IS0142 Milap Case.pdf

IIMA/IS0142 MILAAP - Crowdfunding for All: Helping Patients by Facilitating Philanthropy It was an unusually cold morning in Bengaluru in November 2019. Anoj Viswanathan, the cofounder of Milaap, walked briskly and rubbed his palms to generate warmth as he proceeded towards the...

IIMA/IS0142 MILAAP - Crowdfunding for All: Helping Patients by Facilitating Philanthropy It was an unusually cold morning in Bengaluru in November 2019. Anoj Viswanathan, the cofounder of Milaap, walked briskly and rubbed his palms to generate warmth as he proceeded towards the elevator to attend the annual strategy meeting. As he waited for the elevator, he reflected on the journey of Milaap, which had emerged as a major crowdfunding platform for medical treatments. Milaap offered two types of fundraising processes: supported campaigns and do-it-yourself (DIY). As the names indicated, Milaap provided substantial support to the patients/ relatives in designing and disseminating relevant information in the supported campaigns. DIY campaigns, on the other hand, were completely driven by the patients/ families themselves, with Milaap's role restricted to offering the platform and assurance to donors through beneficiaries and need verification. As Milaap became increasingly popular, Viswanathan contemplated the challenges of achieving a balance between doing good and doing well. Though incorporated as a private limited company, Milaap was conceptualised as a social enterprise, where social pursuit was as important, if not more so, as financial profitability. Today's meeting was crucial for the future of the company as the top management was going to discuss a key issue- 'Which type of service should be prioritised?'. The company had to choose one of the business processes out of the two mentioned above (i.e., supported campaigns or DIY) and concentrate its effort and use its limited resources to scale both profitably and sustainably in the future. Health expenditure as a cause of poverty Expensive medical incidentals are one of the biggest reasons for personal bankruptcies. It is estimated that about 40% of the population are pushed to poverty because of expenses related to medical treatments. According to estimates, about 38 million citizens in India were forced into poverty in 2011-12 due to medical expenses1. The number is estimated to have grown to 55 million annually by 2019. In a country where health insurance penetration is extremely low2, the population depends on out-of-pocket (OOP) expenses to meet healthcare expenses. According to studies, only about 34% of the population in India is covered under health insurance. As a result, 1 Selvaraj, S., Farooqui, H. H., & Karan, A. (2018). Quantifying the financial burden of households’ out-of-pocket payments on medicines in India: a repeated cross-sectional analysis of National Sample Survey data, 1994–2014. BMJ open, 8(5), doi: 10.1136/bmjopen-2017-018020. 2 Konjengbam, N. (2019, November 17). Lack Of Awareness Responsible for Low Health Insurance Penetration. Outlook Money. https://www.outlookindia.com/outlookmoney/insurance/lack-of-awareness-responsible-for-low-health- insurance-penetration-3896 Prepared by Prof. Rajesh Chandwani, Indian Institute of Management, Ahmedabad; Prof. M. Vimalkumar, Indian Institute of Management, Calcutta; Prof. Jang Bahadur Singh, Indian Institute of Management, Tiruchirappalli and Dr. Sonal Asthana, HPB & multi-organ transplant surgeon, Aster Group of Hospitals. Cases of the Indian Institute of Management, Ahmedabad are prepared as a basis for classroom discussion. They are not designed to present illustrations of either correct or incorrect handling of administrative problems. © 2021 Indian Institute of Management, Ahmedabad 2 of 8 IIMA/IS0142 patients and their families end up bearing nearly 70% of health expenses3. This is despite the fact that the central Government and many state governments have provided health insurance to low- income groups through various welfare schemes such as Rashtriya Swasthya Bima Yojana (RSBY)4 from the central government. RSBY, which was initiated in 2008, was criticised for inadequate coverage of various procedures and restrictions on total benefits. As a result, the central government replaced RSBY with the Ayushman Bharat scheme in 2018, under which there was a provision of a broad health assurance under the flagship of