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 organization.
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
Most memorial funds get set up within days of a death. The people setting them up have no time to compare structures. And the choices are hard to undo later.
The biggest decision is not a legal one. It is whether the fund has a narrow purpose or a vague one.
Vague funds stall. Think of "in support of cancer research". Nobody knows when the fund has succeeded. The family cannot picture the result. Donors have no reason to give again.
Narrow funds work better. Some examples:
- Parking and petrol costs for patients traveling 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. A charity finds it easier to accept and report on. And a family can see it finished.
Four Structures, With Different Tax Consequences
Crowdfunding for the family. This is fast. It suits funeral costs or household bills. But 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 organization. Donors get no deduction.
The IRS also warns that crowdfunding proceeds may be taxable income to the recipient. Contributions are "not necessarily a result of detached and disinterested generosity," it says. 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. This is the most common route for a lasting memorial. The charity holds and runs the money. Donations are tax-deductible, because they go to a qualified organization. No new legal entity is created. Minimums vary widely. A simple tribute fund may take a few hundred dollars. A named endowment may need five or six figures.
A donor-advised fund. This is a separately identified account at a 501(c)(3) sponsoring organization. Contributions are deductible when made. The family then recommends grants over time. The trade-off is control. Once you give the money, the IRS notes, "the organization has legal control over it." The family's role is advisory.
A private foundation. Rarely worth it. It means annual filings, distribution requirements, and ongoing admin. That is usually for sums 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?
- Were donors told the gift was tax-deductible? That claim has to be true when you make it.
- Do any donations of $250 or more need a contemporaneous written acknowledgment? Only a qualified organization can issue one.
- Who decides how funds are spent when the family disagrees?
- Is this 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 all the time. They 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 run donor-advised funds. They often accept smaller amounts than national sponsors.
An accountant or estate attorney is worth an hour of fees. That is true for anything involving an estate, taxable proceeds, or a sum large enough to matter.
A Note on Timing
There is no deadline. Funds started in the first week are often built around the obituary. That document gets written under pressure.
Some families run a simple crowdfunding effort for immediate costs. They leave the lasting memorial until the following year. By then the purpose is usually clearer, and the family has the capacity to define it.
Sources
- IRS - money received through crowdfunding may be taxable
- IRS - donor-advised funds
- IRS - tax exempt organization search, to confirm a charity qualifies
- American Cancer Society — Memorial and Honor Giving
- National Cancer Institute — Grief, Bereavement, and Loss (PDQ), Patient Version
- National Cancer Institute — Managing Cancer Costs and Medical Information
- CancerCare - free financial assistance and resource navigation
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 organization 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 recognized as complete. 'Petrol and parking for patients traveling 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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A hospital social worker or financial navigator is the best first call if you have one. If you do not, these organisations help at no cost to you.
- Patient Advocate Foundation — (800) 532-5274. Case managers take on insurance appeals, denials and medical debt with you. Free.
- TotalAssist (Patient Advocate Foundation's copay programme, merged with the PAN Foundation in 2026) — 866-512-3861. Help with medication copays, coinsurance and deductibles, insurance premiums, and office-visit and administration charges on the day of treatment, across nearly 150 conditions.
- CancerCare — 800-813-HOPE (4673). Oncology social workers, free counselling and support groups. Limited financial help with transport, home care, child care and lodging for people in active treatment who meet their income guidelines — funding is first-come, first-served, so call to ask what is open.
- Triage Cancer — 424-258-4628. Free legal and financial navigation: insurance, employment rights, disability.
- Blood Cancer United (formerly the Leukemia & Lymphoma Society) — (800) 955-4572. Information Specialists answer questions on treatment, insurance and financial problems.
- 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 ExplainedSources last checked: 2026-07-30 what this meansLast updated: 2026-08-11Next planned review: 2027-07-30
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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 checked — This page was written with AI assistance and checked line by line against the sources listed on it. That confirms the sources support what the page says. It is not a medical review, and it does not confirm the page is complete or right for your situation.
Human medical review: not completed. Pages here are not signed off by a clinician before they publish. That is not an oversight we are quietly working around: we restate published guidance and cite it, so the authority belongs to the source rather than to us, and every page names where its claims come from — you can verify us instead of trusting us. Where a volunteer clinician has reviewed a page, their name and credentials appear on it; where no name appears, no clinician has checked it. We are glad to have reviewers and are recruiting them, and we do not hold pages back waiting for one. Use this site to understand your situation and to ask better questions of the people treating you.
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