Covering Funeral Costs: Is Crowdfunding the Best Option?

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Burying a loved one isn’t cheap. The median cost of a funeral with a viewing and burial was $8,300 in 2023, according to the National Funeral Directors Association. Choosing cremation instead of burial reduces the cost, but the 2023 median price was still $6,280.

The price can climb much higher depending on a family’s preferences for the casket, vault, flowers, and service. When combined with other final expenses, the cost of a funeral can quickly become a financial burden for a grieving family.

In these cases, crowdfunding for a funeral can be a way to raise the necessary funds. However, be sure you understand the pros and cons and other options that may be available.

How to get funds for a funeral

Don’t expect the government to pick up the tab for a funeral. While many states and counties have indigent burial programs for those who die without assets, they typically pay very little and aren’t likely to cover the type of service preferred by many families.

Rather than going into debt, some families turn to crowdfunding, which allows people to make donations online to help cover the cost of a funeral. There are many crowdfunding platforms available, with some specializing in fundraising for funeral expenses.

“Death is a sad thing,” says Joshua D. Dorsey, assistant professor of marketing at Florida International University. “You don’t have to be related or know the family to be touched emotionally.”

That makes crowdfunding a way to raise money from people beyond immediate family members or close friends. But crowdfunding comes with caveats. The IRS cautions that money raised via crowdfunding may be taxable, and there is no guarantee that a family will raise enough money to cover expenses.

“A more reliable option is life insurance, which provides a guaranteed payout and isn’t usually taxable,” said Yehuda Tropper, CEO of Beca Life Settlements.

Still, crowdfunding remains a viable option to consider if you have few financial resources to pay for the final expenses of a loved one.

Crowdfunding platforms for funerals

If you need to raise money for a funeral, the following websites make it easy to set up fundraising campaigns.

GoFundMe: GoFundMe is the biggest name in crowdfunding and can be used to raise money for virtually any cause. Fundraising pages can be personalized, and organizers don’t have to reach their goal to receive the donated funds. It takes three to seven days to set up and verify an account for funds transfers and then two to five days to receive money once transferred. There is a 2.9% charge plus a 50-cent processing fee for all donations.
Fund the Funeral: Billing itself as “fraud free fundraising,” Fund the Funeral campaigns can be initiated by a family member, friend or funeral service provider. A 5% flat fee is assessed on each donation, and money raised by the campaign is sent directly to the funeral service provider. If donations exceed the cost of the funeral, the provider is required to send the excess money to the family.
Give a Hand: Give a Hand is similar to GoFundMe in that it can be used for a variety of fundraising needs, including funerals. Money raised on the platform must be transferred to a bank account within 100 days of the first donation. It generally takes two to three business days to complete a transfer. Give a Hand doesn’t charge a platform fee, but there is a 2.9% fee plus a 30-cent processing charge for all donations.
Funeral home website: Some funeral homes have integrated crowdfunding into their websites using platforms such as Tribute Technology. These allow families to add crowdfunding links directly to an obituary page. This option may make it easier for friends and family members to donate by eliminating the need to go through a third-party website. Fees may vary depending on the funeral home and the services they provide.

“If you want to be successful, talk about something fundamental,” Dorsey says. “Highlight the humanity of that person.” He advises discussing the impact of the person who passed away – such their volunteer activities – but also touching on the family and friends who will miss them.

Pros and cons of crowdfunding a funeral

Before crowdfunding for a funeral, understand the benefits and drawbacks of this fundraising option. Consider these pros and cons before counting on crowdfunding to pay for a loved one’s final expenses.

Pros

Easy sharing across multiple platforms: Typically, crowdfunding sites make it easy to share a memorial page across multiple platforms and in several formats. For instance, a page could be shared to social media, emailed to friends and family or linked to in an online obituary. This can make it simple to get your cause in front of many people with minimal effort.
Opportunity to fundraise beyond family and friends: The benefit of sharing on multiple platforms is reaching people who may not otherwise know about or be touched by your loved one’s death. Friends can share the crowdfunding site on their social media pages, creating a ripple effect of sharing.
Ability to accept card payments: In the past, people may have left checks at a funeral home or handed cash to family members to help cover funeral expenses. However, more people may be inclined to donate – and donate more – if they could use their debit card, credit card or other electronic form of payment. Modern crowdfunding platforms make that possible.

Cons

No guarantee of success: This is perhaps the biggest downfall of crowdfunding. “Unfortunately, many campaigns don’t reach their goals,” Tropper says. If you plan a service that costs more than the amount raised, you’ll have to pay the remainder of the bill out of pocket.
Possible delay in receiving funds: Crowdfunding websites are convenient for collecting funds for a funeral, but as middlemen, they add time to the process of receiving cash. The websites collect the money, and then it may take several days or more to have funds transferred to your site. There have also been reports of crowdfunding sites holding money for a longer period while they verify the legitimacy of the fundraiser.
Contributions could be taxable: Money given as a gift typically isn’t subject to tax, but it is possible that money from a crowdfunding campaign could be considered income. “Contributions to crowdfunding campaigns are not necessarily a result of detached and disinterested generosity, and therefore may not be gifts,” the IRS writes in a fact sheet. Contributions from employers to employees are also generally considered income. Consult with a tax professional for guidance.

There is also a caveat to crowdfunding for donors, Dorsey says. He notes that crowdfunding uses psychological methods to encourage donations, and people should pause and think before sending money to a cause they haven’t vetted. “You have to be very aware of how and why you’re donating,” he says.

Consider life insurance instead

For a more reliable way to pay for a funeral, consider purchasing life insurance. Term policies are typically the least expensive and can be purchased for a specific period – or term – such as 10, 20 or 30 years.

However, for older or ill individuals, buying a term life policy may not be possible. Traditional life insurance policies often require medical information or an exam. Depending on a person’s age or health status, companies may decline an application for a term policy, or the price may be cost-prohibitive.

In that case, burial insurance can relieve family members from paying out of pocket for a funeral. Also known as final expense insurance, these policies are for smaller amounts, such as $5,000 to $25,000, but virtually anyone can purchase them.

“Since it’s a whole life policy, it covers you for your entire life until you pass away, as long as you keep paying the premiums,” Tropper says.

Life insurance provides a guaranteed death benefit that is not subject to tax. Some funeral homes won’t require an upfront payment from families if they know a person has life insurance. In some cases, an insurer will send funds directly to a funeral home to simplify the payment process.

“That said, life insurance must be bought before the person dies,” Tropper says, “so if your loved one didn’t buy life insurance before passing away, crowdfunding may be your only option.”

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Maryalene LaPonsie

Insurance expert Maryalene LaPonsie has been writing professionally for 25 years, with the past decade focused on personal finance -- insurance, investing and retirement. She is a regular contributor to U.S. News & World Report, Forbes Advisor, USA Today Blueprint and Money Talks News.