I came across this article the other day about the rise of crowdfunding to pay for funerals. Now, this is not the first time we have written about this subject, but this article is interesting because it points out some statistics and trends behind this phenomena. The article is a public relations article about the attributes of owning life insurance, but it is very relative to our industry in that I believe that there is a direct correlation between what consumers will spend on memorialization and what they have “available” to spend.
So, if you read this article it will tell you that “As crowdfunding has grown, it’s become a go-to resource for many families struggling to cover end-of-life expenses including funeral costs, and to provide finances to care for surviving family”.
Here are some statistics that come out of this article:
- Between 2010 and 2014 GoFundMe.com had 113,000 campaigns for memorials and funerals
- In that same time period, that site raised $340 million for those purposes. That’s an average of $3008 per campaign.
- One in five adults aged 20-29 either solicited or contributed to a fund for a funeral related account
Here’s what the article says has contributed to the need for these accounts:
- Funerals are getting more expensive
- American household savings rates have dropped from 12% of income in 1971 to about 5% today.
- Life insurance ownership has fallen. According to the article, Americans who have bought life insurance for funeral expenses and end-of-life expenses has dropped 32% from 2001 to 2014.
Funeral Director Daily take: I think virtually every funeral director I know, knows of the consumer value of having available funds to pay for death care expenses. As the article referenced above says, “Life insurance is first and foremost about peace of mind”. Funeral directors know that and the prevalence of pre-need insurance in the market place is a great start.
However, we all know families who should have pre-need insurance and don’t. It’s imperative that we continue to drill into families the need for a fund that will come forward with payment at the time of death. It is not only good business on the funeral home’s part, it is rock-solid advice to consumers. No funeral director should feel that they are pushy in telling families of the value of pre-need.
Money management is something that seems to get lost with the average American. I remember my very first meeting of sitting on the Board of the University of Minnesota. It was April 2015 and at that meeting student government leaders were allowed to tell the board what were some of the priorities that they would want out of the university’s governing body. I remember, one student saying, “This university does a great job in getting us ready to earn a living. However, we get no advice on how to spend the money we make.” The student government went on to ask us to help in giving students what we now call “Financial Literacy”.
It has taken awhile, and has been at a financial cost to the university, but we have provided financial counseling advisers to all students free of charge. I am a big advocate of this practice and we already are seeing great results. Students take out less in loans, know how to look for attractive rates on loans, learn the value of savings and how to navigate their future employer’s 401k account options, and already are leaving the university with a debt load per student lower than it was 4 years ago.
Crowd-funding is here to stay. However, I would argue it is not a great plan for funeral homes to get paid that way by the consumers that they serve. Like any good and proven financial tool, we have to continue to tell of the pre-arrangement values or we will face more and more client families who give you a blank stare in the arrangement room when they are asked, “How do you want to pay for these services?”