Has your mom ever priced a funeral, especially for somebody who had no estate ot life insurance? Saying "never" seems kind of extreme. I know parents who have had to bury babies, teens, etc. Even the minimal steps are expensive. There is paperwork and that kind of thing. Now a lot of people prepay, some have life insurance, estates cover the cost, etc. That being said, there are definitely situations where I'd be shocked if anybody said I was rude to give the family money. Now, I don't know the circumstances of the bereaved. Is it possible the lady who suggested giving money might know something about medical/funeral expenses?
Donations are great and can be fine, flowers too. But the point is to let the woman know she is being thought of and to try to lift the burden of grief the tiniest bit. If the death and burial brought a financial burden then why not do it by giving her the money?
As far as a donation to charity, unless the bereaved has specified one, I'd be really cautious. The charity you might think is great might be one they dislike.