In the summer of 2005 I worked at a summer camp, earning enough money to purchase my school uniforms and excited by the prospect of riding Metro without an adult. When not working I was glued to the television, watching events unfold after Hurricane Katrina and related flooding in New Orleans . Thousands of moms, dads, children, and elderly people were in desperate need of relief. So many thoughts raced through my mind. What could they have done to prepare for this? What would I do in their situation? What can I do to help them? As days passed, I saw more and more initiatives to support the survivors of New Orleans, yet none of them inspired me to act.

Soon, I started high school; classes and extracurricular activities occupied by mind and time until one announcement thrust Hurricane Katrina back into my consciousness. All after-school activities in the gymnasium had been cancelled or moved to a nearby recreation center so the gym could shelter survivors of Hurricane Katrina who relocated to DC.. There were no ready answers to our many questions: how were they chosen, did they volunteer to come to DC, when would they arrive, how long would they stay, and will they have beds and supplies? This sparked a conversation with a girl in my homeroom who moved to DC following flood warnings in New Orleans. Her stories about how drastically her life changed left me sympathetic and scrambling to grasp that we are all at risk of life-changing events. How can we prepare for the unpredictable?

Preparing for emergencies within our families and communities is important and potentially life-saving. So is preparing oneself as a donor, being ready to give aid to people impacted by disasters. Are you prepared to help others in the most effective and efficient way possible? When disasters strike, many people’s first impulse is to collect food or clothing; it is not unusual for community and local groups to collect thousands of pounds of material – typically used clothing, canned food and bottled water – realizing only afterward that they do not know whether it’s actually needed, how they will transport it or who will distribute it. We all want to help affected families in difficult circumstances, and it is important to remember that material donations not specifically requested by relief organizations can actually slow the process of delivering essential supplies, as they take away precious space, personnel, time and other resources from life-saving activities. For those who want to send material things, it’s important to “connect before you collect” and identify a relief or charitable organization beforehand that needs and can distribute the collection. Charitable preparedness!

Being prepared is a skill and it can be a challenge. In light of National Preparedness Month, I am reminded of that summer before high school. There was little difference between what my classmate shared and what the news recounted after Hurricane Katrina; it was the same story from two different perspectives. Both of them inspired me to think hard about priorities in preparedness. As a donor, I may be tempted to donate clothes and other things I no longer have need for, but realized that the best way for me to thoughtfully express compassion starts with being absolutely positive that what I give is needed and requested.




That’s why Cash is Best! Cash donations to relief and charitable organizations working in disaster-affected communities can be used immediately to purchase supplies that are urgently needed, while supporting the local economy. Sending coats that don’t fit any more or out-of-season shoes to disaster sites can disrupt relief operations by taking up space needed to manage and distribute life-saving supplies. Therefore, it’s important for donors to understand that in-kind donations can be useful in the right circumstances but very harmful in others. For more information on donations and why cash is best, please visit: www.cidi.org.

The recent posting Analyze This on Philanthrocapitalism stated

In a speech at the conference, Ken Berger said that sometimes he cannot sleep for worrying that Charity Navigator’s ratings (of up to 4 stars) “may do more harm than good”. Its stars are awarded for “financial resilience”, which largely means the ratio of costs to money raised. This is widely recognized to be a lousy measure of effectiveness:, as anyone in business knows, it is costs (such as spending on recruiting the best talent, marketing etc) that often make success possible.”

From my own experience tracking aid in Thailand after the tsunami, I saw many examples where an emphasis on low administration costs did more harm than good.

Not enough orphans for all the orphanages

Needs assessments are expensive and increase administration costs, this meant that after the tsunami  aid agencies were unwilling to share their assessments. Giving another aid agency their assessment would have meant that the other agency would benefit from the information but not take a financial hit by paying for it. Therefore, each aid agency either had to pay for their own assessment – wasting overall funds through unnecessary duplication of work and leading to “assessment fatigue” in villages and government offices – or agencies simply developed programs without a needs assessment.

In one instance an orphanage was built without first determining if there were orphans in need of a home. The dearth of homeless orphans led representatives from the agency to visit my office seeking orphans, eventually they had to recruit street children. In another instance there were four aid agencies competing to lead children’s programs in a village of just 23 families, while

in a similar village 10 kilometers up the road had no aid agencies helping children.

Practices that are less expensive may appear more expensive

When I worked for the American Red Cross we funded four programs in six provinces. In order to save costs and increase coordination we decided to rent a single office in each province and hire a  coordinator, office manager, and cleaner which each program would share. We debated how to pay for this because paying for it directly meant the expenses were billed to general management, increasing our apparent administration cost. If, instead, we had given money to each program to rent their own office and hire their own staff it would have cost considerably more, but would have been billed as a program expense creating the appearance lower administration costs.

Taking advantage of the lack of communication between aid agencies

Many agencies gave out student “scholarships” (monthly or yearly payments into a bank account to pay for uniforms, books, etc). This was cost effective for the aid agency because all they had to do was send a team into the area for a week. They would meet with principals and students to choose aid recipients and set up bank accounts after that most things could be handled at a distance. There was no need to pay for an office, vehicle, or full-time staff. Unfortunately, principals, teachers, and students quickly learned to take advantage of the system to get multiple scholarships for the same students – some of which never made it to the students. This was done by repeatedly telling aid agencies that the students had not received any assistance, and then opening bank accounts at different banks. Students in easily accessible schools received more visitors and could get more funding. Students is more distant schools often received no assistance.

To keep administration costs low, agencies did not dedicate the time and staffing needed to communicate with other aid agencies. Because they came and went so quickly they did not spend time in the villages to hear what was really going on. This and other examples of unfair distribution of aid created animosity and distrust between villagers that had been neighbors for generations.

Why the focus on administration costs?

Charity rating agencies have very little information with which to work. In the US the only annual reporting required is the IRS I-90 form. Religious agencies don’t even have that requirement. As the Philanthrocapitalism article points out, getting any other information from aid agencies is extremely difficult.

“The biggest problem may be the lack of cooperation from non-profits themselves, not least because shockingly few of them actually collect meaningful data on their own performance. Berger recently asked the 100 biggest charities with a four star rating to provide him with performance data, and only 10% did.”

Changing how we rate aid agencies will change aid agency practices

Perhaps, instead of rating aid agencies on the percentage spent on projects, we could rate them according to their financial transparency. A base score could be assigned according to whether they regularly share their financial information with donors and aid recipients. Extra points could be awarded to those agencies that make their most recent audit findings available upon request.

The information used to rate aid agencies does impact aid agency practices (see related post). Agencies that score well are financially rewarded by donors, therefore priority is placed on those factors that lead to high scores. By changing how we rate aid agencies we can potentially improve aid agency practices.

Donations can be misused and ill-spent despite the best intentions of donors
Deciding whether or not to donate and which agency or project to donate to can be a daunting and frustrating task. Although donors choose aid agencies that they think will have the greatest impact, aid donations often are misused and ill-spent. This occurs both despite of and because of the best intentions of donors.

How does this happen?
Concerned about aid reaching those who need it the most, many donors give to aid agencies that work quickly and cheaply. Dependent upon donors for funding and survival, aid agencies feel pressured to develop programs that are fast and cheap. Unfortunately, projects with low administration costs and fast implementation rates often have unintended consequences.