Crowdfunding for Funerals and Memorials

Until you experience the death of someone close to you, it’s hard to understand just how expensive dying can be. According to most estimates, the average cost of a funeral today is somewhere between $7,000 and $10,000. That’s the average cost. Depending on the burial options you choose, you may end up spending less, or much more.

To make things worse, funeral expenses often come on top of medical bills and other costs relating to illness or emergency. So, it’s not hard to understand why people are turning to alternative sources for funeral funding. One such method that is increasing in popularity is funeral crowdfunding.

Funeral costs are usually due upfront, but crowdfunding takes time to gain traction—days or weeks. You might need a backup plan (like a credit card or loan) to pay initially. You can reimburse yourself as donations come in.

What is crowdfunding?

Crowdfunding (also called crowdsourcing) is a way to raise money by requesting donations from the general public. In other words, many people contribute small amounts of money toward a designated cause or business venture. You don’t have to do crowdfunding on the Internet, but using online tools makes it easier to spread the word and handle payments.

Today, people use crowdfunding to set up campaigns to generate money for all sorts of causes. Paying for funerals is just one of these.

How does funeral crowdfunding work?

Many websites enable you to set up a funeral fundraising campaign, and new sites appear every day. Your options range from specialized sites dedicated to funeral and memorial financing to broad, general sites that raise money for everything from hospital bills to home repair.

GoFundMe.com is probably the best-known general crowdfunding site, but there are others that are specifically designed for funeral fundraising. Fund the Funeral, for example, was created by funeral directors to help their customers pay for funeral expenses. Fund the Funeral is unique because the funds generated go directly to the funeral home. This feature makes it easier for families since they don’t need to handle the funds. It also minimizes the risk of fraud.

Although each crowdfunding site has unique characteristics, the steps to set up a donation page are essentially the same.

• Register with the site.
• Create a description of your campaign and upload photos.
• Set a time period and goal for your campaign.
• Provide bank information so that you can receive the payments. In the case of Fund the Funeral, funds go directly to the funeral home.

If you know what you’d like to say about your campaign, you can have it up and running in minutes, but setting up an effective fundraising page does take some effort. 

Remember that even the most altruistic sites must generate income to stay in business. In all cases, you must cover credit card fees for donations. The site may offer the person donating the chance to pay the fee, or it may deduct it from the contribution. Credit card fees can vary, but most charge around 3%. Some sites charge a per-transaction fee on credit cards, along with a processing fee. GoFundMe, for example, assesses 5% of each donation in addition to the percentage for handling payment. In general, you can expect that at least 7% of each donation will go toward fees.

Is funeral crowdfunding right for me?

Using a crowdfunding site to defray funeral expenses can be a quick and effective way to generate money. This is especially true if the death is unexpected and no money has been set aside for this purpose. It is easy to spread the word on social media and by email, and you can get a quick turnaround on the payout. One quick search on GoFundMe using the term “funeral” yields thousands of results. Many of these have met or exceeded their goals.

To ensure your campaign’s success, you’ll need to set aside some time to set it up correctly and communicate it. The best campaigns are well written and tell a personal story. Most of your contributions will come from friends, family, and others who have a personal connection with the deceased. You will need to make sure they are aware of your efforts. Let people know you need help by getting the word out on social media, email, and letters.

Contributions are not tax-deductible to the donors but are treated as gifts for tax purposes. Therefore, single large donations could have gift tax consequences for the donor if they exceed the annual exclusion amount. See the IRS website for more information on gift taxes.

Because everyone’s circumstance is unique, only you can decide if raising funeral funds through a crowdfunding campaign is right for you. With a bit of research, a well-formulated campaign, and a concerted effort to spread the word, it is likely that you will be able to raise at least some portion of the money needed to create a special funeral or memorial for someone you care about.