called Pradhan Mantri Jan Arogya Yojana or PM-JAY. PMJAY was launched on September 23, 2018, by the Hon'ble Prime Minister of India, Shri Narendra Modi. It aims to provide insurance coverage of INR 500,000 (USD 6,667 5) per family per year for secondary and tertiary care hospitalisation. The scheme notably covers more than 1000 procedures and therapies and provides for availing cashless treatment in public as well as empanelled private hospitals. The scheme targets around 1.07 billion poor and vulnerable households (approximately 5 million beneficiaries) comprising the bottom 40% of the Indian population6. However, the implementation of the scheme remains an issue with illiteracy and lack of awareness as major impediments in extending the scheme to all the needy households7. Further, as the package costs of each procedure were kept to a minimum, some private hospitals still charged the patients who have to pay the remaining amount as OOP expenditure8. Thus, while PMJAY provides for covering health expenditure, several gaps remain to be addressed. This is especially critical as the costs of diagnosis and treatment is burgeoning across the world. Furthermore, a majority of the lower-middle-class population who are also vulnerable to catastrophic health expenditure remains uncovered under PMJAY9. Crowdfunding for medical expenditure Crowdfunding is defined as a form of financing mechanism which allows the fundraiser to seek small funds from a widespread audience, mainly through social media or dedicated websites. Billions of dollars are raised around the world through crowdfunding platforms like Kickstarter or GoFundMe. Crowdfunding platforms are becoming popular even in India. Ketto, Milaap, and Impactguru are some of the leading crowdfunding platforms serving in the medical expenditure domain. Indeed, the platforms mentioned above are becoming very popular in India, particularly in financing medical procedures and treatments. 3 Rao, N. (2018, April 14). Who is Paying for India’s Healthcare? The Wire. https://thewire.in/health/who-is-paying-for- indias-healthcare 4 Rashtriya Swasthya Bima Yojana (n.d.). How It Works. http://www.rsby.gov.in/how_works.html 5 Assuming exchange rate of USD 1 = INR 75 6 National Health Authority (n.d.). About Pradhan Mantri Jan Arogya Yojana (PM-JAY). https://pmjay.gov.in/about/pmjay 7 The Wire (2019, June 21). Despite Ayushman Bharat Cards, Free Medical Service Still a Pipe Dream for Many in UP. https://science.thewire.in/health/ayushman-bharat-uttar-pradesh-pmjay-mahoba/ 8 Singh, V. (2020, July 10). Under Ayushman Bharat, Poor Patients Are Not Going Cashless but With Less Cash. The Wire. https://science.thewire.in/health/ab-pmjay-scheme-health-insurance-packages-cashless/ 9 Kumar, R. (2019, September 23). Not covered under Ayushman Bharat-PMJAY? How middle class can hope to benefit too – Explained. Financial Express. https://www.financialexpress.com/lifestyle/health/ayushman-bharat-scheme- benefits-for-poor-middle-class-how-ab-pmjay-benefits-people-not-covered/1714480/ 3 of 8 IIMA/IS0142 Crowdfunding platforms are becoming popular as they overcome distance-related challenges. There are three fundamental properties of crowdfunding that help in reducing market frictions as enumerated below: Easier search: an online application allows the funders to search with ease and participate in the project of their choice Less need for monitoring: as the channel allows small contributions and broad participation, the downside risk and need for monitoring reduces Information on what other funders have done: the tool provides the opportunity for everyone to see what others have done and communicate with each other10. These properties make crowdfunding an attractive channel for funding and fundraising. These platforms allow individuals to raise funds for their causes by charging a nominal fee for the service offered. They act as a trusted intermediary for people to donate and make sure they reach the right/worthy cause. For instance, Milaap, a decade old -social enterprise has now become a pioneer in developing person to person giving in India. Milaap11 Milaap is an online crowdfunding platform that enables anyone across India to raise funds for healthcare, education, sports, disaster relief and other personal causes with great ease. Founded in 2010 by a team of young and passionate entrepreneurs, Milaap has pioneered the development