How to crowdfund your life (and death)

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How to crowdfund your life (and death)

You know what’s expensive? College! And healthcare. And...actually, most things nowadays. Rising costs and stagnant wages mean that more and more people are struggling to pay for more and more things in their lives.

Maybe it’s no coincidence that there’s been a huge surge in crowdfunding: a large number of people contributing money toward a common goal. It’s usually associated with creative projects, but charitable crowdfunding, used to pay for bills and other non-tangible needs, are becoming more popular.

On GoFundMe, one of the more popular crowdfunding site, 17% of campaigns are for medical goals and 11% are for education. There are general sites that allow for a lot of different types of campaigns, and some that are for specific needs, like wedding funding.

What’s the right crowdfunding platform for you? Why do so many people turn to groups of strangers for financial support? And what are alternatives to paying for events if your crowdfunding efforts fail?

How to crowdfund

Okay, so you decide this crowdfund thing seems pretty good. And maybe you’ve even heard of crowdfunding before. Yeah, there was that potato salad that got over $50,000, right? And that $13 million cooler that no one is ever, ever getting.

True, those were crowdfunded projects. But most crowdfunding sites – including Kickstarter and Indiegogo, the most popular platforms – are for creative products. It’s how games and albums and books get funded. Those sites have strict rules about what can and can’t be funded, and stipulate projects "must create something to share with others" and they can’t "fundraise for charity."

On the other end of the spectrum, some sites, like Firstgiving, are only for nonprofits and charities and aren’t available for individuals.

So they’re out. But there are more than enough options out there for you: GoFundMe, GiveForward, YouCaring, Fundly, JustGiving, and Generosity (which is a spinoff of Indiegogo) all allow for financial crowdfunding campaigns.

After you decide what platforms you can use, you need to decide which one you should use. Most crowdfunding sites take a cut of donations, usually around 8-10%. You’ll need to factor that in so you don’t meet your goal and find out that you’re actually a few hundred dollars short.

You should also find out what your chosen platform does if you don’t end up hitting your fundraising goal. Some will allow you to keep whatever money you did raise even if you fall short, while others employ an "all or nothing" model. Again, the last thing you want is to hit your deadline and be surprised about how much money you’ve actually raised.

Finally, be mindful of any tax implications. There hasn’t been much talk on just how to tax crowdfunding proceeds, but most experts agree that they fall into one of two categories: income or charitable gifts. Income is taxable, as you find out every April, but that typically only applies to creative crowdfunding where the funders are getting a product in return. Gifts are non-taxable, which means you won’t owe anything to Uncle Sam on them.

The examples here, where you’re not giving anything to the people who donate to your crowdfunding, should fall into the non-taxable category, but it’s something you should check with a CPA so you don’t have an unexpected tax bill.

Maternity leave

Every new parent wants to spend time with her newborn baby – or at least try to sleep during the day as much as possible since they aren’t getting any shut-eye at night. And since only 12% of private-sector workers get maternity leave, it’s no surprise that people are turning to crowdfunding to make ends meet.

While there aren’t any crowdfunding platforms specifically geared toward new parents, many of the general charitable crowdfunding sites have categories for maternity leave or childcare. GoFundMe alone has around 6,000 campaigns totalling nearly $9 million in donations.

If you set up a crowdfunding campaign, you should have an idea of what your plans are going forward. Are you looking to raise enough money to make ends meet while one or both parents take time off after the birth of the child? Do you want to raise money to pay for a nanny, daycare, or some other form of childcare that’s more long-term?

And for you aspiring parents looking to adopt, crowdfunding hasn’t forgotten about you! Pure Charity is a crowdfunding site that helps cover the high costs for adoption. Find more information about Pure Charity and other unconventional ways to pay for adoption here.

Alternative: If you’re lucky, you’ll have someone in your life – a parent or sibling – who will be able to help with childrearing at least part time.

Unfortunately there’s not really a financial alternative to funding maternity leave except for planning ahead and setting aside money that you’ll need to raise your child. Mandatory maternity leave might be in the cards someday, but for now you’ll have to make do with what you can.

Weddings

The average wedding cost in America is over $26,000. Whether you’re a bride and groom paying your own way or parents with mixed emotions on seeing your baby all grown up, that’s a lot. Flowers, food, venue – oh, and you’ll probably want to go on a honeymoon afterward, right?

