Answers to Common Donation Questions
What Percentage of Donations Does Direct Relief Spend on Fundraising?
Direct Relief seeks to be efficient and frugal in all organizational activities, including fundraising activities. Since 2007, all of Direct Relief’s fundraising expenses have been paid by the earnings from a generous, unexpected bequest received that year and several other such legacy gifts since. This includes earnings that may accrue on restricted contributions. By longstanding internal policy and practice, any such earnings are deemed to retain the same restriction as the contribution. This is not required under Generally Accepted Accounting Rules but Direct Relief believes it right and proper to do so to ensure that the intended purpose of a donor’s restricted fund is honored.
Because Direct Relief is able to cover its modest fundraising expenses in this manner, zero percent of donated funds go to the organization’s fundraising activities.
Although not paid by donors’ gifts, Direct Relief’s fundraising expenses are, of course, disclosed and reported as required. Fundraising expenses average about 2 percent of the total cash revenue received by Direct Relief annually.
It’s important here to emphasize the distinction of cash revenue in relation to fundraising expenses because Direct Relief also typically receives significant donations of medications and supplies, many of which have a high financial value. Such in-kind donations must be recorded and reported as revenue. Indeed, the vast majority – typically more than 90 percent — of Direct Relief’s annual total revenue is in the form of in-kind medical donations. In recent years, the financial value of in-kind medical donations has exceeded $1 billion annually.
Although such in-kind donations are revenue, they obviously cannot be and are not used to pay fundraising expenses. So, it can be both confusing and misleading to present the organization’s fundraising expenses as a percentage of the vastly larger total revenue, which includes in-kind medical donations, than the cash contributions it receives. That’s why we call special attention to this.
Direct Relief understands from long experience that members of the public are often keenly interested in the basic question, “How much of my cash contribution will you spend on fundraising?”
In Direct Relief’s case, the answer is “Zero” because, as noted above, the organization is very fortunate to have the means to pay such expenses with funds previously received by bequests.
How can I be assured my donation is going directly to people in need?
Direct Relief’s donation policy ensures that 100 percent of all designated contributions for specific programs or emergency responses are used only on expenses related to supporting that program or response.
By clarifying that Direct Relief may use your contribution wherever most needed, you allow the organization to strengthen the long-term health systems that are vital to vulnerable people around the world and respond to emergencies that do not receive widespread attention. Direct Relief commits to spending your money in the most productive, efficient way possible.
If you wish to restrict the use of your donation only for a specific purpose or area, Direct Relief will honor that wish or tell you that it cannot and offer to return your contribution. Direct Relief has not and will not collect money for what may appear to be a specific incident or purpose with the intention of using it for other purposes.
How is Direct Relief Funded? Does Direct Relief Accept Government Funding?
Unlike many other nonprofit organizations, Direct Relief does not rely on any funding from government grants. Support comes entirely from private individuals, associations, foundations, and businesses who entrust Direct Relief with resources so that it can fulfill its humanitarian mission.
How is Funding for Emergencies Handled?
Direct Relief’s policy ensures that 100 percent of all designated contributions for specific programs or emergency responses are used only on expenses related to supporting that program or response.
This policy applies to all of Direct Relief’s disaster responses.
Direct Relief believes this is appropriate for honoring precisely the clear intent of generous donors who responded to these tragedies and to preserve the maximum benefit for the survivors for whose benefit the funds were entrusted to Direct Relief.
Direct Relief practices have long recognized the importance of enabling donors to communicate their intentions regarding donations and explaining how the organization carefully accounts for and uses designated contributions to honor the donors’ intentions. Direct Relief takes several steps to ensure that both donors’ intentions and the organization’s use of contributions are clear.
Ensuring Donor Intent
To ensure that donors have the ability to communicate their intention regarding a gift, Direct Relief’s online donation page allows people to provide instructions for how a donation is to be allocated among Direct Relief’s various program activities, including specific emergencies. Other methods of contributions, such as by check or wire transfer that include a notation in the check memo line or accompanying correspondence also will be considered as an instruction to restrict the gift for particular program activities.
