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How GoFundMe can affect your FEMA eligibility

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January 27, 2025

TLDR: This podcast examines whether GoFundMe campaigns can interfere with federal assistance during wildfire disasters and clarifies how much of donated funds from special product sales reach wildfire victims.

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In this insightful episode of The Indicator from Planet Money, hosts Waylon Wong and Darian Woods explore the implications of GoFundMe campaigns for victims of the LA wildfires. With the devastation of the wildfires affecting thousands, many are turning to crowdfunding for relief, but potential pitfalls could affect their eligibility for federal assistance.

Understanding FEMA and GoFundMe

The Dilemma of Funding Sources

  • When victims of natural disasters like the LA wildfires create GoFundMe campaigns, there can be unintended consequences regarding federal assistance.
  • FEMA Restrictions: Federal law prohibits FEMA from duplicating assistance for needs covered by other funding sources. This means that if you explicitly state in your GoFundMe that funds will be used for a specific purpose, you may render yourself ineligible for corresponding FEMA aid.

Potential Scenarios Involving FEMA

  • For example, if a GoFundMe campaign is set up to cover the cost of vehicle repairs following the wildfire, FEMA cannot offer assistance for that same vehicle. Here are some key points regarding FEMA assistance:
    • Short-term assistance: Includes necessary items like food and shelter.
    • Long-term support: Encompasses grants for home repairs.
  • Victims must be cautious when fundraising, as receiving other forms of assistance, including grants from nonprofits or insurance payouts, could also affect their eligibility for FEMA support.

GoFundMe: Transparency Issues

Lack of Clear Warnings

  • The hosts found that while creating a draft fundraiser, GoFundMe does not prominently display warnings regarding the potential impact on FEMA eligibility. The website contains some FAQs but lacks clear communication on this important topic.

The Importance of Awareness

  • Victims of disasters should remain vigilant and informed about the overlaps between various funding sources and the potential effects on their aid options.

Corporate Contributions to Wildfire Relief

Fundraising via Retail Brands

  • The episode also delves into how various brands are marketing products with promises of donating a percentage of sales to wildfire relief. This brings about questions regarding the actual impact of such charity initiatives.

Example of Corporate Donations

  • Claire V: An LA-based fashion company pledged to donate 100% of proceeds from specific products toward wildfire relief.
    • Proceeds are defined as the retail price minus costs for materials and manufacturing only.
    • As reported, the initiative has raised $145,000 since its launch.
  • In contrast, other brands donate varying percentages:
    • Foxy Bay: 10% of e-commerce profits to wildfire initiatives.
    • Pura Vida: 100% of net profits on a specific bracelet, meaning they subtract marketing and processing fees from their donations.

The Need for Transparency in Corporate Donations

  • Consumers are encouraged to scrutinize the fine print regarding how much will actually go to relief efforts. Without this information, it can be difficult to ascertain the effectiveness of these charitable campaigns.
  • The direct route of donating to reputable organizations or directly to victims remains the most straightforward way to ensure aid reaches those in need.

Key Takeaways

  • If you are a victim of disaster fundraising through platforms like GoFundMe:

    • Be aware that your campaign may affect your FEMA eligibility.
    • Review the language of your fundraising efforts to avoid conflicts.
  • When considering purchases tied to charitable contributions:

    • Look closely at how companies define proceeds or profits.
    • Research the exact percentage of your purchase that will contribute to relief efforts.

Conclusion

The episode serves as a vital reminder of the complexities involved in disaster relief fundraising. Whether it’s through crowdfunding platforms or retail contributions, understanding the implications can make a significant difference in the support received by disaster victims. The discussion highlights the need for transparency from all sides—platforms, organizations, and corporate donors—to ensure relief reaches those who need it most.

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