Sites like The Crowded Wedding let you raise funds directly that you can put toward your wedding however you see fit. Honeyfund is an online registry, but you can ask for a lot more than a set of kitchen knives. Their honeymoon registry allows guests to pay for different aspects of a honeymoon, whether it’s travel or activities while you’re there.

Alternative: Lots of people have an idealized wedding in their minds, but there’s nothing wrong with a small wedding! And you know what’s even cheaper? Heading to the courthouse and getting a marriage certificate – just you, your spouse-to-be, a few witnesses, and the judge.

When it comes to a honeymoon, you don’t have to go to Bora Bora. You can take advantage of these cheap-but-lovely vacation spots and get used to traveling frugally for when you’ve got a minivan full of little ones.

Higher education

You don’t need us to tell you about the student loan debt crisis that’s hitting America. $1.3 trillion in total debt, an average of $35,000 in loans per graduate, yadda yadda yadda.

So what’s a student to do, besides forgo college altogether and hope you can get a job that pays really well even with only a high school degree or – ugh – go to your safety school instead? Crowdfund (obviously; that’s sort of the theme of this post)! All that nice money without the crippling mountain of debt that you’ll spend decades digging out from underneath.

Luckily the internet has recognized this challenge and crowdfunding sites are stepping in to help. Zerobound is for people who find themselves in over their head with student loan debt, helping people pay off their debts more quickly. Piglt allowed crowdfunding for tuition or loan repayment, and allowed for fundraising for anything "education-related," giving you a little more flexibility when you’re trying to further your education.

Alternative: If your parents and grandparents really loved you, they’d have set up a 529 plan long before you got accepted to your dream school. Not only do they get tax benefits, but it can put a huge dent into the cost of college by the time you’re 18.

Funerals

Living is expensive, but no one ever said dying was much cheaper. Funerals are pricey – the average cost is over $8,000 – and the stress of paying is on top of the grief of those who have to foot the bill.

Charles Wells, the CMO of charitable crowdfunding site JustGiving, says he’s noticed an increase in the number of funeral-based campaigns on the site. There are even dedicated funeral crowdfunding sites like Funeralfund.

Crowdfunding can be hit-or-miss no matter what, but that’s especially the case when it comes to funeral funding. Many of the campaigns that hit their goals involve the unexpected – someone dying young and out of the blue, for instance. When it comes to older people whose deaths aren’t as untimely, it can be more difficult for raise funds.

Alternatives: The death benefit that’s paid out from a good ol’ life insurance policy is more than enough to cover the cost of a funeral. There’s also final expense insurance, which is used specifically to pay for things like a funeral, cremation, or however you choose to spend the rest of eternity.

With final expense insurance, though, the death benefit isn’t as large as it is with traditional life insurance. Sure, you’ll (probably) be able to cover the cost of a funeral, but life insurance allows you to cover that and provide much more protection for your family.

Healthcare

Medical bills are the number one cause of bankruptcies in the United States. That’s why so many people are turning to crowdfunding to pay those bills.

Unfortunately crowdfunding likely won’t cover everything you owe. The average amount of money raised for medical purposes is just over $1,000. However, it can still help in supplementing what your insurance covers.

We talked earlier about making sure you’re choosing the crowdfunding site that’s right for you, and this is especially true when it comes to healthcare costs. There aren’t any crowdfunding sites specifically for healthcare-related costs, so you’ll need to make sure you can raise funds for their needed purpose. For example, GoFundMe won’t allow campaigns that are raised for abortion procedures. Just another thing to keep in mind.

Alternative: Health insurance is mandatory, so you probably have it. (If you don’t, stop reading and look into it. We’ll wait.) Still, that doesn’t mean that you’ll get the full cost of medical treatment covered.

You could always shop around for a doctor or facility that’s more affordable, but keep in mind that while it’s not always true that cheaper means worse, sometimes that’s the case. You shouldn’t base your medical treatment solely around cost, even if it feels like you have to.

If you really want an out-there alternative, see if you can start or join a susu. A susu is basically a group of people who chip in a certain amount to a fund each month and rotate who gets to take home the pot and use it for whatever they’d like. It’s definitely a trust exercise, but desperate times call for desperate measures, right?

It’s not great to rely on anyone for your financial needs. You might not reach your goal, and if you do you might feel indebted to those who helped you (even if it’s not financially), which many people don’t like like hanging over their head.

Budgeting, saving, and investing wisely is the best way to make sure you have enough money for whatever comes up. Still, it’s nice to know that when push comes to shove, there’s a safety net that just might catch you if you fall.