Relief Charities Seek to Establish Their Own Crisis Funds

After violence erupted in Kenya earlier this year, Mercy Corps knew it wanted to send staff members to help. But the charity had to borrow against its unrestricted reserves to rush aid to the East African country, and then began raising money in hopes it could pay for its expenses.

Like a growing number of relief organizations, Mercy Corps wants to change that pattern. The Portland charity plans to use $3.75-million of the $25-million it seeks to generate through a fund-raising campaign to create a disaster fund that will make it easier to pay for assistance during the first days of a crisis.

“There’s so much that happens during the first 24, or 48, or 72 hours of an emergency, and we just want to be that much more ready to help,” says Johanna Thoeresz, vice president of development at Mercy Corps.

Reserve Funds

Many relief groups have taken similar steps in recent years to establish general funds for emergencies. They say the disaster programs help them avoid problems inherent in raising money for specific crises.

With such reserves, relief workers say, they can more quickly deploy aid, without fear of not being able to draw enough donations to meet needs or prevent their organizations from helping in a future crisis.

The funds also help support efforts in countries that don’t garner much news-media attention — or donations — and avoid scenarios similar to the 2004 Asian tsunamis, when some groups brought in more money than they could spend.

“It had become a high-wire act to bet the organizational farm every time a major disaster came up,” says Thomas Tighe, president of Direct Relief International, which established a $1-million fund last year. “We always responded, but we never had an identified way to pay for it.”

Some other charities that have recently created general funds:

• Action Against Hunger, in New York, began allocating $250,000 from its annual budget last year for general emergencies. The charity also hopes to create a $10-million fund to pay for emergencies, as part of a nearly $30-million campaign.
• Oxfam America, in Boston, established a $1-million Global Emergencies Fund following its experience during the Asian tsunamis, when it brought in more cash than it could use. Because the charity is able to pay for immediate aid through the fund, aid workers can take more time to assess needs at a disaster site before they issue an appeal to donors. That way, they have a better sense of how much money they will need to raise. “We’ve never had a situation since where we’ve brought in more money than we could program,” says Ken Mallette, director of the annual fund.

Direct Relief International and Oxfam America’s “revolving” funds are replenished annually. The charities might use money from the fund to speed aid to the Peru earthquake, for example, and then put donations that come in later for the earthquake to reimburse what they have spent on that disaster.

Mr. Tighe says that approach helps honor a donor’s intentions. “It seemed a clean way to get around the kind of pitfalls that arose most famously with September 11,” he says.

A Hybrid Fund

Some other charities are experimenting with different approaches. Mercy Corps’s fund might be a hybrid of a revolving fund and an endowment, says Ms. Thoeresz. Action Against Hunger hopes to create a permanent fund with the goal that it will spend only its earnings every year.

For some charities, general disaster funds are nothing new. CARE created a $2-million program in 1993, while World Vision has had three general funds since 2000 — including one for neglected crises and a second for high-profile emergencies. Doctors Without Borders, meanwhile, focuses on raising unrestricted gifts.

Charity officials say there are challenges to raising money for general funds, which are more abstract than specific crises.

“It takes a special donor to be able to anticipate a disaster,” says Ms. Thoeresz. “It’s much easier to respond to something you can visualize and imagine.”

Several relief groups use a variety of means to pay for their funds. World Vision, for example, created two funds with a gift from an anonymous donor, but continues to raise money through its Web site to replenish the reserves.

Oxfam America plans to use some money raised through a new $50-million capital campaign for its general fund. But it also gives people who are drawn to its Web site after an emergency the option of giving to relief efforts for that particular crisis or to the general fund.

Mr. Mallette says that approach has shown some success. “We do have donors who want to build the fund, even during an emergency,” he says.