When disaster strikes, many of us find ourselves wondering what is the best way to help people in need. There are many philanthropic options, but during these times it is especially important to find a charitable avenue that makes sense for you and your charitable giving goals.
Donating Through an Existing Organization
Following a disaster, you may feel inclined to start a new charity to aid those in need. However, it may be best to find an existing charity that has the same mission as you in order to save time and resources. With a little bit of research, you may find an existing charity that not only suits your charitable goals but also has the ability to respond quickly and provide immediate assistance to those in need.
Starting a New Disaster Relief Charity
If you find that starting a new charity is the best option for you, the first step would be to apply for tax-exempt status. This application process can take some time, but the IRS does allow for an expedited application if there is evidence for an immediate need for a specific disaster relief service.
The IRS requires that you establish the type of service you will be providing as well as specifying the “charitable class” that your charity may fall under. The charitable class is the specific group of individuals that will be receiving assistance. According to the IRS, “A charitable class must be large enough or sufficiently indefinite that the community as a whole, rather than a pre-selected group of people, benefits when a charity provides assistance.” An example of a large charitable class would be all the individuals of a city. On the other hand, a charitable class that is indeterminate in size would be more open-ended, such as employees affected by a current disaster and those who may be affected by a future disaster.
This idea of a charitable class also means that disaster relief cannot limit assistance to specific individuals, and donors cannot earmark contributions to be used for a particular individual or family.
Using your Charity to Provide Disaster Relief
Many people believe that their current charity cannot help disaster victims or provide aid to disaster victims when in fact, that may not be true. Under federal regulations, even charities that are not specifically organized to provide disaster relief may engage in disaster relief activities without specifically stating those activities in the application for exemption.
However, charities that engage in disaster relief activities must report their new activity on their annual filing (Form 990). In reporting these activities, it would be best to also keep detailed records of your activity, depending on the type of aid provided.
Please note that the IRS has very strict guidelines for Private Foundations when donating money and resources to specific individuals. If your Private Foundation is interested in learning more about providing disaster relief to individuals please contact our office.
Documentation and Record Keeping
If your goal is to provide immediate assistance, the record keeping and documentation process is much less daunting than those aiming to provide long term assistance. Charities that are providing short term assistance are expected to keep good records, and at the least, are expected to keep records showing the type of assistance provided, the estimated number of victims assisted, and the date and place of assistance. Some examples of short term assistance are providing food, clothing, and temporary shelter.
On the other hand, organizations that are looking to provide longer term assistance must provide records showing the individual’s names to whom the services or goods were provided as well as information on the recipients who were provided with long-term assistance. Some types of long-term aid include mortgage assistance, tuition reimbursements, and psychological counseling for victims affected by the disaster. When providing this type of aid, it is important to get as much information as possible from the recipient to ensure the most accurate depiction of the situation at hand.
We may not be able to control the weather or do much to prevent a natural disaster. We can, however, choose how to respond to an unexpected event with our time, energy, and money. Whether it be donating through an existing organization, starting a new disaster relief charity, or using your charity to provide disaster relief, it is imperative to continue to give and help others in need in the midst of these disasters and to keep good records of the resources that are given. There are many options to choose from and these are just a few to keep in mind to help you decide which one is right for you and your charitable goals. If you have any questions about this information please contact your L&B professional at 858-558-9200.