Crowdfunding funerals: Taking a chance on financial security

In early September, a 56-year-old Texas man dove into Galveston Bay to help kayakers struggling against the current. He swam about 100 yards out, disappeared and never resurfaced.

Though the kayakers made it out safely, authorities pulled the man’s body out of the bay a few days later. Soon after, his children set up an online fundraiser, asking others to “help the family relieve some of the financial stress related to funeral costs, as well as aid for his disabled wife, as he was her sole caretaker and provider for their entire marriage of over three decades.” 

Within a week, the family was well on its way to raising enough money to pay for a funeral, but had asked for just $10,000, not nearly enough to cover the wife’s ongoing care.

Conversely, the family of a 17-year-old who died suddenly in August started a campaign as they couldn’t afford his funeral after having to pay for his great-grandmother’s funeral just a week before. They haven’t come close to their goal, raising only $1,300 of $8,000 through Sept. 9. That’s when his family shared this update: “I’m asking PLEASE donate and share. Imagine if this were your child and you were unable to pay your respects to your baby due to not being able to afford it.”

“It’s heartbreaking to see so many families left to rely on the generosity of others to cover ever-increasing end-of-life expenses,” says Salene Hitchcock-Gear, president of Individual Life Insurance and Prudential Advisors, who launched a Twitter poll this month to find out whether people are contributing to a growing number of crowdfunded funerals.

It’s heartbreaking to see so many families left to rely on the generosity of the crowd to help cover ever-increasing end-of life expenses when a loved one passes away. Have you contributed to a memorial or funeral expense crowdfunding campaign in the past year?

— Salene Hitchcock-Gear (@Salene) September 9, 2019

More than 50% of about 18,600 respondents said they have never contributed to a funeral campaign, while 22% said they’ve donated for a friend or family member and just 13% for a stranger in the last year. The rest have contributed to campaigns in the past.

GoFundMe.com, which was founded in 2010 and leads among companies offering memorial fundraising, says while fundraisers for events, animals and family causes are among its fastest growing categories, more than 125,000 memorial campaigns raise $330 million each year. On its memorial homepage, visitors find largely successful campaigns that can top several hundred thousand dollars and often exceed fundraising goals. But many campaigns fall short.

Those families asking for help in lieu of life insurance or any other financial planning solution aren’t alone. According to LIMRA, a financial services research and consulting organization, only 59% of Americans have life insurance, and half of those are underinsured.

“It’s no surprise that I’d suggest people consider life insurance rather than leaving funeral expenses to chance, particularly if someone depends on your income for any number of reasons,” Hitchcock-Gear says. “Importantly, it can deliver benefits well beyond paying for funeral expenses, such as providing for children and their education, ensuring your debts are paid or that loved ones receive the care they need.”

Counting on friends, family and strangers can be a big ask: The average funeral costs between $7,000 and $10,000, according to Parting.com, which helps consumers compare funeral home pricing.

Crowdfunding certainly isn’t new, but donating to a cause online is still a novel approach for most. According to NonprofitsSource.com, 62% of donors to any campaign are new to crowdfunding. More specifically, individual campaigns raise an average of just $568, with donors giving an average of $66 each.

When they first began, personal appeals through crowdfunding often found success, but they were also less frequent. There are daily pleas, and many have become skeptical following some high-profile fundraising scams. Now, people can get several requests in a month and are more likely to pay medical bills than funeral costs, says Rose Spinelli, a crowdfunding consultant. When it comes to funerals, benefactors favor supporting families facing sudden, accidental deaths, especially when it comes to young people, while expecting older adults to plan ahead.

“There’s a new calculus that didn’t happen at first,” Spinelli says. “Now people are asking, ‘Why are people coming to me? Why didn’t they think of this on their own?’”

A majority of Americans do want to plan for an uncertain future. Fully 59% say one of their top financial priorities is ensuring they can maintain a standard of living for their family and loved ones, yet only 57% are confident they can reach that goal, according to Prudential’s 2018 Financial Wellness Census. Worse, 60% of Americans don’t have enough savings to cover a $500 emergency, much less a funeral.

“When it comes to planning for life’s worst moments, too many people think they don’t need to worry about it—until they do,” says Hitchcock-Gear. “It’s certainly not the only way to plan for funeral expenses but life insurance can be one way to build financial wellness and ensure financial protection for the people you care about the most.”