If you can get her to make arrangements with the funeral home, that would be the better way to approach this issue.  If she doesn’t want to do that, and if you accept the gift with the stipulation, your acknowledgment letter will have to place a value on the goods and services that you are providing in return for the gift, and she will be able to deduct only the amount of the gift in addition to the value of those goods and services.  (See Ready Reference Page:  “Charities Must Set Value on ‘Quid Pro Quo’ Gifts”)  The dinner may be difficult to value now unless you set an arbitrary amount and agree to spend only that amount when the occasion arises. 

Explaining all of this to her may cause her to think a little more about the issue.  If she is trying to get a current income tax deduction for her memorial dinner, she may be upset when you tell her that you can’t play her game.  If she just doesn’t understand the legal consequences of the proposal, she may be willing to make a deal with the funeral home, or with you.