Crowdfunding: What happens to the money when patient dies? Queries answered

Do you encounter distressing advertisements on YouTube, websites, or social media featuring victims of acid attacks, disabled individuals, or cancer patients asking for financial aid? These adverts are not just calls for help; they represent a modern approach to fundraising known as crowdfunding.

What is crowdfunding

Crowdfunding allows individuals and organisations to gather financial support for personal emergencies or social causes through the internet. This method connects with a broad audience, enabling donations of various sizes. It's a shift from traditional fundraising that usually depended on a few large donors or institutions, making it possible for anyone to support or initiate a campaign.

 

Notable platforms like Keto, Milaap, and ImpactGuru facilitate donation-based medical crowdfunding.

How exactly does medical crowdfunding work for social causes? Let's explore the process using the example of Milaap

Step 1: Campaign setup

Sayanti Ray, Head of Communications at Milaap, explains: "Anyone in need, or someone on their behalf, can start a campaign on Milaap. They outline the purpose of the campaign with a title and description and set a fundraising goal. They then share their story to appeal to potential donors. Before the campaign goes live, it undergoes a verification process to ensure authenticity and compliance with platform standards, safeguarding donors' contributions."

Step 2: Raising funds

Once the campaign is live, it becomes accessible globally. Donors can learn about the cause, donate directly through the campaign page, and leave supportive messages. Even those unable to donate financially can support the cause by sharing the campaign on social media. This transparency ensures accountability, allowing anyone to see the progress of the campaign.

Step 3: Fund withdrawal and disbursement

When the campaign reaches its goal or deadline, Milaap facilitates the transfer of funds. The campaign organiser must request a withdrawal and submit necessary documents for verification. The funds are then used for the stated purpose, and organisers update the campaign page to show donors the impact of their contributions.

Verifying genuine cases

Potential donors naturally want assurance that their contributions are going to genuine cases and not scams. Milaap's team meticulously assesses every campaign for compliance with their terms and conditions, verifying documents like medical estimates, admission letters, and KYC details of the beneficiary. This thorough scrutiny helps maintain trust and integrity within the platform.

Disbursement process

The process for linking a bank account and making withdrawals offers flexibility. Depending on the type of fundraiser, donations may be transferred to different recipients:

- For medical fundraisers, funds can go to the beneficiary, their immediate family, or directly to the hospital or pharmacy.

- For memorial fundraisers, donations are directed to the next-of-kin.

- For community or social fundraisers, funds are usually directed to a trust or NGO, or to individuals upon submission of expense reports.

"After initiating a withdrawal, the platforms review and verify the cause and expenses within 24 hours. Regular updates on the fundraiser page help maintain transparency and trust among donors," says Sayanti Ray.

Handling funds after a patient's death

What occurs with the funds if the patient unfortunately passes away during treatment? This situation, particularly common in severe cases like advanced-stage cancer, raises questions about the remaining funds.

Case example: Patient X's campaign

Patient X, battling stage four cancer, launched a fundraising campaign through ImpactGuru. The goal was to raise Rs 30 lakh, and within a month, Rs 15 lakh was successfully collected. Tragically, X passed away three weeks into the treatment.

ImpactGuru's approach to remaining funds

ImpactGuru outlines a clear process for handling funds post-demise. The unused portion of the funds is transferred to the patient's family for their welfare, or with the family's consent, redirected to other needy patients on the platform.

Communication with donors

ImpactGuru and other platforms update the campaign page on such unfortunate events with a comprehensive message to inform and guide donors about the next steps.

Here is an example of the message:

"Dear Donors,

Words cannot express our gratitude for your unwavering support and contributions. With X's unfortunate demise on April 1, 2024, the family is now in severe financial distress as they have incurred substantial expenses for his treatment.

This update is regarding the utilization of funds raised in the fundraiser. As part of the funds were utilized for his treatment, the remaining funds will be transferred to the patient's family account for their welfare and the rest other needy patients on ImpactGuru with the consent of the family.

If you have any concerns regarding the utilisation or looking for a refund (on a pro-rata basis), reach us at info@impactguru.com within the next 7 days. If no response is received within the stipulated time, then it would be deemed as your consent for transferring the funds as per the family’s request."

Is crowdfunding a legal method to gather funds in India?

Online donation-based crowdfunding for various causes is entirely legal under Indian law. The Securities and Exchange Board of India (Sebi) supports all forms of crowdfunding except equity-based methods. Additionally, recognised crowdfunding platforms are often registered under the Income Tax Act as charitable trusts, allowing donors to claim tax deductions under section 80G.

Is it safe to donate money on crowdfunding platforms?

"Funds raised through a campaign on Milaap are released only upon submission of legitimate supporting documentation, adherence to KYC protocols, and validation from the hospital. Users are encouraged to report any concerns, prompting swift investigation and resolution through the 'Report This Cause' button," says Sayanti.

Impact and reach of crowdfunding

Crowdfunding platforms like Milaap and ImpactGuru have significantly impacted the community. Over the past decade, Milaap has raised more than Rs 2,400 crore, aiding over 900,000 lives, while ImpactGuru has facilitated over 200,000 campaigns, demonstrating the powerful role of crowdfunding in providing critical support during times of need.

No repayment required

Is there a requirement to repay the funds on donation-based platforms like ImpactGuru? The answer is no. Contributions are viewed as donations and carry no obligation to return them. This provides relief from debt concerns typically associated with medical and personal emergencies.

Benefits of crowdfunding

Crowdfunding not only helps raise the necessary financial resources to cover expenses like hospital bills and treatments but also provides emotional support and builds community awareness about specific medical conditions. This reduces stress and allows the person in need to concentrate on recovery rather than financial burdens.

Crowdfunding vs medical loans

The core differences lie in the source of funds, repayment obligations, associated costs, and impact on one’s credit score. Crowdfunding, a donation-based approach, typically does not affect a credit score and involves no repayment, whereas medical loans, sourced from financial institutions, require repayment with interest and can influence credit ratings.

By using the power of social networks and the internet, crowdfunding offers a powerful tool for those in dire need of medical and personal aid, bypassing many of the hurdles associated with traditional financing methods like loans. Whether it's gathering widespread support or simply alleviating the financial burden of healthcare, crowdfunding empowers people to seek help in an effective and humane manner.