When disaster strikes a region, it often flips a switch in humanity, triggering their need to help in ways that everyday struggles don’t. We saw it with Hurricane Katrina years ago and again with Hurricane Ida this year. While nonprofits, businesses, and individuals alike wish to do something to help those affected, it’s important to be informed on how to best contribute, so they don’t fall victim to scams or tax problems down the road.

Temporarily shifting the nonprofit’s focus

If you’ve wondered whether you can temporarily shift your nonprofit’s focus to help with disaster relief, the answer is yes, but there are some limitations. When originally filing for tax-exempt status with the IRS, your organization provided the purpose or focus of your nonprofit.

Disaster relief efforts allow for some leeway in that purpose. However, you’ll want to protect your organization against accusations of violating the prohibition for private benefit in the tax code and disclose any change in focus on the annual Form 990 filing. Keep very thorough records that include:

  • Dates of assistance
  • Assistance provided
  • Purpose of the assistance
  • Name and address of recipients
  • How recipient(s) was selected for assistance
  • Who is selecting the individuals receiving assistance
  • Any personal relationships between members of your nonprofit and recipients.

If you take these precautions and consult with your trusted tax advisor beforehand, providing disaster relief instead of your core organizational focus can be achieved.

Struggling nonprofits and partners

Nonprofits and their partners are not immune to hard times and could be struggling through a natural disaster while they’re trying to provide assistance. If your nonprofit finds some of your partnership organizations have been affected, there is still a way to help.

For example, there are often preapproved grants at the local level that help charitable nonprofits provide disaster relief. As part of your disaster recovery planning, make sure to review what grant options are available in your area. Doing so will allow you to apply for assistance more quickly if disaster strikes.

Other considerations nonprofits should be aware of

When nonprofits and individuals jump into action, they can hit several roadblocks along the way. While collecting and donating food, clothing, and supplies seems like an easy way to help, it can be met with logistical problems. First, collections take time. Second, transportation of these items is often expensive and often waylaid by restrictions accessing affected areas until it’s safe to do so.

Monetary donations to nonprofit organizations with their boots already on the ground can be implemented more quickly, and they’re often more aware of exactly what the community they’re serving needs. Reach out to nonprofits in the area to discuss how your organization can help them help the community.

There may be times when those who are impacted cannot communicate with your nonprofit team due to language barriers. Having team members who speak secondary languages can help overcome those barriers to provide assistance for those community members. Another option would be contracting with a translating service that offers remote capabilities.

In addition, the IRS often announces disaster relief for individuals and businesses who may be impacted in the form of extending deadlines for tax filings. Keep an eye out for those announcements, should you need them.

How to advise individuals looking to help

There are several resources available to consumers and businesses alike to help them determine if the organization they’re donating to is legitimate. Typically, nonprofits working on disaster relief efforts are registered on the Center for Disaster Philanthropy. In addition, they can use the IRS Tax-Exempt Organization Search tool to confirm their donations are going to a registered nonprofit.

Our team of professionals is here to help you navigate how to shift to disaster relief efforts. Give us a call with any questions you have.