The short answer
Memorial funds are usually set up in days and hard to unwind. Structure determines tax treatment: gifts to individuals are never deductible. A narrow purpose outlasts a vague one.
IRS Publication 526 is explicit that contributions to specific individuals are not deductible, even when routed through a qualified organisation.
Crowdfunding proceeds may be taxable income to the recipient, and platforms may issue Form 1099-K; keep records of the fundraising and spending for at least three years.
A named fund at a hospital foundation or existing charity gives donors a deduction without creating a new legal entity.
In a donor-advised fund the sponsoring 501(c)(3) has legal control of the money; the family's role is advisory.
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The full explanation.
Decide What the Money Is For Before You Decide Where It Lives
Memorial funds are usually set up within days of a death, by people with no time to compare structures, and the choices are hard to unwind later. The most consequential decision is not legal. It is whether the fund has a narrow purpose or a vague one.
Vague funds ("in support of cancer research") tend to stall. Nobody knows when the fund has succeeded, the family cannot picture the result, and donors have no reason to give again. Narrow funds work better in practice: parking and petrol costs for patients travelling to one specific clinic; wigs and head coverings at one hospital; a named annual bursary in one department; equipment for one ward. A narrow purpose is easier to describe in a sentence, easier for a charity to accept and report on, and easier for a family to see finished.
Four Structures, With Different Tax Consequences
Crowdfunding for the family. Fast, and appropriate when the need is funeral costs or household bills. Understand what it is: donations to a named individual or family are gifts, not charitable contributions. IRS Publication 526 is explicit that "you can't deduct contributions to specific individuals," even when routed through a qualified organisation. Donors get no deduction. The IRS also warns that crowdfunding proceeds may be taxable income to the recipient, since contributions are "not necessarily a result of detached and disinterested generosity," and platforms may issue Form 1099-K. Keep complete records of the fundraising and how the money was spent for at least three years.
A named fund at an existing charity or hospital foundation. The most common route for a lasting memorial. The charity holds and administers the money, donations are tax-deductible because they go to a qualified organisation, and no new entity is created. Minimums vary widely, from a few hundred dollars for a simple tribute fund to five or six figures for a named endowment.
A donor-advised fund. A separately identified account at a 501(c)(3) sponsoring organisation. Contributions are deductible when made, and the family recommends grants over time. The trade-off is control: once contributed, the IRS notes, "the organisation has legal control over it," and the family's role is advisory.
A private foundation. Rarely warranted. It means annual filings, distribution requirements, and ongoing administration, usually for sums that a named fund would handle without any of it.
Questions to Settle Before You Announce Anything
Who receives and banks the money, and in whose name. Whether donors were told the gift was tax-deductible, because that claim has to be true when you make it. Whether any donations of $250 or more need a contemporaneous written acknowledgment, which only a qualified organisation can issue. Who decides how funds are spent when the family disagrees. And whether this is a one-off collection or something that will still need attention in five years, when the people running it have changed.
Who Actually Does This
Hospital foundations and charity development offices set up named funds routinely and will walk a family through minimums, naming, and reporting in one phone call. Funeral directors know local practice for memorial donations in lieu of flowers. Community foundations administer donor-advised funds and often accept smaller amounts than national sponsors. For anything involving an estate, taxable proceeds, or a sum large enough to matter, an accountant or estate attorney is worth an hour of fees.
A Note on Timing
There is no deadline. Funds started in the first week are often built around the obituary, which is a document written under pressure. Some families run a simple crowdfunding effort for immediate costs and defer the lasting memorial for a year, by which point the purpose is usually clearer and the family has the capacity to define it.
Sources
Words to know
Tap any term to see what it means.
Common questions
Can donors deduct what they give to our GoFundMe?
No, if the money goes to a named individual or family. IRS Publication 526 states that 'you can't deduct contributions to specific individuals,' and that this holds even when funds pass through a qualified organisation but are earmarked for a particular person. Say so on the page. Telling donors a gift is deductible when it is not creates problems for them at filing time.
Will we owe tax on money raised through crowdfunding?
Possibly. The IRS position is that gross income includes income from any source unless specifically excluded, and it warns that crowdfunding contributions are 'not necessarily a result of detached and disinterested generosity,' so they do not automatically qualify as gifts. Money raised by an organiser purely to pass on to someone else may not be their income. Employer contributions to an employee's campaign are generally taxable. Keep complete records for at least three years and take advice if the sums are significant.
What is the difference between a named fund and a donor-advised fund?
A named fund sits inside an existing charity or hospital foundation, which administers it and applies the money to the agreed purpose. A donor-advised fund is a separate account at a sponsoring 501(c)(3) from which the family recommends grants to charities over time. Both give donors a deduction. The named fund is simpler and tied to one cause; the DAF gives flexibility about where money goes later, at the cost of legal control.
Why does a narrow purpose matter so much?
Because it can be described in one sentence, accepted and reported on by a charity, and recognised as complete. 'Petrol and parking for patients travelling to this clinic' or 'head coverings on this ward' behaves differently from 'cancer research'. Narrow purposes also survive the family's attention fading, which it will.
How soon do we need to decide?
There is no deadline, and funds set up in the first week are often shaped by whatever the obituary said. Some families run a simple crowdfunding effort for immediate funeral and household costs and leave the lasting memorial until the following year, when the purpose is clearer and there is capacity to define it.
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- Patient Advocate Foundation — (800) 532-5274. Case managers take on insurance appeals, denials and medical debt with you. Free.
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- HealthCare.gov — 1-800-318-2596. For questions about the external review process — the independent review your insurer is required by law to accept.
Your state Department of Insurance regulates insurers and takes consumer complaints. On Medicare, your State Health Insurance Assistance Program (SHIP) gives free one-to-one counselling. If a specific drug is the problem, ask the manufacturer about its patient assistance programme.
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Written by: Cancer Explained Editorial TeamSources last checked: 2026-07-30Last updated: 2026-07-30Next planned review: 2028-07-29
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How this page was created
Cancer Explained does not originate medical claims. Every page restates guidance already published by the National Cancer Institute, the CDC, the USPSTF and the FDA, in plain language, with the source cited so you can check the original yourself. AI does the translating and organizing; automated checks test claims, citations, clarity and safety before anything publishes. We do not employ clinicians and do not intend to — our work is translation and navigation, not clinical judgment. Nothing here is personal medical advice, and no page can account for your particular situation.
Editorial status: Source verified — This page was created with AI assistance and checked against the sources listed on it. Source checking is not a medical review.
Human medical review: not completed. Cancer Explained is not clinician-reviewed, and that is a deliberate design choice rather than a gap we are waiting to close. We restate published federal guidance and cite it; the authority belongs to the source, not to us. That is why every page names where its claims come from — so you can verify us instead of trusting us. Use it to understand your situation and to ask better questions of the people treating you.
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