Crowdfunding a funeral
Turning to the public for financial support is not a new idea.
People have been doing it for years.
In fact, some have started businesses, launched artistic careers, and funded medical procedures on the dime of public supporters.
Often times it’s a win/win situation—givers relish in the goodness of their contribution and receivers experience a financial reprieve.
In recent years, however, the new trend of crowdfunding a funeral has taken wing.
And many people have started to crowdfund rather than employ traditional means of paying for funerals.
As a life insurance broker serving the San Francisco Bay area, I’m often involved in end-of-life planning discussions.
I’ve also attended numerous professional continuing education meetings on the subject.
When the concept of crowdfunding a funeral comes up, it’s universally dismissed as “bad planning”, or most often as the result of no planning.
Yet, it’s so important to safeguard your family’s financial security should they lose you.
So let’s take a look at why crowdfunding a funeral isn’t a good idea and what to do instead.
Crowdfunding a Funeral: What Is It?
First, let’s talk about the actual business of crowdfunding.
Crowdfunding is soliciting the public to make financial contributions toward a cause.
It’s simply an online fundraiser.
Crowdfunding a funeral is nothing more than raising money to pay for a loved one’s final expenses after they’ve died.
Entrepreneurs have launched crowdfunding campaigns for their startup companies.
Musical artists are well-known for using crowdfunded proceeds to record and produce their newest album or even fund a tour.
Crowdfunding is popular because it promotes a sense of community.
Furthermore, giving to a campaign invites feelings of belonging to something bigger than you.
Plus, people love “free stuff”.
Of course, crowdfunding a funeral is slightly different in that they are fewer incentives.
But, supporters still revel in the “warm fuzzies” when they click the donate button.
It’s just a good feeling to help other people.
Some of the more popular crowdfunding sites include:
Not surprising, crowdfunding campaigns rely heavily on social media to spread the word.
But, email is another medium for recruiting financial supporters as well and is often a component of a crowdfunding “campaign”.
3 Reasons Why NOT to Crowdfund Funeral Expenses
In times of tragedy, untimely deaths-car accidents, sudden diseases, homicides, etc.—people have turned to crowdfunding for help covering funeral expenses.
We see this often with young people who have not had the chance to accumulate enough resources to provide for a young family, for example.
Yet, even in these traumatic cases, crowdfunding a funeral is often a huge gamble.
1. Crowdfunding Is Financially Risky
Each crowdfunding platform functions a bit differently.
Most of them charge a fee (or multiple fees) to campaign using their services but these fees vary from platform to platform.
Though the total fee amount typically falls within the 4-8% range.
Although crowdfunding harness the power of social sharing and personal networks, many of them still fail to reach the monetary goal.
In many cases, when you don’t raise the amount you originally set for the campaign, you lose your funding altogether.
It’s often an all or nothing risk.
Plus, all transactions occur online, opening up a vulnerable pathway for fraudulent activity.
It’s also not uncommon to have a minimum goal of $500, which would only tickle the overall cost of a funeral anyway.
Nevertheless, unlike traditional methods to cover funeral expenses, crowdfunding involves no payout guarantee.
In fact, Crowdfunding can be so risky to both the donor and the recipient(donee), that the California Office of the Attorney General has included the following warning in their publication, GUIDE FOR CROWDFUNDING SITES, CHARITIES, AND DONORS:
DONORS • Do your research. Do not assume that the crowdfunding site vetted the organization. You should research the charity independently of the site. You can always contact the charity outside of the site. If there is anything odd about the page (misspellings, bad grammar, broken links) this may be evidence that this could be a scam. If the page is for an individual claiming to be raising money for a charity, ensure that they have received permission to do so from the charity. If privacy is important to you, ask if the site will sell your contact information. Consider using a dedicated email address so that you can easily screen solicitations.
2. Crowdfunding Encourages Higher Funeral Expenses
When faced with the death of a loved one, crowdfunding a funeral is often a family’s last hope of providing proper arrangements.
However, the rapid rise of funeral costs has made services incredibly expensive.
Funeral expenses across the United States have increased rapidly.
Although crowdfunding isn’t to blame entirely for this, the spike will likely continue.
Especially when crowdfunding platforms cater to the bereaved.
Anytime funds are possibly available to cover a certain cost, the price naturally increases.
Although it seems wrong, it’s no different for funeral funding.
3. Crowdfunding Can Add Pressure to Remaining Family
After the death of a loved one, life for the remaining family can get harried and stressful.
From making final arrangements to comforting others to sorting through the deceased’s belongings, there’s a lot to do.
Granted, traditional methods of covering final expenses also require action—accessing account or policy numbers, speaking with representatives, and verifying information.
Yet, there is no rallying of the troops, per se.
To raise money through a crowdfunding campaign, however, can be a very meticulous process.
It’s more than simply posting a picture of your loved one and expecting dollar bills to fall into your bank account.
A successful campaign requires a great deal of attention and strategic effort.
Which, are two things most bereaving families fall short of.
And, rightly so.
The grieving process takes a huge physical and emotional toll on families.
Add the burden of a DIY fundraising campaign, and that could spell a roller-coaster recovery for the remaining family.
What to Do Instead of Crowdfunding a Funeral
To secure your family’s financial future, it’s important to opt for funeral funding with a guarantee.
Keep in mind, there are numerous ways to cover final expenses including annuities, savings, and life insurance.
Yet, one way is more affordable and secure than most of the others—term life insurance.
Also known as “pure life insurance,” the main function of term life insurance is the death benefit.
Term life insurance contains no bells and whistles.
Term life insurance policies have no investment components.
It is simply “pure insurance.”
Rather than gambling on a crowdfunding campaign, you purchase a 10-, 20-, or 30-year life insurance policy that covers you for the elected term.
Hence the name “term insurance.”
And term insurance policies are dirt cheap.
A healthy 35 year-old man who doesn’t use tobacco or vape can get a $250,000 policy for less than $20 per month.
Why would you force your family into a DIY crowd-sourced funeral if you could give up Starbucks or Blue Bottle Coffee a couple of times a month?
Plus, the life insurance payout can be used for more than paying for funerals.
With that in mind, term insurance is the optimal coverage for parents.
Primarily, because it’s the most effective way to secure financial support for your child if you’re suddenly removed from their future.
Because term insurance is so affordable, you can still enjoy financial freedom while giving your loved ones a sense of security.
According to financial expert Suze Orman, this is the ultimate way to show your family that you love them.
Take the Next Step
Crowdfunding a funeral might seem like the way to go…until it isn’t.
But, there’s a better way and we can help!
To support you safeguarding your family’s financial security, I’ve created an up-to-date guide for parents who need life insurance here.
My guide can help you with your long term life insurance goals, especially with little kids at home!
At CB Acker Associates, we want to help you take care of your family.
If you’re ready to find a policy that fits your needs and your budget, we can help!
With access to all the top rated life insurance companies, we work extra hard to get you the best life insurance rates possible.
You can even compare rates and benefits from over 40 providers with no obligation to buy here.
Plus, it’s fast—under 60 seconds kind of fast.
Please, give us a call today at 650-969-5844 or email [email protected].