Lessons Learned from Recent Natural Disaster Relief Funds: Part 1 of 3

Lessons Learned from Recent Natural Disaster Relief Funds: Part 1 of 3

Article posted in Ethics on 21 April 2015| comments
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Summary

Bryan Clontz presents a compelling analysis of disaster relief giving and presents some best practices for charities to consider for the future.

By: Bryan Clontz, CFP®, CAP®, Doug Stockham, MBA and Ryan Raffin, JD

Abstract

With the United States’ emergence from the Great Recession, Americans’ giving to charity has increased over the last four years. In 2013, individuals contributed more than $240 billion (Giving Institute, 2014). With population, urbanization, world economies and the frequency of natural disasters all increasing, established relief organizations are expanding and new charities are popping up after every event.

By definition, natural disasters bring sudden, often devastating damage to communications, transportation, and other infrastructure. Fortunately, they also bring overwhelming monetary and in-kind aid from donors. Charities may find it difficult in the chaos after a disaster to manage fundraising, aid distribution, volunteer coordination, and the thousand other details they face. This report seeks to review the types and choices of funds to better understand financial responses to natural disasters.

This paper examines recent domestic and international natural disaster response funds. It then develops a set of best practices by comparing and contrasting amounts and types of several funds, analyzing fund policies, extrapolating behavior to model or avoid, and identifying any other lessons learned that promote benefits to victims of disasters.

Introduction

Incidences of natural disasters have dramatically increased over the last 20 years. Over the last decade, an average year saw 200 million people affected by meteorological and geological disasters.  During that period, disasters caused an average of $156.7 billion in annual damage (MunichRE, 2014). Over the last 10 years, China, the United States, Indonesia, the Philippines, and India have experienced the most disasters, annually (Centre for Research on the Epidemiology of Disasters, 2013). This is understandable, as only natural events that impact people qualify as disasters. But 88 percent of the fatalities caused by disasters were in low- or middle-income countries where limited resources and infrastructure may hinder rescue efforts. The frequency and severity of natural disasters likely will continue to climb as the world’s population grows and urbanizes more and more territory.  What’s more, nearly three-quarters of the $3.8 trillion in worldwide disaster costs since 1980 has been the result of weather-related phenomena (World Bank, 2013).

More catastrophes and more devastating results mean greater need for disaster relief. By understanding the successes and failures of recent disaster fundraising campaigns, charities may begin to plan for, react to, and thereby mitigate the economic and humanitarian devastation of the next natural disaster. By developing a set of best practices in fundraising, marketing, strategy, procurement, charities can improve their efficiency and effectiveness. These improvements will bring more relief to more people in a timelier manner the next time disaster strikes.

Thesis

This article reviews domestic and international charitable responses to recent natural disasters by comparing and contrasting the number and types of funds involved to identify evidence of best practices and pitfalls charities should avoid in the future. In addition, it will examine two organizations, The American Red Cross and the Robin Hood Foundation, more closely to see what behaviors can be modeled from their experiences, operations, policies, results, and public and official responses.

Domestic Response Funds

A number of domestic natural disasters over the past several years have captured the country’s attention and sympathy and drawn large charitable responses. In late October 2012, Hurricane Sandy hit the beaches of America’s east coast. In its path, it left 285 people dead (150 of them Americans) in seven countries, causing some $70 billion in damage. Less than seven months later, on May 20, 2013, one of the most powerful tornadoes ever recorded struck Moore, Oklahoma. The EF5 class twister was part of a string of tornadoes that touched down over a period of days, wreaking destruction on Newcastle, OK, Joplin, MO, and other communities across the American Midwest. The Moore storm resulted in 24 fatalities and $2 billion dollars in property damage (American Institute of Philanthropy, 2013).

Within days of the storms’ subsiding, charities sprang into action, mobilizing fundraising initiatives, recruiting volunteers, and distributing critical supplies. Because of the sheer magnitude of Hurricane Sandy, and the fact that the world could track its path and knew the approximate time and place it would hit the Eastern Seaboard, relief efforts were swift.

