In a humanitarian crisis, circumstances are often rapidly changing, with complex, often volatile situations involving large numbers of people. While many philanthropically inclined individuals are moved to contribute in such emergencies, knowing where, how, and how much to give can be challenging. For those who take a thoughtful approach to philanthropy, even during emergency times, research and appropriate vetting are key. But how does a philanthropist best approach such a situation, and ensure their donations have the greatest charitable impact? Below are some recommendations and best practices for charitable giving in the wake of humanitarian crises and other emergency situations.
1. Educate yourself on the current and long-term needs.
In the early hours and days of a crisis, the situation is typically rapidly evolving, and the needs of those who are suffering are similarly moving and shifting. During this time, while emotions run high, it is important to remember to balance immediate needs with the potential longer-term impacts of a disaster.
When it comes to responding quickly to a crisis, speed is a hallmark of private philanthropic funding, because private funders can act quickly, often more nimbly and flexibly than government agencies, allowing critical funds to meet targeted needs in the earliest moments.
As you think about supporting either your local community or an impacted area elsewhere, keep in mind how needs differ over time. In responses to a crisis there is always an immediate influx of donations, but as time goes on those donations may taper. In response to Hurricane Sandy, which hit New York City in 2012, millions of dollars were donated to support the immediate needs of those displaced by the storm, however years later many of those families still didn’t have homes, as the long-term rebuild went largely under the radar.1 While the news cycle may turn over, people impacted by disasters often have very long-term needs, for resettlement, education, mental health services, and job training. With this in mind, a truly strategic approach considers both immediacy and the long-term needs, and allocates funds accordingly.
Typically, the best gift to give in the wake of a crisis is both monetary contributions and support to the experts already on the ground. A monetary donation provides immediate capital to organizations on the ground so they can quickly purchase and distribute essential supplies such as food, water, shelter, and healthcare equipment to address the community’s immediate needs. Trust is a factor, at this stage, because vetting takes time. So it’s about understanding the immediate ecosystem of groups experienced in disaster response, who have sound reputations for addressing the most-critical needs, and directing funds there.
Whether you are an experienced philanthropist or evaluating how to get involved, listen to our webinar, Philanthropic Responses to Humanitarian Crises, and hear from some of the world’s most dynamic aid organizations on how you can approach and evaluate opportunities to make the most of your philanthropy.
2. Identify the key stakeholders focused on the same mission as you.
Before making donations, it’s recommended to conduct a landscape analysis, to understand the issues you want to focus on and the organizations operating in that space. Thoughtful philanthropists rely on the expertise of those who are on the ground, closest to the populations they wish to assist, with deep experience in the issues they wish to address. Additionally, partnering with existing, reputable players may also amplify the overall impact of your philanthropy. Ask yourself: who are the key stakeholders focused on this location, or on this kind of crisis? What resources and projects already exist, that I can potentially support or leverage in my own giving?
Online research is a great place to begin. Here are a few places to start your landscape analysis:
- Key stakeholders focused on the issue: academic/research institutions, government funded organizations, business leaders and community groups
- Major organizations currently providing funding in this space or similar spaces: institutional non-profits, family foundations or individual funders
- Recent publications, including both news sources and research publications
3. Vet charities appropriately and do your due diligence before making a gift.
Unfortunately, there are bad actors who may try to take advantage of heightened fears when crises strike. We have seen instances of sham charities seeking donations during times of disaster. To avoid falling victim to fraud, direct grants to qualified public charities that are registered and current with the IRS. All US-qualified public charities are required to register with the IRS, and file annual returns – which are publicly available and include a large volume of information about the organization, including annual spending, reserves (including endowment, cash, and other holdings), key staff along with board names and compensation, and for grant-making organizations, a complete list of grants made the previous year. This information can be easily accessed via industry aggregators that provide publicly-available information:
- Charity Navigator – the largest independent evaluator of non-profits
- Candid.org (previously Guidestar) – provides financials of qualified 501(c)(3) organizations in the US, including 990 tax forms which include annual donations, grants and other expenditures of the organization.
- Giving USA – produces key insights and tools on giving best practices along with their annual report on annual giving trends in the US.
In addition, most organizations produce annual reports and financial statements that may be obtained either via the organization’s website or by requesting it from the organization directly.
4. Ask thoughtful questions when selecting organizations to support.
While you are researching a potential beneficiary organization, be sure that its mission aligns with your giving goals to ensure your donation is as effective as possible at achieving your philanthropic objectives. This applies to all charitable activities, but can be even more important in a crisis setting when speed and efficiency are critical.
Questions to Ask When Reviewing Potential Organizations to Support
- What is my purpose for funding this organization?
- What is my desired outcome or impact of my gift? What do I hope the organization will accomplish or achieve?
- What will my grant fund – general operations or a specific program? Do I have a preference?
- How will I measure the effectiveness of my contribution? Is my expectation realistic, given the complexity of the situation, the size of my contribution, and other factors?
- Will my contribution be made one-time, repeated, or renewable? If renewable, what information will I require to identify if additional funding is appropriate? Within this organization, how are projects identified and what is the approval process?
- How much of this organization’s donations are actually spent on charitable work, versus on administrative expenses and overhead?
- What is my assessment of the leadership and how they are elected or appointed?
- Does the organizational structure suggest the right committees are in place to manage operations?
- Is there a conflict of interest policy that protects the integrity of the organization against private interests?
- Are the organization’s activities open [transparent] to public scrutiny?
5. Be mindful of foreign grantmaking rules.
A humanitarian crisis, no matter where in the world, is as an acute reminder of how closely connected humans are, and how global issues impact everyone. With this in mind, more and more philanthropists are looking to support crises and natural disasters located abroad.
When making a donation to an international organization, it is critical for anyone in the US to mind the rules governing international giving, for both due diligence and tax deductibility purposes. The penalties for ignoring these rules can be severe. Best practices suggest giving to a US-qualified, 501(c)(3) organization that engages in work internationally, or giving to a “Friends Of” organization, which generally exists to provide federal tax deductibility for charitable contributions to support a foreign charity. Alternatively, another option is giving via an HSBC donor-advised fund, a key feature of which is a team of experts to perform charity due diligence and ensure donation tax deductibility.
6. Support the causes you are passionate about.
One of the best ways donors can achieve long-lasting impact is to give to causes you care about deeply. Philanthropy is personal — supporting the issues you care about and are personally connected to can lead to great personal satisfaction, and donors who do so are more likely to continue giving into the future. If you have a specific area of interest that aligns with the current needs of the world, that is the best place to start your philanthropic journey.
In times of crisis, we all want to help, but it is often difficult to know where to begin. If you aren’t sure where to start, or want help making a positive impact, reach out to our team. HSBC Global Private Banking’s wealth planners, philanthropy experts, and experienced charitable trust and foundation administration team can help you map out a plan that takes into account your family’s values and desired impact. We can help you have a positive giving experience, and can incorporate philanthropy into your overall wealth management strategy. For more information and to explore solutions to help you formulate your charitable giving plan, please contact us or contact your Relationship Manager.