of person to person giving in India12. Anoj Viswanathan, cofounder and president Milaap, who studied engineering at National University of Singapore, and Mayukh Choudhury, cofounder and CEO, a BTech from IIT-Madras, met while working at a social enterprise selling solar lanterns in villages13. Milaap started operations at a time when the internet was beginning to change the way Indians shopped and travelled. The cofounders wanted to see how that could be extended to lending and donating. "So, we showcased rural projects online, to connect them to individuals across the world who could give microloans," Viswanathan says. Thus, Milaap began its journey as a platform that allows people to donate to Indian NGOs selected after due diligence. Requests to expand the scope of Milaap beyond microloans first came during the Uttarakhand floods of 2013 when regular donors asked if the platform could be used for flood relief. What nudged the founders to pivot and focus on crowdfunding medical care was "Abhishek's case", as they have come to call it. In 2015, a group of friends wanted to raise money for their friend's heart transplant quickly. "Here was a situation where the family was not poor, and the friends were tech-savvy. Within a week, they raised Rs 30 lakh via Milaap. It made us re-examine fundraising," says Choudhury, 37. They wondered if the platform could be helpful in similar cases. The data they dug up on healthcare enhanced their resolve to double down on emergency medical care. 10 Agrawal, A., Catalini, C., & Goldfarb, A. (2015). Crowdfunding: Geography, social networks, and the timing of investment decisions. Journal of Economics & Management Strategy, 24(2), 253-274. 11 https://milaap.org/ 12 https://milaap.org/about-us/overview 13 https://economictimes.indiatimes.com/industry/healthcare/biotech/healthcare/how-milaap-tweaked- crowdfunding-model-to-raise-money-for-medical-care/articleshow/74420753.cms?from=mdr 4 of 8 IIMA/IS0142 What started as a platform to fund rural projects and micro-entrepreneurs became widely utilised by Indians to raise funds from friends, family and a more comprehensive social network for medical needs. Though the platform allowed for fundraising for various social causes, funding for medical expenses emerged as a significant aspect over time. As a result, Milaap is soon becoming the go-to platform for funding cancer treatment, transplants and other critical emergencies. Currently, 80% of the funds raised are related to donations for medical emergencies.14 Milaap addressed the many challenges of giving (such as difficulty in discovering the right causes, trust deficit, and overall donor apathy). Sitting in a conference room in Milaap's open- plan office in Bengaluru's JP Nagar, Viswanathan, 32, emphasised, "Our goal is to make giving an everyday behaviour and facilitate the process using technology. We want that anyone from anywhere can raise money for their medical expenditure anytime, and no one should be denied treatment for lack of funds." The smartphone revolution sped up Milaap's growth, with the number of Milaap users doubling year-on-year from 2018 to 2021. The increasing penetration of mobile phones has also increased the reach of the platform to tier 2 cities and towns across India. Over 45% of campaigns on Milaap come from outside the seven biggest cities, and a similar proportion of payments are made through mobile phones. Some donations are as small as INR 5 or INR 10. As a result, Milaap rapidly grew both in popularity and size — by 2020, Milaap employed more than 80 people. As of March 2021, the platform had raised nearly INR 120 billion to support around 290,000 causes, impacting millions of lives across the country. The impact of Milaap was substantial as several patients benefited from the crowdfunding process that allowed them to access costly treatment in private hospitals. The success stories also highlighted the combined power of offline and online. An example case was Mohammad Vasees, who ran a digital printing shop in Vellore. He had put up posters in the shop about his infant daughter's liver ailment and a payment gateway for donations that Milaap had set up. He says that without the platform, he would not have been able to raise the INR 2.5 million that was needed for the liver transplant. Vasees got to know about Milaap through the hospital treating his daughter. It was one of over 