Having some personal experience with this I can say that performing under these circumstances takes a certain kind of musician. Being with someone in hospice is overwhelming experience. Hospice is generally for the very end stages of an illness, and the time available would be very short, often under 72 hours. The performers would need to be able, and available on a very short notice. Writing a song about someone specifically could take more time than they have left.
Here are my suggestions based on those observations. 1. I would use the original compositions for fundraising mostly. There will be times when people can and will make music about the person that they are playing for, but I think that would be the exception and not the rule. That would make that music more for the families of the departed rather than the person in hospice. 2. Playing music that the person is familiar with and enjoys can do wonders, so gathering information from family or the person in hospice would go a long way towards creating a joyful experience. I would also recommend having musicians who are good at learning songs quickly and adapting to different styles. 3. I would recommend having a large number of musicians available for scheduling. This will be the hardest part I believe. I'm not sure how many musicians will be able or willing to do this type of performance. I have played at a number of funerals and spent time with people in hospice, each one of those events was a real kick in the gut. Death doesn't always mean great sadness, but it is an incredibly intense experience. There will need to be some sort of protocol for preparing artist for the experience and for decompressing afterwards. 4. It might be an idea that works well with a single visit to a hospice wing of a hospital/care facility by a few performers at once. Each one with a diverse ability to perform different types of music, including religious and and non-religious music at the patients request.
All in all I think that this is a beautiful idea, and I would love to see what comes of it. I would consider though that having a performance in a safe venue where we discuss and intellectualize the experience of death is very different than being there when it is happening. I would strongly recommend making sure that each artist involved understands this and has some type of experience before their first performance.