Audit Your Disaster Relief Policies

By Dale Hanson Bourke

The footage was disturbing but fascinating. Over and over again, we watched the wave approach the shore, sweep over hotel furniture and swirl through streets. Never had a disaster been so well-photographed. And never has a relief effort been so scrutinized.

The tsunami in Asia gave the world a front-row seat on a disaster in a way most had never experienced before. At least in part because of this unprecedented coverage, there was an unprecedented outpouring of giving. But along with this giving came more attention to the process of raising funds for disasters. Suddenly the public has become far more aware of the nuances of fundraising and the process of disaster response work.

Humanitarian nonprofits need to be prepared for this new level of scrutiny and transparency by developing or upgrading their existing policy regarding disaster response situations. An organization must be prepared—and the staff must know its policy—before a disaster occurs.

It’s time to consider an audit of the policies governing your organization’s disaster responsiveness.

What is the scope of the organization’s work? Relief workers swarmed to Asia in the first weeks following the tsunami. Many had never worked in the region before but were anxious to provide photos and “on the ground” stories. This influx of new groups created tension between organizations that had already been operational and those who were viewed as trying to grab the spotlight.

Disasters occur all over the world. Just because the media attention is significant doesn’t mean that an organization should respond. What are the core competencies of the organization? What does it bring that others don’t?

Will your organization respond to a disaster in a region where work is not ongoing?  What are the criteria for deciding to respond? Will it begin to raise money before it knows if it can do the work? What will the public message be in the time period between the disaster and a plan to respond?

Will your ministry work through another group, either because your ministry does not have the expertise or the regional experience? What agreements are in place for such cooperation?

What is the operational model?  A disaster taxes the resources of any responding charity. Does the organization have staff ready to respond or does it have to hire contract workers? Must contract workers sign a statement of faith, agree to certain organizational standards or observe certain policies? What happens if someone hired as a contract worker is photographed wearing your organization’s shirt while acting in a way that is inconsistent with your statement of faith?

If your organization hires national staff, how are they vetted? In what situations are they allowed to publicly represent your organization? Can they sign contracts, speak to the media or disburse supplies? Remember that laws and norms vary by culture. There should be safeguards to “do no harm” to local culture.

What is the length of our mission?  Relief typically lasts for a short period of time and must be transitioned into longer-term development. Is the organization just there for the short-term or will it now establish a longer-term operation in the region? What is the board policy for entering a new country to do relief work? Does it require board action to establish a longer-term presence? Are funds earmarked for relief being held in order to sustain longer-term development? Was this communicated to donors? What is the exit strategy of the organization?

What environmental factors affect our operational strategy?  Will your organization work in an environment where Christian witness is forbidden? Will it partner with a Muslim organization to deliver services? Does your staff know what laws govern proselytizing in the region? 

What will happen to local churches if your organization raises their visibility? If your organization has not been operating in the region how will staff become educated about various factions (including Christian) which they may unknowingly appear to support?

How can financial accountability be ensured?  In response to the tragedy on September 11, 2001, the Red Cross received an enormous amount of funds. Its policy, along with many organizations, was to use the funds for the disaster indicated unless the needs were fully met. Then the money was used to meet the needs of other disasters. Once this policy was spotlighted, the public response was very negative.

Some ministries still have fine print on their fundraising materials that says funds raised can be used for another purpose if the income exceeds the needs. While a caveat state­ment of this nature may provide legal protection for a charity, integrity issues are often raised regarding honest communication and donor expectations if a significant amount is received beyond what is needed. What is your organization’s policy on handling disaster funds and what would happen if it were examined publicly? Is your board clear about how donor intent is viewed by fundraisers, accountants and program staff? Do your policies give staff the guidance to tell donors that enough money has been raised for the disaster?

What fiscal policies exist for overhead charges?  Most charities receiving gifts and, in turn, making grants to other organizations to fulfill the donor’s restrictions do not deduct the same amount for overhead as groups that implement the work themselves. Some groups use a lower overhead percentage for disaster response because the income is so much greater in relation to the cost of fundraising efforts. Does your organization use the same rate for disaster response funds as it does for ongoing development work? How does it justify the overhead rate charged? If it gifts the money to an implementing organization, how much overhead does it keep? 

How is donor intent matched to our mission?  If you raise the money, you are respon­sible for its use. It’s that simple. Passing it on to a local partner, sharing it with another agency or entrusting the work to contract personnel does not take the organi­zation off the hook. A donor gives to your organization and entrusts the money to you. Your organization issues a receipt for the money.

Grantee reporting requirements should be determined before funds are passed on to another group. If your donors were able to personally observe the use of funds would they be satisfied? How will you keep your donors accurately apprised of your work? What information will be shared and what type of financial reporting will be available?

What is the effect of disaster income on the rest of the budget?  Disasters may bring enormous amounts of money to an organization. But they also tend to “rob” the other areas of need as donors divert donations from existing programs to disaster efforts. It’s hard to imagine cutting a budget when income is at a high level. But management may need to make adjustments to the previously-approved budget in order to deal with the new reality. Or the organization may want to be pro-active in seeking a line of credit to help even out the giving over a longer period of time. Most fundraisers are predicting that 2005 will be a very poor year for philanthropy outside of the tsunami giving. Is your organization prepared for a downturn in giving?

What have we learned?  Every organization should look carefully at the tsunami relief efforts and consider how prepared it was to respond, what might have been done differently, and how it would be prepared if another natural disaster hit. Besides financial, fundraising, human resources and programmatic policies, your organization should consider what theological principles govern your response in a situation. How are the actions of your organization consistent or inconsistent with your theological view? 

The role of the board is to set policy so that the staff feels free to do its work within clear boundaries and guidelines. The heightened attention of media and donors and the changing world in which we live creates a situation in which disaster funding policies must be re-examined. It is imperative that all humanitarian groups—and especially Christian organizations—be prepared to offer an open and clear explanation of how policies are made and implemented before the next disaster occurs.

Dale Hanson Bourke is the author of “The Skeptic’s Guide to the Global AIDS Crisis” and is president of PDI, a marketing and strategy consulting firm.

 


This text is provided with the understanding that ECFA is not rendering legal, accounting, or other professional advice or service. Professional advice on specific issues should be sought from an accountant, lawyer, or other professional.


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