Charities, both longstanding and ad-hoc, established specifically in response to the disaster, raised $575 million. The American Red Cross collected more than half the donations, at $310 million. While 89 charities raised money for benefit of hurricane victims, the top five accounted for 80 percent of all contributions collected (Charities Bureau, 2013). The Robin Hood Foundation collected $65 million, and the Mayor’s Fund to Advance NYC took in more than $57 million.

Fundraising data for the Moore tornado was more difficult to quantify. Many of the funds collected and disbursed were handled by the Oklahoma Disaster Recovery Project (ODRP), a consortium of several large charities: the Red Cross, Salvation Army, Catholic Charities, United Methodist Committee on Relief, and the Society of St. Vincent de Paul. In addition, the OK Strong fund, set up by the state’s first lady, was administered through the United Way. Various sources pegged the total amount raised at around $100 million. Again, the Red Cross led the way with $52.4 million collected, with the United Way/OK Strong and the Salvation Army taking in $18 million to $20 million each (Red Cross, 2014A, KJRH, 2014, Salvation Army, 2014).

International Response Funds

Typhoon Haiyan ravaged the Philippines on November 8, 2013, killing an estimated 6,000 and causing damage approaching $1 billion (Weather, 2013). The January 2010 earthquake in Haiti, with its epicenter near the capital of Port-au-Prince, dwarfed those numbers. Nearly a quarter-million people were killed, and damage estimates ran as high as $13.9 billion – more than the country’s gross domestic product. (Washington Post, 2010).

Again, people from around the world were quick to donate to charity, collecting some $1.2 billion for Haiti and nearly $500 million for the Philippines. The American Red Cross again collected the most money for relief efforts in both Haiti and the Philippines. In Haiti, it secured $486 million. The U.S. Fund for UNICEF collected $351 million ($76.4 million from the United States). Eight charities collected more than $100 million each for efforts following the earthquake. In the Philippines, where contributions reached $468 million (United Nations, 2013), the fundraising was even more evenly distributed among the leading charities. While the American Red Cross again led the way with $85.7 million earmarked for Typhoon Haiyan relief, others raised nearly as much. World Vision collected $67.7 million; Doctors Without Borders $49.3 million; and Catholic Relief Services, $44.1 million (American Red Cross, 2014; Word Vision, 2014; Doctors Without Borders, 2014; Catholic Courier, 2014).

Several interesting observations can be made from these numbers. While Americans gave generously to all four disasters, they responded more strongly to those on American soil. Since America is the richest country in the world, this constrains the donor pool for disasters outside the U.S. The fact that the people in both Haiti and the Philippines are about 80 percent Catholic perhaps spurred additional donations to Catholic Relief Services, which was a major contributor to both earthquake and typhoon relief efforts. Non-U.S.-based charities also presented massive contributions to the events outside the U.S., but were much less visible for the American tragedies.

DISASTER ESTIMATED DAMAGE
($millions)
TOTAL COLLECTED
($millions)
COLLECTED BY CHARITY
($millions)
HURRICANE
SANDY
$70,000 $575 RED CROSS - $310
ROBIN HOOD - $65
MAYOR'S FUND - $57
MOORE TORNADO $2,000 $100 RED CROSS - $52.4
UWAY/OK STRONG - $20
SALVATION ARMY - $18
TYPHOON
HAIYAN
$1,000 $486 RED CROSS - $86
HAITIAN
EARTHQUAKE
$13,900 $1,200 RED CROSS - $486
US for UNICEF - $351

 

Similarities Among the Largest Funds

Despite frequent and vocal criticism (discussed below) the American Red Cross led fundraising efforts in all four disasters profiled in this report. This, of course, is due to its wide and broad network of volunteers, and an established infrastructure that allows it to respond at a moment’s notice to disasters around the world. This is especially important when delivering aid to remote areas where transportation, communications and government services have been interrupted. This was the case around Tacloban, a Philippine city especially devastated by Haiyan. The Red Cross considers the feeding, provisioning, and comforting of disaster victims as one of its key purposes. Its website notes that 91 percent of all donations are used for humanitarian services and programs.

David Meltzer, chief international officer for the American Red Cross, explained that “[t]he American Red Cross [was] in a unique position to help provide support by airlifting relief supplies from its warehouses around the world, providing trained disaster responders specializing in damage assessment and telecommunications” (American Red Cross 2013).

