|When I first
heard about the notion of crowdfunding it seemed quite a fantastical idea.
The original premise of crowdfunding was hatched within the incubator of
entrepreneurship and raising capital for small business ventures.
Its extension into the fund-raising arena for other causes was, I guess,
a natural evolution. We are all familiar with the notion of
charity and it is inherent in most of us to feel empathy for a worthy cause
and step up to the plate to help those in need.
Historically if a family
could not pay for a funeral they would have reached out to their local
community and sought some charitable help to meet the costs of the funeral
home. With a breakdown in communities, and 76% of Americans existing
paycheck to paycheck, the level of charitable community support just isn’t
what it used to be.
So it seems that people have
turned to the great platform of the Internet and utilized our transferred
online community culture AKA social media and aside from crowdfunding platforms
that cover a range of campaigns to raise funds, there are also dedicated
funeral crowdfunding websites.
available, or institutions are
just very reticent about extending credit to pay for a funeral.
Why crowdfund a funeral?
If you have no funds to cover
the cost of a funeral it can be extremely distressing! There is very
limited financial aid to assist low income families pay for funeral expenses,
and an unexpected death can catapult a family into a situation of suddenly
needing to access several thousand dollars. Not many of us just have
a few thousand dollars sitting around in a bank account these days, or
even hidden under the mattress. A good percentage of us are juggling
credit cards and bill payments and extending a level of credit is either
Setting up a crowdfund campaign
for a funeral can assist in raising all, or at least some, of the costs
required. A full funeral service can amount to $10,000 but a simple
cremation funeral can be completed for between $600 and $2,000. Raising
a few hundred, or a couple of thousand, dollars using a crowdfunding platform
can enable a family to meet the cost of a simple and dignified send off.
How do you crowdfund a funeral?
There are several crowdfunding
websites. Some are for a variety of fund-raising purposes such as
GoFundMe, GiveForward and Donationto, but there are also dedicated funeral
fund-raising websites such as FuneralFund and GracefulGoodbye. To
set up a funeral fund-raising campaign you need to register with a crowdfunding
site and complete the fund request information to begin a campaign.
You set a length of time for your campaign to run and a campaign $ target.
You can share your fund-raising campaign via your social media networks
and hope to see some funds get donated.
The issue with crowdfunding
a funeral is most likely to be the time-scale. Donation campaigns
often run for 30 days but funds to pay for a funeral can be required within
What is the cost to crowdfund
The commissions that a crowdfunding
platform takes vary depending upon the site you use. There is no
upfront fee to set up a campaign but instead a fee is taken from each donation
received. For example GoFundMe take 5% from every donation
you receive and levy a 3% processing fee for each donation. GracefulGoodbye
claim to take 4% on every $1 donated
What are the legal and tax implications
of using a crowdfunding site to make, or receive, donations?
In the main donations made to
a crowdfunded funeral are considered a ‘personal gift’ and therefore not
taxed as income. Only donations made to a legally registered charity
or non-profit organization may be considered tax exempt and therefore eligible
to claim as a tax deduction. If a funeral fund campaign raises more
than $20,000 or more than 200 donations are made, the payment processor
is required to send the campaign host a 1099-K to ensure the money is reported
to the IRS. However, tax experts say that this can get complicated
as funeral and related expenses are exempt from taxation anyway.
How long does it take to receive
the funds for a crowdfund funeral campaign?
Donations that are made into
your campaign can be withdrawn instantly as funds come in. The length
a campaign should run largely depends upon your situation. A funeral
home will not proceed with a funeral if you have not provided evidence
that you can pay, and a crowdfunded funeral campaign would not instill
much faith in a funeral director that payment is guaranteed. Crowdfunding
a funeral is most likely an ideal way to recoup some (or all) of the costs
paid for a funeral from friends, family and extended networks.
Does crowdfunding a funeral
According to a recent article
by Fox News crowdfunding platform GoFundMe, recently had more than 22,000
open funeral, tribute and memorial campaigns, which have collectively raised
$40 million to date. The average funeral campaign raises about $2,200 with
an average individual donation amount of $65. YouCaring has more
than 30,000 open funeral-related campaigns at the moment, which have doubled
in the past year, with the average campaign raising around $2,000.
This clearly demonstrates
that crowdfunding a funeral campaign can work. The message seems
to be about being open and honest about your campaign, why the funds are
needed and what you intend to do with the funds (especially should there
be an excess). Making a funeral fund campaign personal and an active
tribute is most likely to elicit support. For example a recent campaign
on YouCaring named the “Rick and Kelly Schwab Memorial Fund” recently raised
more than $23,000 to pay for the funerals of a couple killed on their motorcycle
by an alleged drunk driver on July 4, leaving their 14 year-old son behind.
Rose Spinelli of CrowdFundamentals
claims that the most effective campaigns are those where a sudden or unexpected
death has occurred, however, the death of an elderly person does not prompt
such an outpouring of empathy and financial support. Most support
comes from family, friends and acquaintances and not complete strangers.
Another mechanism employed to encourage and honor donors by some campaign
hosts is to offer rewards or gifts for those who donate. These may
be just small tokens of appreciation based upon a level of contribution,
and range from such things as a remembrance card to a hug!
Whilst crowdfunding may not
be a solution to immediately deal with funeral costs if you do not have
the money for a funeral, an effective crowdfunding campaign (especially
if you can quickly share this amongst your networks of contacts) can certainly
help to raise funds in many cases.
||Expert Author: Sara
Sara is the Editor in Chief
for US Funerals Online and has been researching and writing about the death
care industry in the US for the last 5 years.
Published: August 31st 2014
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