2,000 hospitals that Milaap had tied up with. Most of the time, donations went directly to hospitals, increasing the credibility of medical campaigns. Over the years, Milaap earned credibility prompting the donors to return repeatedly to engage in philanthropy. Mayank Jain, for example, a 40-year-old businessman from Gurgaon, returns to Milaap every few days to donate on behalf of his mother, Usha Jain. "I could see that the causes were verified. Medical reports of the patient were also available. At times, I have also spoken to the doctors involved”, says Jain, who donates between INR 2,000 and INR 7,000, depending on the urgency of the cause. Milaap has been appreciated for its philanthropic work in several reports. It was one of the finalists for Economic Times' Social Entrepreneurship Award - 2016 15. It has also received 14 Milaap (n.d.). Overview. https://milaap.org/about-us/overview 15 ET Bureau (2016, August 8). ET Startup Awards 2016: How AgroStar is making a profit while making a difference. Economic Times. https://economictimes.indiatimes.com/small-biz/startups/et-startup-awards-2016-how-agrostar- is-making-a-profit-while-making-a-difference/articleshow/53590267.cms 5 of 8 IIMA/IS0142 appreciation for being instrumental in saving lives 16. Its support during the pandemic was also appreciated as India's Selfless heroes17. Business Model of Milaap Organisations that attempt to achieve social good usually depend upon donor funding. Some social organisations pursue financial sustainability while attempting to achieve social goals. Such organisations, called hybrid organisations or social enterprises, attempt to balance financial sustainability with the overarching organisational mission. This dual purpose of doing good while doing well is critical for such organisations. As most founders/ administrators of non- profits lack the proper training or background pertaining to managing organisations and financial acumen, there is often an imbalance in retaining steady funds while upholding the mission of the organisation18. However, the founding team in Milaap had the expertise in both technical as well as managerial competencies. Therefore, though Milaap was a social venture, the founders designed the offerings so as to ensure financial sustainability of the organisation. Two different types of campaigns Milaap provides two types of campaigns: Do-it-Yourself (DIY) and Supported Campaigns (SC). DIY: In this model, the fundraiser manages the entire campaign. The fundraiser needs to write the story of the campaign, promotes it and raises funds. This information is shared with donors on the Milaap platform and within the person's internal network. People who wish to donate can donate in any range from INR 5 and above. At the end of the campaign, 5% of the total collection of the donor is deducted as a service fee by Milaap and the rest is transferred to the fundraisers' bank account. SC: Realising that most users need assistance to reach out to a larger audience, network and professional help to write and upload convincing and poignant stories and pictures, Milaap launched its Supported Campaigns Product. The fundraiser gets professional help from story writers and photographers to build a donation profile in this product. The team visits the patient and fundraiser and provides adequate support to build convincing material for crowdfunding. The typical flow of these campaigns is depicted in the following flowchart. Milaap is directly involved in the supported campaigns. Milaap assists the client opting for the supported campaigns to design and set up the campaign. In return, Milaap charges 15% service fee for assisting in the campaign. 16 The New Indian Express (2020, November 28). Crowdfunding platform saves young life. https://www.newindianexpress.com/cities/kochi/2020/nov/28/crowdfunding-platform-saves-young-life- 2228931.html 17 Discovery Channel India (2020, November 4). Bharat Ke Mahaveer | India’s Selfless Heroes. YouTube. https://www.youtube.com/watch?v=bY5B2fmerAg&feature=youtu.be 18 Blalack, H. M. (2016). The financial stability of nonprofit organizations. https://core.ac.uk/download/pdf/72841243.pdf 6 of 8 IIMA/IS0142 The process occurs as follows: The onboarding team undertakes an initial screening of both types of campaigners. They connect with the respective campaigners to guide them through the process of setting up a campaign. In