In fact, all the largest fundraisers are charities that were established and providing aid long before these recent crises emerged. The Robin Hood Foundation, which boasts several investment bankers, hedge fund managers and other Wall Street and society elites among its directors, set up a disaster relief fund after the September 11 terrorist attacks. That institutional knowledge helped the foundation’s Hurricane Sandy Relief Fund raise $10 million and get $3 million to worthy grant recipients throughout the New York/New Jersey/Connecticut region within a week of the hurricane’s landfall (Robin Hood Foundation). Interestingly, 100 percent of the donations to the foundation’s efforts are used to help victims; the foundation’s directors pay all administrative costs.

Both these organizations rely on entrenched institutional knowledge to perform their specialties. For the Red Cross, this experience is centered on its field operations and paid staff which coordinates communications, service delivery, and fundraising. For Robin Hood, the knowledge comes in the form of financial planning, analysis of potential grant recipients, and management assistance.

Differences Among the Largest Funds

Several differences exist between the Red Cross and Robin Hood, relating to their missions, donor targets, disposition of collected funds, etc. Furthermore, these different approaches may hold lessons for established charities looking to launch a disaster-relief campaign or for people or organizations contemplating establishing creating charity to aid victims of a specific natural disaster. As mentioned earlier, both these large non-profits leverage their human capital to accomplish their goals. The core competencies the two charities possess, however, are quite different. As a result, their aims and approaches take divergent paths toward helping victims.

As a full-service, “boots on the ground” relief agency, the American Red Cross must concern itself with myriad logistical matters.

During the emergency relief and recovery phases of a disaster, the agency tracks requisitions and costs of goods and services from the initial purchase order through delivery at the disaster site anywhere around the world. These efforts are often directed at areas where transportation and communications have been disrupted by the natural disaster. To minimize financial and time costs, the Red Cross positions supplies in locations liable to experience a disaster (tornadoes in the Midwest; hurricanes along the Gulf and Atlantic coasts, earthquakes in California, etc.) Its supply chain management and infrastructure enable it to consistently ensure delivery of emergency supplies to disaster victims within 24 hours of the order being placed to vendors, with less than 2 percent loss / spoilage (American Red Cross, n.d.)

The charity relies on a small paid staff and thousands of volunteers to fill these roles. However, because the volunteers often hold full-time jobs, the time they can devote to relief efforts is necessarily limited. This leads to management turnover, as workers are shuttling into and out of the disaster site based on their availability. Also, to make the most efficient use of its leadership personnel, the Red Cross has established hundreds of chapters across the world. A Red Cross chapter in a peaceful community may have only one staff member and a miniscule budget. But if disaster strikes, it may find itself struggling to direct an operation of “1,000 employees and volunteers distributing meals and assistance in excess of $25 million. That expansion generally takes less than a week, as trained Red Crossers pour in from across the region” (American Red Cross, (2006).

The Robin Hood Foundation, on the other hand, makes monetary grants to establish programs that already have “demonstrated success at helping people build better lives for themselves and their families,” and new endeavors “built on research into what works or bold new ideas” (Robin Hood Foundation, n.d.). This gives Robin Hood the luxury of leaving the administration of aid to partners with experience in the area. It does, however, take a hands-on approach to management and leadership in the organizations to which it grants funds.  Robin Hood seeks to “augment and protect donors' investments in these life-saving organizations [by lending its] expertise directly [or recruiting] best-in-class providers of professional services,” says Robin Hood Foundation Managing Director of Management Assistance Amy Houston. For instance, Robin Hood may aid the grantee in hiring additional staff when disaster strikes. Or it may procure accountants, attorneys, marketers, or other professionals.

