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Step 2

SET UP A BENEFIT FUND

A benefit fund is generally set up as a short-term account to assist volunteers and the recipient/family with donation collection, accounts payable, and fund distribution. There is no/minimal cost to establish a benefit fund. Contributions to an individual/family benefit fund are not tax-deductible. Contributions deposited into an individual/family benefit fund are considered to be gifts to the recipient, not reportable income. However, if the recipient of the benefit fund is receiving assistance through Medicaid, SSI, or other programs, it is recommended they review (with the appropriate agency) if/how being an authorized signer on the account may affect their benefits through these programs.

A. Determine a benefit fund name

Generally, the title of the benefit fund will include the name of the person or family experiencing a crisis (recipient). For example; John Doe Benefit Fund.

B. Set-up a benefit fund at a local bank/credit union

Designate a volunteer to work in coordination with the recipient and/or family member(s) to establish a benefit fund at a local bank or credit union. Carefully determine at least two authorized signers for the benefit account; one representing the volunteer committee, and one representing the recipient. Additional authorized signers may be required dependent on bank/credit union requirements and the status of the recipient/family. Discuss how the account will be used by authorized signers.

When setting up the benefit fund, be prepared to provide information including:
  • The title and purpose of the benefit fund
  • The name and social security number (or other tax identification) for authorized signers of this account
  • How deposits will be made
  • How funds will be distributed (If funding has the potential to adversely affect the recipient's eligibility for assistance under Medicaid, SSI, or other programs, it may be beneficial to have individuals who are not members of the immediate family/household serve as account signers that make payments directly to medical providers, insurance companies, etc.)
  • Considerations as to what would happen to funds if authorized signer(s) are no longer able to serve, or in the event of recipient death
  • Whether or not the account should be interest-bearing (it is generally recommended that the account be set up as non-interest bearing to eliminate reporting requirements)
  • What type of information is available/reported? For example, will deposited amounts include the clarification of donor names and addresses? (for tracking and/or sending out thank you letters)
  • How long the fund will remain active.