The donation brings total fund-raising for the Tender Funerals "community undertaking" to $90,000 - enough for a deposit on a building.

It is now negotiating to buy a former fire station in Military Road. The site was ideal for conversion into a funeral home because it already had internal vehicle access, said Tender Funerals' Jenny Briscoe-Hough.

"The next step is securing that building, then raising money for a renovation," she said. "We're not there yet, but we're closer than we've ever been.

"We are totally thrilled. [The donation] is a great Christmas gift really."

The benefactor - a woman - is known to Ms Briscoe-Hough. She is not from the Illawarra, and has asked to remain anonymous.

"She said quite simply, 'I will give you that'," Ms Briscoe-Hough told the project's supporters via the Tender Funerals website.

"I was filled with gratitude and emotion and I thanked and thanked her and when I put the phone down my heart was beating out of my chest with happiness."

Fund-raising efforts for the Tender concept have so far attracted 129 donations.

Interest in the project was piqued with the release of a documentary, Tender, by artist Lynette Wallworth, earlier this year.

The film recently won an award at the Australian Teachers of Media Awards and was a finalist in the Grierson Award Documentary Competition at the London Film Festival.

Tender Funerals is an initiative of the Port Kembla Community Project, whose backers argue that funerals are too expensive for low-income earners.

The fund-raising effort continues at tenderfunerals.org/donate.