DISASTER FUND STRENGTHS WEAKNESS/CRITICISMS
AMERICAN RED CROSS Established Infrastructure
Volunteer Network
Trusted Name
Potential Logistical Breakdown
Slow to Distribute Funds

ROBIN HOOD
FOUNDATION

Management Expertise
No Administration Funds*
Speedy Distribution

Little Control of Grantees' Activities
Perceived as "Rich Person's Charity"
No "Boots on the Ground"

Not providing direct assistance for victims does not relieve the Robin Hood Foundation of the task of ensuring accountability to its donors and to its recipients. That process entails not only analyzing its own operations, but those of its grantees. The foundation vets its grant partners on several criteria: Leadership potential, how well the potential partner’s goals mesh with Robin Hood’s own, management capabilities, relevant experience, evaluation of program model, and other “venture philanthropy” metrics similar to how venture capitalist firms analyze entrepreneurial businesses. The foundation believes it fills a need for building charities’ infrastructure “that will ensure efficient scale and effective programs…effective evaluation and the time required to complete it. Encouraging groups to craft and use that data so that it can shape improvements in the program is an important, but time-consuming task” that the Robin Hood Foundation undertakes (Venture Philanthropy Partners, 2001).

Lessons Learned and Best Practices Moving Forward

Mission and Strategy

Several lessons have emerged from recent natural disasters and charitable responses. These lessons can serve as a roadmap for groups wishing to respond to a natural disaster, either by creating a relief organization or launching a targeted campaign from within an already-established organization.

“Disasters tend to happen quickly and with overwhelming force. The same holds true for fundraising in the aftermath of a disaster. The more planning you do in advance of the disaster, the better equipped you will be to handle the outpouring of support that immediately follows such devastation” (Z Smith Reynolds, 2005). Prior planning is the best way to create confidence that a new charity will be successful. This may seem difficult – after all, how can you plan for something if you don’t know where, when, or exactly what you are planning for? But it is possible to draw a broad outline of the people you want to help, what assistance you want to provide, who will compose your core leadership team and what roles they will play, how you will receive and distribute the funds you collect, and a hundred more questions. It is equally important that new charity initiatives have policies in place to ensure compliance with laws, regulations, and ethics.

With these guidelines established beforehand, the organization can concentrate on helping victims rather than on procedural matters when calamity strikes. Planning in this area starts with finding an unmet need and determining how to meet it. If your primary concern is ensuring disaster victims are fed, clothed, and housed in the immediate aftermath of a tragedy, your best bet may be to partner with an existing charity. Raising funds and contributing them to an organization such as the Red Cross whose expertise, established supply chain, buying power, and network of experts will support effective, efficient use of the money you raise. On the other hand, you may find that other sources can address these immediate needs sufficiently well. If so, you may decide to focus on long-term, often-overlooked or niche needs such as survivor counseling, resumption of education, home repair, job training, and the like.

Communication

Raising money for established charities may be easier than building a relief organization from the ground up, but it requires planning and communication with the partner organization. “That wasn't the case after Hurricane Sandy, when many well-intentioned groups ran print and television ads for months, saying the best way to help was to donate to the Red Cross. Those ads continued long after the Red Cross had stopped dedicating donations to its storm response” (Associated Press, 2014).

Communication and coordination among charitable organizations are necessary at all stages of relief work to mitigate duplication of efforts and prevent overfunding some areas while leaving others wanting. It is just as important within your organization. According to the Z. Smith Reynolds Foundation (2005), “coordination between your communication and fundraising teams is important to ensure key messages are consistently and effectively reflecting community needs.”

In addition, communication with donors, local government officials, victims, and the media will play a vital role in the success of your endeavor. Messages must be crafted to appeal to each target market. Effective external communications framing will consider the organization’s goals, mission, and the audience’s demographic and economic characteristics in choosing the message, the medium used to deliver it, and the timing of the presentation to motivate donors (Timmerman 2003.)

The marriage of message to medium is especially relevant in today’s technology-driven society. Charities seeking contribution from the Millennial Generation may choose to seek donations using social media platforms. If that strategy includes Twitter solicitations, the message necessarily must be confined to 140 characters. “These communication media mandate that messages are crafted with brevity and immediacy, limiting the construction of message appeals. Senders must, therefore, pay extra attention to message characteristics that will successfully influence the receiver” (Schlimbach, 2013).

Whatever the medium or the specific content of the message, keep it short, simple, and positive (Z. Smith Reynolds, 2005). It is best to focus on the people and the stories of how donations have made a difference in their lives, rather than on the amount of money raised. And don’t forget the call to action (“click here to contribute”, “text ‘donate’ to 1111 to give $10,” etc.)

