Personal Finance

After the Storm: Make Your Disaster-Relief Donations Count

Charitable giving throughout the storm season can be an effective way to make a difference for others—and your tax strategy—if you do it as part of your investment plan.

November 11, 2019

When disaster strikes, many Americans want to help by donating to organizations that provide aid to those in need. For example, from July 2017 to June 2018, the American Red Cross used disaster-relief donations to render aid to millions of victims from 258 large-scale disasters¹ across the United States and its territories.

That included an unprecedented 22 major disasters² including hurricanes Harvey, Irma, and Maria, and 2017’s destructive wildfires in California. During that time, the Red Cross’ domestic disaster services spent $766.8 million to help individuals and communities with emergency assistance and recovery, food and shelter, disaster preparedness, and other kinds of relief.³

“Constant media coverage is now part of the aftermath of any catastrophe, so individual donors are much more aware of what each affected community needs,” says Deborah P. Lauer, Planning and Life Events Specialist at Wells Fargo Advisors. “Donors have the opportunity to be more effective with their responses.”

Build giving into your long-term investment plan

The urge to help others is powerful, but it’s worth developing deliberate philanthropic goals so your giving is part of your overall investment plan.

“Many Americans associate giving as part of the holiday tradition or as a last-minute tax strategy,” Lauer says. “But creating an annual giving budget that can be responsive to events like Hurricane Dorian can be more efficient for both the victims’ recovery and your own financial strategy.”

Events like hurricanes and tornados are often followed by a huge increase in donations to disaster relief organizations. While this outpouring of support is welcome, charities note that it’s more important to have the resources they need before disaster strikes.

Volunteers sort blankets and other disaster relief supplies.

Lauer supports this as a smart financial strategy as well. “Planned giving helps charitable organizations prepare rather than react,” she notes. “And it also gives you extra time to find charities that support your family’s values and are delivering the best benefit on a dollar-for-dollar basis.”

Know why you donate

Giving throughout the year instead of focusing on year-end donations can also help your family manage its philanthropy as part of its general budget. “Families have increased budget pressures at year-end with holiday travel, entertainment, and spending on presents,” Lauer says. “Giving midyear can help avoid that cash crunch.”

The extra time also allows donors to consider strategies beyond simply writing a check. For instance, donating appreciated securities owned for more than 12 months can be a tax-efficient way to give: You may be able to deduct the full market value of the securities (subject to adjusted gross income limitations) while avoiding capital gains taxes on those assets. But the process takes time, and a late start in December could mean missing out on that year’s income tax deduction. Working with your tax advisor early in the year can help you determine your potential tax benefits.

Organize your giving

If philanthropy is important to you, use this opportunity to incorporate it into your overall financial strategy. At the beginning of the year, set a total for your annual charitable giving based on your budget and the causes you want to support. But leave a little aside for sudden catastrophes so that you know how much you can afford to give regardless of the time of year you make the donations. Your financial advisor can help you work through this process.

“Incorporating charitable giving into your investment plan helps you know how much you can afford to contribute, regardless of when you give it,” Lauer says. “That way, supporting humanitarian causes is not just an emotional decision, but a deliberate one.”

After you identify which organizations will benefit from your donations, conduct due diligence to ensure the group is likely to use your donation effectively and efficiently. The Internal Revenue Service provides Tax Exempt Organization Search, a searchable web database of organizations designated as qualified charities. Verifying that your chosen group is on the list can help you avoid donating to a fraudulent organization.

Understand that giving abroad is complex

Each year Americans make significant donations to victims of disasters around the world. But such giving is complicated: Donations to foreign charities are generally not deductible for U.S. federal income tax purposes. If you do want to support relief efforts abroad, consider donating to a domestic charitable organization that has foreign partners active in disaster relief. Also, check the IRS website for guidelines in making international donations.

Charities and victims alike depend on the kindness of strangers for support after a disaster. If you make contributions throughout the year, your support will be available when needed the most, and you can make your generosity an integrated part of your financial strategy.


¹Defined as Level 2+ disasters, with costs of $10,000 or more;, page 1

²Defined as Level 4+ disasters, with costs of $250,000 or more;; page 1

³, page 6


Additional Resources

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This list of questions can serve as your financial fitness and crisis preparedness checklist.

Wells Fargo Advisors and its affiliates do not provide legal or tax advice.