Not only was the work of Howard Phillips Lovecraft uniformly bleak, but what he did write was sometimes execrable. Take this random passage from a 1985 HP Lovecraft omnibus: "But oddly enough, the worthy gentleman owned himself most impalpably disquieted by a mere minor detail. On the huge mahogany table there lay face downward a badly worn copy of Borellus, bearing many cryptical marginalia and interlineations in Curwen's hand."

The American writer, who died in 1937, is also widely considered today to have had unacceptable racist views. And yet, despite his prejudices and stylistic shortcomings, his work remains insanely popular. A Kickstarter appeal to fund a life-sized bust of the writer – for the Athanaeum Library, in his hometown of Providence in Rhode Island – roared past its target of $30,000 in a couple of days, closing at $55,000.

Meanwhile, the British graphic novel company Self Made Hero will this month publish the latest of many comic adaptations of Lovecraft's novels and stories. Called The Shadow Out of Time, this 1936 story, one of Lovecraft's last, tells of university professor Nathaniel Wingate Peaslee, who collapses one day in 1908 and doesn't come to his senses until 1913 – though in the intervening five years, his body has certainly been active, powered by agencies from beyond our world. "In 1909," says the professor, "I spent a month in the Himalayas, and in 1911 roused much attention through a camel trip into the unknown deserts of Arabia. What happened on those journeys I have never been able to learn."

Ian Culbard, who also adapted At the Mountains of Madness (which won him a 2011 British Fantasy award), ably transforms Lovecraft's somewhat lumpen and info-dumpy prose into a taut, chilling read, well-paced and illustrated with a suitably muted palette. It's a prime example of how Lovecraft's original ideas and concepts are all the more fascinating when placed in the hands of storytellers with a more contemporary narrative approach.

But perhaps the strangest Lovecraftian legacy is the range of stuffed "Cthulhu" toys and children's books based on his work. Cthulhu, who first appeared in the 1928 short story The Call of Cthulhu, is "a monster of vaguely anthropoid outline, but with an octopus-like head whose face was a mass of feelers" – one of a race of vast, unknowable elder beings who lurk at the crossroads between dimensions, or sleep fitfully in underwater cities, waiting until the time is right to rise again and devour all life on the planet".

The vast mythology Lovecraft created around this creature was named the Cthulhu Mythos after his death by his collaborator August Derleth. Another Kickstarter project is hoping to bring out – wait for it – Baby's First Mythos. This will be a revamp of a 2003 book by Americans CJ and Erica Henderson "that teaches the ABCs and numbers using The Cthulhu Mythos". Due to finish its stint on the crowdsourcing site on 6 June, it has already surpassed its $10,000 goal, with almost $18,000 in pledges from nearly 600 people.

Lovecraft's work is not obviously child-friendly. "I am so beastly tired of mankind and the world," he once wrote, "that nothing can interest me unless it contains a couple of murders on each page, or deals with the horrors unnameable and unaccountable that leer down from the external universes." So why a baby book? "When we first printed Baby's First Mythos a decade ago," says Erica Henderson, "it was meant as more of a novelty for adults. But parents came back to us years later and said they were teaching their children with it. I think people like it when horror is subverted."

Why does she think he is so popular? "Lovecraft made a world where humans are alone, floating on a rock in a terrifying larger universe that we cannot possibly comprehend because our time in it has been so short and we are so insignificant compared to the horrors from the Cthulhu Mythos. So much of modern horror is based on that idea. We wouldn't have Ghostbusters if it weren't for Lovecraft – and that's the best argument I can think of for his work."

These days, it's not so much his strange hybrid of science fiction and supernatural terror that is the problem as his racism. When the Nigerian-American Nnedi Okorafor became the first black woman to win the World Fantasy award in 2011, a friend pointed out the fact that the award was problematic – it being a bust of Lovecraft. Okorafor gamely reproduces one of his racist poems on her blog and writes: "I am the first black person to win the World Fantasy award for Best Novel since its inception in 1975. Lovecraft is probably rolling in his grave."

In Against the World, Against Life, his biography of the writer, the French novelist Michel Houellebecq ascribes Lovecraft's racism to his relatively wealthy New England upbringing suddenly bumping up against two years of rougher living in multicultural New York. But fellow writer Nicole Cushing refuses to accept the oft-trotted out excuse that Lovecraft, born in 1890, was merely "a man of his time". She says Lovecraft seems "obsessed with the theme of white supremacy, taking opportunities to shoehorn it into stories even when it's totally unnecessary".

So why do we continue to fete Lovecraft instead of burying him quietly away? US author Elizabeth Bear, accepting that Lovecraft's views are "revolting", posits this answer: "Because authors are read, beloved, and remembered, not for what they do wrong, but for what they do right, and what Lovecraft does right is so incredibly effective. He's a master of mood, of sweeping blasted vistas of despair and the bone-soaking cold of space. He has at his command a worldview that the average human being, drunk on our own species-wide egocentrism, finds compelling for its sheer contrariness."