MISSION/STRATEGY COMMUNICATION TRANSPARENCY/ACCOUNTABILITY

Establish a Consistent Collection and Distribution Policy

Get Key Players on Board and Make Sure They Understand Their Responsibilities

Establish the Charity's Tax-Exempt Status

Coordinate Efforts with Local Government, the Media, and Especially Other Charities with Similar Missions or with Which a Grantor/Grantee Relationship Exists

Craft Messages Carefully, and Target Them to Specific Audiences and Stakeholders

Develop a Social Media Strategy for Communications and Collections

Make Sure Donors Know They Can Earmark Contributions for Specific Disasters

Make Such Designations Easy to Perform

Make Sure Victims Understand the Charity's Mission: Who It Aims to Help, How It Will Assist, and When Funds Will Be Made Available

 

Transparency and Accountability

As mentioned earlier, miscommunication was partly responsible for controversy surrounding the way the Red Cross allocated contributions to its Hurricane Sandy relief campaign. The Red Cross and other charities instituted cut-off dates after which it would not guarantee all funds raised in their respective Sandy campaigns would be used for relief efforts along the Atlantic Seaboard. After that date, only contributions specifically earmarked would go to hurricane relief. While this is an acceptable practice, it is important that donors understand the policy, and that they can easily designate or restrict their contribution to help victims of specific events (Charities Bureau, 2013).

This practice is especially disturbing given the sheer volume of donations received in Sandy’s wake. The spike in donations made donors’ intent clear. It is a charity’s duty to guarantee any money collected is used the way donors intend. Charities must clearly communicate their fulfillment of this duty to contributors and allow those donors to make informed decisions about which organizations to support in the future.

Accountability extends to distributing funds as well as collecting them. Establish and stick to criteria for determining which individuals or agencies will receive the aid you collect. This policy should include a description of the aid community, the amount each recipient is eligible for, how the funds can be used, and how much and in what time frame the money will be distributed (Connecticut Attorney General).

Conclusion

This article’s quick overview of how large funds operate is meant to offer other charities guidance in moving towards a world that will require faster, bigger, and more accountable responses from disaster relief funds. By identifying best practices and lessons learned from mistakes made in earlier campaigns, the report seeks to identify procedures that lead to strong, appropriate, and efficient disaster relief among non-government organizations. It is true that every disaster is unique, and aid responses to them must necessarily incorporate their real-life, ground-level characteristics. Given that, this review pinpoints specific criteria which has emerged from earlier disaster responses that other organizations can use when establishing, organizing, expanding, and operating their disaster relief charities. Specifically, charitable funds that are perceived most positively incorporate recognized and accepted organizational values and ethics throughout their collective culture.

References

American Institute of Philanthropy. (2013). The best way to help victims of Superstorm Sandy. Retrieved 07 August 2014 from http://charitywatch.org/hottopics/sandy_2012.html

American Red Cross. (2014). Oklahoma Tornadoes: one-year update. Retrieved 25 October 2014 http://www.redcross.org/images/MEDIA_CustomProductCatalog/m32540080_Okla...

American Red Cross. (2014). Red Cross Typhoon Haiyan work in Philippines turns to recovery. Retrieved 19 October 2014 from http://www.redcross.org/news/article/Red-Cross-Sends-Support-to-Philippines-for-Typhoon-Response.

American Red Cross. (2013). Red Cross contributes initial $6 million for typhoon response. Retrieved 14 October 2014 from http://www.redcross.org/news/press-release/Red-Cross-Contributes-Initial-6-Million-for-Typhoon-Response.

American Red Cross. (2006). From challenge to action: American Red Cross actions to improve and enhance its disaster response and related capabilities for the 2006 hurricane season and beyond. Retrieved 20 October 2014 from  http://www.redcross.org/images/MEDIA_CustomProductCatalog/m4340124_Chall....

American Red Cross. (n.d.) American Red Cross disaster logistics (PowerPoint). Retrieved 21 October 2014 from  http://www2.isye.gatech.edu/humlog09/program/disasterredcrossparnell.pdf.

