A memorial fund is a way to turn your pain into something positive and at the same time, keep your loved one’s memory alive. Unlike with starting a foundation, a limited term memorial fund doesn’t require that you incorporate as a tax-exempt nonprofit organization. Although this means that donations are not tax deductible, it does make a memorial fund easier to set up and manage than through a foundation.
Consider Your Options
A simple memorial fund remains open for a limited time -- most often no more than about six months -- for the purpose of making a one-time donation. Many families focus on something their loved one was passionate about, such as education, the environment, animal rescue, or a specific medical condition or disease via a “field of interest” fund. Another option is to donate funds to a specific organization or charity, such as The American Red Cross or Habitat for Humanity. You also can pass donated funds to the spouse or children of the deceased person.
DIY versus Working through a Community Foundation
Work with a personal financial adviser to set up the fund yourself or work with a community foundation. Although the best choice is a personal decision, there are advantages to setting up the fund yourself. For example, many community foundations require a minimum initial donation to set up the fund and most charge a percentage of the fund's balance as a handling fee. In addition, your personal involvement is minimal as the community foundation will handle the administrative tasks and simply send you reports.
Decide How to Accept Donations
Provide options for accepting donations directly and via the Internet. Print information about the memorial fund in your loved one’s obituary and on funeral cards. Ask family members and friends to contribute to the fund instead of sending flowers. Set up a memorial website, or for a less expensive alternative, start a Facebook Group Page to accept online donations.
Create Donation Options
You’ll need holding accounts to keep memorial fund donations separate from your personal funds. Set up a holding account at a local bank to accept and direct donations and transfer funds donated online. The Massachusetts Attorney General’s Office recommends that you indicate who the beneficiary is whenever possible. For example, use a title such as "Friends of John Smith" or "The Mary Jones Fund." If the memorial fund is for the children of the deceased, the attorney general suggests that a surviving parent or permanent guardian open the account. Next, set up an account with an online payment service such as PayPal or Google Wallet. Link the payment service account to the memorial fund bank account so you can transfer funds as they accumulate.