I’ve spent most of the last week in the hospital with my five-year old son, Charlie. He’s going to be okay, he had a relatively rare complication from Strep throat that moved into a lymph node at the base of his skull, killing it and creating a major infection in the soft tissue. The treatment is 14 days of intensive antibiotics. First that was delivered at the hospital so they could keep an eye on him and make sure he was improving, and now he’s got a PICC line (a long-term IV inserted under his upper arm) to allow me to deliver doses of antibiotics every eight hours at home. I’m writing this at 10:30 at night while I wait for 11pm, when his next 30-minute infusion of antibiotics needs to start.
This caused me to reflect on my own good fortune, and to finally get around to telling you about a resource for folks without the same good fortune.
In short, I feel extremely grateful to have good health insurance. That means that when the ER doc ordered a spinal tap to check for meningitis, an X-ray to check for pneumonia, and then two CT scans–first for the sinuses and then for the neck–I was only thinking of Charlie’s health and not the incredible expense of all these tests. When they checked him in to the hospital for a few days, I was likewise only thinking of what Charlie needed to get better. And now, our family finances will not be ruined by ongoing sky-high medical bills.
The Burden of Medical Bills
According to Harvard researchers, 62% of all bankruptcies were caused by health problems and associated medical bills. The majority of those folks had health insurance, and yet their average costs are over $20,000. According to the researchers quoted in this article, most middle class families–even those with health insurance–are “just one serious illness away from bankruptcy.”
GiveForward Helps Families Facing Medical Crises
There is a relatively young start-up company that has already helped individuals facing medical crises to raise over $3.8 million for medical bills and other causes. This Chicago-based social enterprise, called GiveForward, is not a non-profit. It is a sustainable for-profit business with a social mission baked into every aspect of its operations.
Here’s how it works: individuals set up a fundraising page at GiveForward. Then they start publicizing it to their friends through the integrated social networking tools like Facebook and Twitter. Their friends can donate via credit card to their campaign. When the campaign reaches its pre-determined end date, GiveForward sends them a check, minus the 7% fee (that would be the sustainable part–see below for what the fee covers).
I should be clear here that these “donations” are not tax-deductible to the donors. It’s not a nonprofit collecting donations on behalf of individuals. It’s a for-profit intermediary that has simplified the process for anyone to establish a fundraising page for any cause.
One potential concern is that GiveForward does not actively verify any of the fundraisers using its platform, however “any suspect or questionable projects are asked to provide more information and will be removed and funds returned if an investigation brings us to question the legitimacy of any fundraiser.” So probably best to give only to causes and people you know in real life.
Comparing the For-Profit and Nonprofit Versions of This Idea
I wrote a few years about The Lighthouse Community, a nonprofit that actively verifies the medical issue the beneficiary is facing. TLC similarly sets up web page for all of their “clients” which allow individuals to share their stories and allows supporters to make a donation to help cover the medical costs in question. TLC obviously has a higher standard of due diligence, and it has the advantage that contributions are in fact donations to a non-profit and therefore tax-deductible to the donor.
In 2009 TLC passed through $100,000 in donations and spent about $54,000 on its own administration. It seemed to have an operating deficit of $20,000 (meaning it spent $20,000 more than it raised). Clearly, they are operating on a shoestring and doing an amazing thing with very limited resources. (Note that TLC raises funds separately to cover its operating expenses, so donations for individual beneficiaries are also passed through minus about 7%, per their page on Guidestar.)
But GiveForward has a much lower barrier to entry for individuals and families already facing an avalanche of paperwork. And most donors are not motivated by the tax deduction available for helping a friend or family member with medical bills. So one might argue GiveForward has streamlined and simplified the process while removing as much risk as possible. And while TLC raised $38,000 for its own operations in 2009, GiveForward recently received a $500K investment and is expanding rapidly. It has already facilitated almost $4 million in transactions, which would mean it also earned revenue of $267,000 if it collected 7% of that amount.
If I did need to raise money for medical bills, I think I would set up a page on GiveForward rather than TLC. And GiveForward is poised to expand awareness of its services with this huge investment that will allow them to improve their technology and to reach many more potential fundraisers by advertising and partnering with referral sources including cancer charities, major hospitals and, of course, successful fundraisers who tell their friends.
In all, the for-profit structure has brought great benefits to GiveForward, which has allowed it to ultimately accomplish the social mission–getting money to families who need it to pay for major medical bills.
However, families will have to evaluate the two different organizations and decide for themselves which is right for them. I would welcome the comments of anyone who evaluated both organizations and made a decision one way or the other to help guide other families as to the pros and cons of each. What have I missed? What else you would like to know?
About That Fee
Fee details from GiveForward: “This fee covers all credit card and bank processing fees (usually around 2.6% depending on your credit card) as well as GiveForward fees. The GiveForward fees cover basic overhead; from maintenance of the site so we have the most up-to-date security software to protect the privacy of our users to the cost of sending out the final payment to the beneficiary.”