Associated Press. (2014). Red Cross to make changes in disaster fundraising. Retrieved 24 October 2014 from http://bigstory.ap.org/article/charities-agree-speed-sandy-aid-programs.

Catholic News Service. (2014). “Special collections raise $24.5 million for Typhoon Haiyan recovery.” Retrieved 18 October 2014 from http://www.catholiccourier.com/news/world-nation/special-collections-raise-245-million-for-typhoon-haiyan-recovery/.

Charities Bureau. (2013). Charitable Response to Hurricane Sandy, Interim Report.  Retreived 18 October 2014 from http://www.ag.ny.gov/pdfs/Hurricane%20Sandy%207-16%20Final.pdf

Connecticut Attorney General (n.d.). Charities Disaster Relief Guide. Retrieved 21 October 2014 from http://www.ct.gov/ag/lib/ag/charities/charitiesdisasterguide20140618.pdf.

Doctors Without Borders. (2014). Typhoon Haiyan relief – Philippines. Retrieved 18 October 2014 from http://www.msf.ca/en/typhoon-haiyan-relief-philippines.

Giving Institute, The (2014). The Annual Report on Philanthropy for the Year 2013. Philadelphia.

KJRH-TV (2014). Moore tornado relief: where did your donation money go? Retrieved 18 October 2014 from http://www.kjrh.com/news/local-news/investigations/moore-tornado-relief-....

MunichRE. (2014, February). Loss events worldwide 1980 – 2013: 10 costliest events ordered by overall losses. Retrieved 08 August 2014 from http://www.munichre.com/site/corporate/get/documents_E-311190580/mr/assetpool.shared/Documents/5_Touch/_NatCatService/Significant-Natural-Catastrophes/2013/10-costliest-events-ordered-by-overall-losses-worldwide.pdf

Robin Hood Foundation. (n.d.) Robin Hood responds: Sandy: One year later. Retrieved 14 October, 2014 from https://www.robinhood.org/rhsandy#section-6.

Robin Hood Foundation (n.d. B) Get funding FAQ. Retrieved 21 October 2014 fromhttps://www.robinhood.org/programs/get-funding-faq#1340.

Salvation Army (2014). Salvation Army Marks One-Year Anniversary of 2013 Central Oklahoma Tornadoes. Retrieved 17 October 2014 from http://www.salvationarmyusa.org/usn/news/Salvation_Army_Marks_One_Year_A....

Schlimbach, Hilary Jennet. (2013). How disaster relief organizations solicit funds: The effects of disaster presence, message framing, and source credibility on an individual’s intention to donate. Retrieved 22 October 2014 from http://repositories.lib.utexas.edu/bitstream/handle/2152/22496/schlimbac....

Timmerman, C.E. (2003). Media selection during the implementation of planned organizational change; A predictive framework base on implementation approach and phase. Management Communication Quarterly, 16 (3), 301-340.

United Nations Office for the Coordination of Humanitarian Affairs. (2013). Emergency: Phillippines: Typhoon Haiyan – November 2013. Retrieved 18 October 2014 from http://www.unocha.org/crisis/typhoonhaiyan/funding.

Venture Philanthropy Partners. (2001). Venture Philanthropy Organization Profiles. Retrieved 24 October 2014 from http://www.vppartners.org/sites/default/files/reports/profiles2.pdf.

Washington Post. (17 February, 2010). “Haiti earthquake damage estimated up to $14 billion.” Retrieved 18 October 2014 from http://www.washingtonpost.com/wp-dyn/content/article/2010/02/16/AR2010021605745.html

Weather Channel. (2013). Typhoon Haiyan one month later: 1,900 still missing, 4 million displaced. Retrieved 12 October 2014 from http://www.weather.com/news/weather-hurricanes/typhoon-haiyan-one-month-later-20131210.

World Bank (2013). Building Resilience: Integrating climate and disaster risk into development. Retrieved 12 October 2014 from https://www.documentcloud.org/documents/835955-wbg-2013-building-resilience.html.

World Vision. (2014). Typhoon Haiyan response: 6-month report. Retrieved 18 October, 2014.

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