130,500 causes · $320M raised · 4.7 since 2009
Which entity, and deductibility
Four options, four different answers, and one that is much harder to undo.
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This is the decision to make before any money is collected, and the one most families make by accident — usually by somebody opening an account or starting a page within a day of the death.
Option one: a personal account
Somebody holds the money and gives it to the family or spends it on the agreed purpose.
- Simple and immediate, which is why it happens
- Not deductible. Contributions are personal gifts, and the page must not say otherwise
- Carries personal exposure for whoever holds it — tax questions, and responsibility for money that is not theirs
- Fine for a small, short, one-off fund and poor for anything ongoing
Option two: a fund at a community foundation
The option most families have never heard of and the one that most often fits.
- Deductible, because the foundation is a qualifying charity
- They do the administration — receipts, records, compliance, grantmaking
- It can be permanent, and can outlive the family
- They have done this before, which matters enormously when the people setting it up have not
- The trade: the foundation retains control, there is usually a minimum, and there are fees
If the fund is intended to last, this is usually the conversation to have first. Community foundations set up memorial funds constantly and will walk a family through it kindly.
Option three: a fund at an existing charity
A named fund at the hospice, the hospital, the school, the club or the charity the person cared about.
- Deductible, and administered by people who already do this
- Meaningful, because it goes to something connected to them
- Almost no work for the family
- The trade: the charity controls the money and its use, within whatever was agreed
For most memorial funds this is the best answer and the least considered.
Option four: a new charitable organization
Forming a nonprofit in the person's name.
- Full control over purpose, name and direction
- Significant work, ongoing and permanent — filings, governance, compliance, a board
- Rarely the right answer in year one, and frequently chosen then
- The families who regret it are the ones who set it up while grieving and inherited an obligation they now cannot put down
If the ambition is genuinely large and durable, it can be right — but start with a fund at a foundation and convert later if it grows. Almost nothing is lost by waiting a year and a great deal can be lost by not.
Say which it is, plainly
Whatever the choice, one sentence on the page naming the receiving entity and stating whether contributions are deductible.
The specific error to avoid: describing a personal fund as tax deductible because it feels charitable. It is inaccurate, and at scale it becomes a problem for the person holding the account rather than for the donors.
The questions that follow the entity choice
- Who decides how the money is used, and how are those decisions recorded
- What happens if the fund raises far more than the purpose needs
- What happens when the family no longer wants to run it
- Whether the person's name may be used, and by whom, and for how long
- Whether the family can stop it, and how
The last two are worth settling early. A person's name is a thing the family should retain control of, and a fund that continues after they have withdrawn from it is a situation nobody planned and everybody regrets.
The surplus question
It arrives more often than families expect, because memorial fundraising frequently over-performs. Agree in advance: does a surplus stay for future years, transfer to a related cause, or go to a charity the person cared about?
Deciding it while grateful is much easier than deciding it while tired.
Get one conversation
A community foundation will explain all four options at no cost, and an accountant or attorney will settle the rest in an hour. In most communities somebody in the person's own network will do it as a kindness if asked.
General information, not legal or tax advice. Whether contributions are deductible depends entirely on which entity receives them, and setting a memorial fund up correctly at the start is much easier than fixing it later — this is worth one conversation with an adviser or a community foundation.
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Written by the bereaved, for the bereaved
Frequently asked questions
What are the options?
A personal account, a fund at a community foundation, a named fund at an existing charity the person cared about, or a new nonprofit. They differ on deductibility, control, administration and permanence.
Which is usually best?
A named fund at an existing charity connected to the person — deductible, administered by people who already do this, meaningful, and almost no work for the family. It is the least considered option.
Should we form our own nonprofit?
Rarely in year one, and it is frequently chosen then. The families who regret it set it up while grieving and inherited a permanent obligation. Start with a fund at a foundation and convert later if it grows.
What happens to a surplus?
Agree it in advance — stays for future years, transfers to a related cause, or goes to a charity the person cared about. Memorial fundraising frequently over-performs, and deciding while grateful is easier than deciding while tired.
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