Make the dip. Whip heavy cream until stiff peaks form. Set aside. Beat softened cream cheese with sugar and vanilla. Fold in whipped cream and set aside until ready to serve.
Prepare funnel cakes. Combine dry ingredients in a medium bowl including all-purpose flour, sugar, cocoa powder, baking powder, baking soda, and salt. Whisk together buttermilk with vanilla, eggs, and red food coloring in a separate bowl. Add wet ingredients to the dry, mixing until well combined. Transfer batter into a zip-lock bag. Cut the tip of the bag in one corner.
Heat oil in a saucepan, about 2 inches deep over medium-high heat to 350 degrees F.
Carefully pipe batter in circular motions into the oil. Cook until the batter puffs up and turns deep red, about 1 minute. Flip funnel cake and cook for another minute. Remove and set on a plate lined with paper towel. Repeat with remaining batter.
Dust funnel cakes with powdered sugar and serve with cream cheese dip.