I am compelled to take up the topic of crowdfunding funerals after a phone call I received yesterday. A family was dealt a tragic blow when their adult daughter was killed in a car accident. The family was not prepared to pay for a funeral and has pressing medical expenses that make it impossible to give their daughter the kind of funeral their beliefs compel them to plan for her.
A friend of the family was calling me to ask for ways to help, for referrals to organizations that can help cover the cost of the funeral, or other ideas to meet the family in their time of need and grief.
I believe strongly in the power of ceremony and ritual to appropriately answer grief, and given this family’s desire to provide their daughter with a traditional funeral, it seemed like the best advice I could give the friend that wanted to help was to set up a crowdfunding campaign to help the family create the kind of ceremony they were seeking.
But then it occured to me, I don’t know anything about crowdfunding funerals. So I did my research, and I want to share with you what I learned. As you likely know, crowdfunding is a process by which you collect donations from the general public via the internet. Here, the old adage proves true: many hands make light work. In other words, many small donations add up quickly and can provide you the financial resources to pay for the funeral of a loved one. But while this practice has become increasingly popular lately, it is not without risk.
You will want to proceed with caution and understand the landscape. So let’s take a look.
Crowdfunding giant, GoFundMe, sites memorials as one of their fastest growing categories of campaigns, generating more than $330M annually to cover funeral expenses. While that’s a lot of money raised, it’s also worth noting that an estimated ⅓ of all campaigns do not reach their fundraising goal.
The most successful funeral campaigns are usually funded by family and friends, and people familiar with the deceased. Sudden or “premature” deaths of younger people generally reach their fundraising goals more frequently than do those campaigns seeking donations for the funeral of an elderly person, whose death can be considered more expected.
If you read about crowdfunding funerals online, you will find many articles about the multitude of risks in the process. Be sure to read with a discerning eye, though, because the vast majority of those articles are written by insurance companies who are trying to sell you something. News sources like Forbes and the New York Times, or disinterested groups like the Funeral Consumers Alliance, on the other hand, offer the following unbiased cautions if you are considering crowdfunding a funeral:
MISTAKE #1: WE ASSUME THAT WE CAN RAISE MORE $ THAN WE ACTUALLY RAISE.
We are generally averse to thinking about our own mortality or planning for premature death that we have not budgeted for the kind of funeral we may want to provide our loved one. When we embark on a crowdfunding venture we may hold the funeral first, planning to pay later with the money we think we can scrape up. But BEWARE! The majority of crowdfunded goals are not reached.
MISTAKE #2: WE DON’T CHOOSE OUR FUNERAL HOME FIRST.
When crowdfunding or paying out of your own pocket, you always want to choose your trusted funeral home first. When you choose a funeral home and make a plan first, you will have a better idea of the estimated cost of what you want, and that is how you should set your fundraising dollar goal. The Funeral Consumers Alliance warns that if you don’t have a clear budget and plan in place ahead of time, you may bring your crowdfund to a funeral home and end up with a more elaborate service than you wanted, one that matches your crowdfunded kitty instead of your family’s wishes.
MISTAKE #3: WE FORGOT TO CONSIDER WHETHER THERE ARE TAXES AND FEES
If you are lucky enough to reach a lofty crowdfunding goal, you may end up getting slapped with taxes and fees that you had not anticipated. The IRS has a threshold of $20K or 200 donations and once you cross that, you are obligated to report your campaign and may owe taxes on the money raised. You should also beware that donations to crowdfund campaigns are not tax-deductible, but rather count as gifts for tax purposes. You should also check whether the crowdfunding site you are using charges a processing fee and/or collects a percentage of donations.
MISTAKE #4: THE MONEY ISN’T GOING WHERE IT SHOULD
Whether you are raising money or donating money, you should be aware that crowdfunding sites do not police or provide oversight on the way the money is spent once it’s donated. Many funeral directors lament that they can still get stiffed on a bill (pun intended) after a successful crowdfunding campaign, because the recipient of the funds decides to spend the money on something other than the funeral. There have also been unfortunate cases of individuals collecting funds for funerals never held, or for funerals provided at no cost (for an infant, for example). This mistake has prompted some to create crowdfunding platforms exclusively for funerals (such as FundtheFuneral), which pays funds collected directly to the funeral home, saving the family from taxes and fees and ensuring the money is spent as promised in the campaign.
So now that you understand the risks, if you still want to participate in crowdfunding a funeral, go for it!
In summary, you’ll want to:
Good luck and Godspeed!
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