Common donor misconceptions

Everyone has heard of aid agency waste and poorly implemented programs, but few people understand the underlying causes. Unfortunately, poor donor advice, heavy media coverage of “sexy” projects and locations, and aid agency advertisements targeting donor heartstrings, have made it so the average donor has many misconceptions about good donor practices. Donating based on these misconceptions may fund programs that are poorly implemented, unnecessary, or even do more harm than good.

Many people think that there is an international body regulating aid

Most people assume that the aid agency they are donating to is monitored and regulated.
In reality, there is generally no real oversight or regulation of aid agency work.

Two attempts to create a regulatory body under the League of Nations and the United Nations (U.N.) have both failed. It is up to the beleaguered government receiving aid to track, coordinate, evaluate, and regulate the hundreds of aid agencies pouring into their country. More often than not, countries receiving aid do not have the manpower, resources or regulations in place to do this. Once an aid agency has your donation they have the power to implement their program, whether or not it is needed or wanted.

Many people think that programs need to be implemented immediately after a disaster

Because giving is always greatest right after a disaster, aid agencies use the dramatic images and news coverage to help fund raise.
In reality, by the time your donation reaches the aid agency and the aid agency makes it to the disaster site, many of the basic requirements of food, water, and shelter have been met by neighbors, friends, family, civil society, the local government, and organizations that have stockpiled relief supplies. There is a chance that your donation will go to longer term recovery efforts. Thus, it is better to either donate on a regular basis to an aid agency with stockpiles of relief supplies, or donate part of your money now and wait until a needs assessment has been conducted and a coordinated response plan developed before donating the rest. However, for a coordinated response plan to be successful, donors must be willing and able to donate money several months after the disaster.

Many people think that low operational costs are key to choosing aid agencies

On the surface it makes sense that the less an aid agency spends on operational costs the more money goes directly to those they are trying to help. Many charity rating sites use the percentage of budget spent on operating costs as a major factor in charity ratings – although this is beginning to change.

In reality, operational costs are critical to ensuring that the right type of aid gets to those that need it the most. This requires a needs assessment that covers a wide enough area and includes the work of other aid agencies and the government. Good needs assessments help agencies avoid; duplicating the work of other agencies, undermining the work the government, or picking areas that do not have the greatest need. Experienced staff are needed to work closely with the aid recipients as well as coordinate with the government and other aid agencies. Evaluations of aid agency work are critical to ensuring that aid agencies continually improve their practices. Unfortunately, efforts to keep operational costs low may mean that aid agencies skip these critical steps.

Many people think that taking up a collection of goods to send to developing countries is a good way to help

Collecting new or used items to send overseas is appealing because it allows you to actively help out, while recycling items you no longer need. However, it is much better to buy goods locally.

In reality, most donated goods are far more expensive to ship than to buy locally. Sending donated goods can clog up the ports preventing other relief items from getting cleared in a timely manner. Donated goods often go unused because they are inappropriate to the local climate, culture, or religion. Donating goods can also undercut the local market, putting people out of business, thereby increasing the number of people in need of assistance.

Many people think that earmarking your money is a good way to ensure you donation is well spent

Common donor advice to earmark your money for specific projects seems to make sense because it allows you to pick the exact project or country you want to support. Many people feel that choosing how the money will be spent ensures that the money is well used.

In reality, earmarking funds often leads to wasted aid. Earmarking requires an aid agency to spend money even if the funds are far in excess of what is actually needed. Examples of this are mini-mansions and empty orphanages built after the tsunami. Earmarking also means that “sexy” projects are far easier to fund than non-”sexy” projects, such as helping people get the documentation needed to access government assistance.