Hollande told reporters in Brussels in February 2013.
Later that year, the debate resurfaced when AQIM released four more French hostages. French daily Le Monde reported that Paris had paid between €20 million and €25 million ($26.5 million to $33.2 million) to help free the four men, employees of state-run nuclear engineering company Areva SA AREVA.FR -1.37% and a subsidiary of construction firm Vinci SA DG.FR -1.25% .
Asked about the Le Monde allegations at the time, Foreign Minister Laurent Fabius said "no public fund had been paid," leaving open the question of a payment by Areva and Vinci. The two companies declined to comment.
—Eric Sylvers contributed to this article.
Write to Dion Nissenbaum at dion.nissenbaum@wsj.com, Jennifer Levitz atjennifer.levitz@wsj.com and David Gauthier-Villars at David.Gauthier-Villars@wsj.com