The group said they wanted to "commemorate Captain Sir Tom’s valiant efforts in raising so much money for the NHS during the coronavirus pandemic".
The veteran raised more than £32 million for the NHS, walking 100 laps of his garden before his 100th birthday during the first national lockdown in April.
He was knighted by the Queen in summer 2020 before he died with coronavirus earlier this month.
The finished Moortown memorial will be on a box on Blackmoor Road, on the junction with the ring road, outside The Moor Allerton Centre.
The Moortown West Community Association was formed in September 2019 to provide groups and activities for the local community and improve community cohesion.
It replaced the Moortown West Residents Association.
The group has held many other successful events, including producing a pantomime production of Aladdin and hosting a Santa sleigh ride across Alwoodley Ward last Christmas.
The group added: “Covid has changed how we operate, but we have still wanted to support our community the best we can by making our events and fundraisers Covid secure.
“We also help with food exchanges and helping the most vulnerable.”
People wishing to donate to the Captain Sir Tom fundraiser can do so at the group’s GoFundMe page.
The group can also be found on Facebook and Twitter as Moortown West Community Association.
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