the case of SC, one team member visits the hospital to verify the identity, diagnosis, and medical facts. This typically costs around INR 5000/- per visit per campaign. Milaap also assigns a dedicated relationship manager (RM) for the supported campaigns. The RM coordinates with the hospital and the doctor in charge to ascertain the options for treatment available, costs of the procedure, the prognosis and other related information. The RM is in touch with the campaigner, social media team, hospital and doctor throughout the campaign and also consults with the respective stakeholder to make the campaign successful. While the RM takes care of the coordination work, the creative work required for SC is outsourced. Each SC entails a detailed assessment of the patient's socio-economic and health status, and a story is built up to kindle the philanthropic side of the donors. Photograph and video footage are supplemented to make the story authentic and appealing to the donors. The outsourcing agency charges about INR 30,000/- per campaign. The media relations team then circulates the stories on appropriate social media platforms and networks for the SC. These social media campaigns are supported with an advertising expenditure to enhance the visibility of the campaigns to relevant audiences. Details of these expenditure overheads are provided in Exhibit 1E. The CEO also shared that the supported campaigns were usually more likely to achieve the predetermined goal amount than DIY campaigns. Further, regardless of whether the full goal amount is reached, the money is still given to the campaign organisers to meet medical expenses. Milaap charges its commission only on the funds raised in successful campaigns. In case the total donations are higher than the goal, the extra money received is also transferred to the campaign organisers after informing donors and getting their consent where required. One of the issues in raising money for medical treatments is fake or spurious campaigns where the fundraiser participates for personal financial gain. While it is possible for any individual, even without an illness, to start a campaign in the DIY mode, the same is impossible in the supported campaign. The supported campaign involves a close connection with the patient and the hospital, such as a visit to the hospital, talking to the patients and the concerned doctors, examining and sharing clinical documents etc., which minimizes the chances of fraud. However, though theoretically possible, frauds in DIY campaigns are also rare. According to Viswanathan, "Interestingly, the crowd itself screens out fraudulent campaigns. As the fundraising process reaches near and dear ones and the broader social circle, some of them will identify that the campaign is fraud, and we come to know. I would say, the fraud campaigns would be less than 0.005 % in DIY also. And they are not possible in the supported campaigns." 7 of 8 IIMA/IS0142 Dilemma As Viswanathan entered the committee room, he realised that the company and its revenue sources had evolved organically without strategically prioritising one type of campaign over the other. That would be the major agenda for discussion today — whether to prioritise one type of campaign over another and, if yes, which one. He wondered how the discussion would progress. 8 of 8 IIMA/IS0142 Exhibit Exhibit 1 A: Number of Subscriptions Milaap's Annual Subscriptions Product 2017 2018 2019 Do it Yourself 11,404 16,308 23,320 Supported Campaigns 601 858 1,227 Total 12,005 17,166 24,547 Exhibit 1 B: Total number of successful campaigns Total number of successful campaigns Product 2017 2018 2019 Do it Yourself 1,652 2,320 3,401 Supported Campaigns 252 349 493 Total 1,904 2,669 3,894 Exhibit 1 C: Money Collected - Campaigns Avg. Money Collected by Successful Campaigns Product 2017 2018 2019 Do it Yourself ₹ 3,46,780 ₹ 5,49,776 ₹ 3,85,581 Supported Campaigns ₹ 9,26,693 ₹ 14,72,818 ₹ 18,28,438 Total ₹ 12,73,473 ₹ 20,22,593 ₹ 22,14,019 Exhibit 1 D: Money Collected – Campaigns Costs – 2019 Rs. Cost of Relationship Manager 43,00,000 5,000 (for SC) and 500 On boarding team cost per campaign (Verification and Appraisal) (For DIY) Outsourced - Fixed cost for photography and story writing 30,000 per campaign Network and Social Media Promotions 3,70,00,000 Technology cost 2,45,00,000 Field Visits and Customer Verifications 10,000 for SC only