Crowdfunding Can Cost SSI Benefits

By: Catherine Freeman, 2L
Staff Writer

In recent years, crowdfunding has become a popular way for people to raise money for personal causes. One of the most popular ways is GoFundMe.com. At first glance, websites like GoFundMe seem harmless, as they give donors the ability to help those facing monumental challenges. But in some situations, the financial assistance derived from these sources can cause many disadvantages.

Demicka Gilmore has witnessed this issue firsthand. Gilmore’s 15-year old daughter, Tavi, was diagnosed with osteosarcoma, a rare form of bone cancer, at the age of 12. This type of cancer requires almost daily trips to the doctor, which made employment for Gilmore nearly impossible.

Demicka Gilmore

Demicka Gilmore lost her SSI when she crowdsourced hospital bills. | Source: www.ijreview.com

Although Gilmore originally worked a full-time job, she was eventually forced to give up employment in order to provide around-the-clock care to her daughter, who is now terminally ill. Unable to afford housing any longer, Gilmore and her two children soon became homeless.

Fortunately, a local minister offered the family a place to stay in the basement of a nearby church. Gilmore then decided to start a GoFundMe page to raise money for her daughter’s Sweet Sixteen birthday party, a Make-A-Wish trip to London, and a year of rent in an apartment.

Gilmore was shocked when over 300 people donated $16,000 to her cause. Her sudden glimpse of relief, however, quickly came to a halt when she received a letter from the Social Security Administration and the Washington State Department of Social and Health Services requiring Gilmore to record the $16,000 in donations as income.

The news was devastating to Gilmore, considering the income change would mean she would lose all public assistance from the government—the only way in which Tavi has received the medical care she needs. While donations on sites like GoFund-Me are generally considered gifts in the context of tax consequences, the donations have significant effects for those receiving Supplemental Security Income (SSI), a federal program that helps eligible low-income individuals deemed disabled cover the costs of basic needs. For those receiving this type of assistance, the donations derived from crowdfunding sites constitute a type of “resource.”

Under current SSI laws, any cash gift exceeding $2,000 for the taxable year must be considered when computing the total amount of resources the individual possesses. If a single person like Gilmore wants to continue to receive federal aid, one’s total assets (including resources) must remain under $2,000. Once Gilmore became aware of this dilemma, she was forced to refund all of the donations she received back to the respectful donors.

Luckily, a Florida non-profit called “DirectlyTo” has stepped in to attempt to re-raise the funds raised on the Go- FundMe site. So far, the non-profit has raised over $7,000 dollars toward the $15,000 dollar goal. Gilmore’s case highlights how sites like GoFundMe are lifesavers at first glance, but may result in significant, unforeseen consequences for those who are most in need.

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