In a time of crisis it may be tempting to consider establishing a new nonprofit organization to accept and disburse charitable donations. Resist the urge!

In general, working with and supporting existing charitable organizations is a more effective use of disaster relief resources. Community funds like the United Way and Feeding America have existing targeted disaster-relief programs, while charities with a local presence, such as the Downtown Women’s Center, the Los Angeles Regional Food Bank or Jewish Family Services of Los Angeles, know best what assistance is needed and how to deploy it effectively. Do your research (e.g., Guidestar, Charity Navigator) to ensure your charity of choice is in good standing with the IRS and, if you are considering a large gift, assess the charity’s capacity to manage a significant gift (annual budget size is relevant here).

However, it is appropriate to consider establishing a new public charity if:

1. No existing charity appears to have the capability to carry out an effective disaster relief or emergency hardship program

2. You have long-term charitable goals extending beyond the immediate crisis

Currently in Los Angeles and around California, numerous rapid response funds have been set up. A list of response funds vetted by Philanthropy California can be found by clicking here. In addition, many community foundations have waived their administrative fees for managing COVID-19 response funds. Key here is making sure the focus areas of the response fund you select support your charitable goals.

Finally, the IRS has provided comprehensive guidance for disaster relief through charitable organizations.

Note that the more favorable charitable giving provisions of the CARES Act do not apply to gifts made to private foundations or donor-advised funds, however the increased cap on deductions (see earlier Nonprofit blog post on the CARES Act expansion of charitable giving) is temporary and only available for 2020.

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POST WRITTEN BY

Donella Wilson

Donella Wilson, CPA, leads the Firm’s Nonprofit Practice and has 25 years of public accounting experience providing audit, accounting and special project services and works exclusively in the nonprofit sector. She is also President and Chief Philanthropy Officer for GHJ Foundation, the Firm’s…Learn More