Philanthropy for disaster relief
Preparation, response & recovery
Hurricanes, earthquakes, wildfires, epidemics, large-scale acts of terrorism. When extraordinary events with tragic outcomes occur and dominate the media cycle, the human reaction is to respond with compassion and to try to provide help. However — whether the event happens next door or halfway around the globe — it is not always easy to know how to have the greatest impact or how to get aid to those who most need it. Sometimes the most effective response is to make grants prior to a disaster striking.
There is a particularly important role for private philanthropy in responding to disasters, as private funding is more flexible and can often reach on-the-ground responders more rapidly than public funds can. In addition, private donors can take the long view and think about impact at all stages of disaster response.
The Center for Disaster Philanthropy (CDP) has defined the four stages of disaster response1 along with opportunities for philanthropic support at each stage:
- Resilience, risk reduction and mitigation- support for regions or organizations to build, maintain and recover critical functions in the face of shocks/stresses. For example, redundant off-site storage of patient files for a health center or planting mangrove belts along coastlines to preemptively mitigate flooding from surges during major storms.
- Preparedness- specific emergency preparedness activities for communities such as training for first responders, community education programs or city planning exercises around evacuation for flood or hurricane.
- Response and relief- grants for immediate responses, particularly for basic human services.
- Reconstruction and recovery- longer-term recovery and reconstruction, including activities to mitigate against future disasters (for example, raising houses in flood-prone areas).
In their long-running study Measuring the State of Disaster Philanthropy: Data to Drive Decisions4, the CDP has consistently found that the bulk of funding in any given year is on the immediate response phase to disasters. Resilience, risk reduction and mitigation, and usually long-term recovery are all underfunded. The focus on response and relief is understandable, given the immediacy of images and stories that emerge directly after a catastrophic event, and there is no denying the importance of providing critical services—food, shelter, medical care, safety —as soon as possible. However, the longer-term reconstruction and recovery needs are often overlooked, more expensive, and dramatically underfunded by public, insurance and private funds.
In considering a donation in response to a disaster, some key points outlined by CDP and other experts include:
The catastrophic impact of Hurricane Katrina on New Orleans is widely known. However, the numbers tell a stark story about the disparities in funding for stages of disaster response. The Data Center, an independent research center focused on Southeast Louisiana, reports that total damages from Hurricanes Katrina and Rita were $150 billion—$135 billion from Katrina and $15 billion from Rita.
Federal spending in response was $120.5 billion. However, of that amount, $75 billion went to emergency relief, not rebuilding. Private giving was $6.5 billion, and private insurance claims covered less than $30 billion of the losses.2
These numbers, taken together, suggest that as much as $79 billion of losses and long-term recovery costs were not covered by any source of public or private donations. 3
- Take the long view. Even while focusing on immediate needs, remember that it will take some time for the full range of needs to emerge. Be patient and willing to persist in learning about the long-term needs and impacts after major events. Many needs such as mental health or housing reconstruction may take months if not years to be fully apparent, and funding will be needed throughout.5
- Inequities may be exacerbated by the disaster. Consider focusing your giving to support under-resourced and/or socially marginalized populations who may have a harder time finding safe shelter or appropriate services.
- All funders are disaster philanthropists. Even if a you do not normally give in a particular geographic region or fund immediate relief efforts, there are multiple ways to tie disaster funding into a foundation’s mission. When thinking about an overall giving budget, it may be useful to have routine discussions about whether disaster giving is in place of or in addition to your regular charitable giving.5
- Support the sharing of best practices. Interested donors could help support the transfer of expertise from one region to another before the next disaster occurs. For example, a donor could fund the research and documentation of best practices in volunteer management.5
- Look to past disasters for guidance. There are often lessons learned that could be used to create better policies and procedures. Consider funding disaster risk-reduction research or projects that could inform more effective disaster preparation and response policy.5
- Do not collect or send physical goods unless an agency on the ground specifically requests them. Aid agencies are frequently overwhelmed when well-meaning but uninformed people send what they think to be necessary items, but which are frequently less than useful. 6
When donations of goods are bad
Although motivated by good intentions, the collection of clothing, food or even water to ship to a disaster-struck area may actually contribute to an inefficient or even dangerous allocation of resources. In 1998 after Hurricane Mitch devastated Honduras, there were planes with vital supplies that could not land because the runway was blocked by bales of donated used clothing, including winter coats, which were not needed.
A disaster expert notes that even bottled water isn’t always the most useful donation. For example, 100,000 liters of water will provide drinking water for 40,000 people for one day. Shipping that amount of water from the United States to West Africa would cost about $300,000. However, a relief organization with portable water purification units can produce that same amount of water for approximately $300.7
Experienced aid agencies have repeatedly stressed the importance of cash donations that allow responders to buy exactly the supplies needed in the quantity and type needed. In addition, to the extent that supplies can be purchased locally, it may help to restart economies that have been hit by disaster.
When making decisions about where to give in responding to a disaster, you should continue to undertake due diligence for an organization before you make a grant. Some questions to consider include:
- What is the organization’s track record in providing disaster relief? Does it work from a central national site, or have local affiliates or partners? Especially in international disasters, the importance of local knowledge is paramount, as responders need to be able to fluidly navigate the language, culture, policies and local institutions such as hospitals in the in the affected area.
- How well has the organization responded in the past to delivering the type of services needed? For example, if It’s providing medical services, does it have the appropriate staffing and expertise?
- Does the organization have current exempt status from the IRS?
- If this is a new organization formed in response to this specific disaster, what do you know about the board? Staff? Other funders? It’s wise to be particularly wary of new nonprofits formed at times of disasters. While many will be legitimate, there have also been a number of unfortunate situations where organizations raising funds for a specific disaster have later been revealed as scams.8 If you have any doubts, consult with a philanthropic advisor.
- Center for Disaster Philanthropy
- IRS Guidance on Disaster relief and providing assistance through charitable organizations
- National Voluntary Organizations Active in Disaster (NVOAD)
How we can help you
Because disasters touch every facet of life, and all corners of the world, all donors have opportunities to respond to extraordinary events with compassion in a way that aligns with their values and giving priorities.
Bank of America has the expertise and resources available to assist individuals and foundations with giving in response to these events. For more information on this topic, please contact your advisor.
1 The Disaster Life Cycle, Center for Disaster Philanthropy, 2020.
2 Allison Plyer, Facts for Features: Katrina Impact, The Data Center, August 26, 2016.
3 $79 billion derived by taking total losses ($150 billion) and subtracting maximum federal spending ($45.5 billion), insurance ($30 billion) and a high estimate for percent of private funds that were designated for long-term recovery ($3 billion).
4 Measuring the State of Disaster Philanthropy: Data to Drive Decisions, Center for Disaster Philanthropy, 2021.
5 Adapted from Basic Tips for Disaster Giving, Center for Disaster Philanthropy, 2020.
6 Multiple sources, see for example: cbsnews.com/news/when-disaster-relief-brings-anything-but-relief/
8 Charity and Disaster Fraud, FBI, 2023
This material does not take into account your particular investment objectives, financial situations or needs and is not intended as a recommendation, offer or solicitation for the purchase or sale of any security, financial instrument, or strategy. Before acting on any information in this material, you should consider whether it is in your best interest based on your particular circumstances and, if necessary, seek professional advice. Any opinions expressed herein are given in good faith, are subject to change without notice, and are only correct as of the stated date of their issue.
Due diligence processes seek to mitigate, but cannot eliminate risk, nor do they imply low risk.
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