Detailed Accounting for Emergency Funds
An internal fund is created with all designated contributions, and all expenditures related to emergency response are recorded for both internal management and external reporting purposes. Independently audited financial statements are prepared and published annually, but Direct Relief will share current information on its website as events unfold regarding programmatic activities and expenditures.
No Emergency Funds are Used for Fundraising Expenses
100 percent of Direct Relief’s fundraising expenses are paid by the earnings from a generous, unexpected bequest received in 2007 and several other such legacy gifts since. This means that no portion of any emergency contribution (or any other contribution) will be used for fundraising purposes.
What Restricted Funds May be Used For
Emergency contributions will be used only for emergency-related programmatic costs and administrative expenses directly related to the emergency response activity. Programmatic costs include those related to purchasing, storing, transporting, and distributing essential medical material to affected areas and the costs of programmatic staff and related travel for emergency relief assistance functions. Directly related administrative expenses include credit-card processing fees associated with the receipt of emergency contributions; accounting fees associated with managing emergency funds; postage related to issuing receipts to emergency donors; banking fees related to wire transfers of emergency donations; warehousing and packaging of medical material; and IT support costs that are necessary to conduct emergency-related programmatic activity (such as inventory management of medical material being provided in the relief effort).
General, unrestricted financial support is essential for Direct Relief to fulfill any of its deeply compelling humanitarian activities, including being able to respond rapidly to any emergency. Such unrestricted contributions always are needed and deeply appreciated and enable Direct Relief to assist people in many places and situations that do not make the news.
However, Direct Relief is obligated to—and will always—honor the intent of a donor-designated financial contribution. If a donor were to make a clearly restricted gift for a purpose or with a restriction that Direct Relief is not able to fulfill or comply with, Direct Relief will advise the donor of this situation and inquire if other uses may be permitted. In the event that a donor’s intent cannot be met by Direct Relief, the organization would offer to direct the gift to another nonprofit that would be able to fulfill the donor’s intent or return the gift.
State Nonprofit Disclosures
Certain states require written disclosures for nonprofit organizations soliciting contributions. Individual state disclosures are below.
Florida: A copy of the official registration and financial information may be obtained from the division of consumer services by calling toll-free within the State, 1-800-435-7352 (800-HELP-FLA), or visiting www.floridaconsumerhelp.com. Registration does not imply endorsement, approval or recommendation by the State. Florida Registration #CH3137
Georgia: A full and fair description of our programs and our financial statement summary is available upon request at our office and the phone number indicated above.
Maryland: For the cost of copies and postage, from the Office of the Secretary of State, State House, Annapolis, MD 21401.
Mississippi: The official registration and financial information of Direct Relief may be obtained from the Mississippi Secretary of State’s office by calling 1-888-236-6167. Registration by the Secretary of State does not imply endorsement.
Nevada: Contributions may be tax deductible pursuant to the provisions of sec. 170(c) of the Internal Revenue Code of 1986, 26 U.S.C. 170(c).
New Jersey: Information filed with the attorney general concerning this charitable solicitation and the percentage of contributions received by the charity during the last reporting period that were dedicated to the charitable purpose may be obtained from the attorney general of the state of New Jersey by calling (973) 504-6215 and is available at www.state.nj.us/lps/ca/charfrm.htm. Registration with the Attorney General does not imply endorsement.
New York: Upon request, from the Attorney General’s Charities Bureau, 28 Liberty Street, New York, NY 10005, 1-212-416-8686 or www.charitiesnys.com.
North Carolina: Financial information about this organization and a copy of its license are available from the State Solicitation Licensing Branch at 1-919-814-5400. The license is not an endorsement by the state.
Pennsylvania: The official registration and financial information of Direct Relief may be obtained from the Pennsylvania Department of State by calling toll-free within Pennsylvania, 1-800-732-0999.
Virginia: From the State Office of Consumer Affairs in the Department of Agriculture and Consumer Affairs, P.O. Box 1163, Richmond, VA 23218.
Washington: From the Secretary of State at 1-800-332-4483 or www.sos.wa.gov/charities.
West Virginia: West Virginia residents may obtain a summary of the registration and financial documents from the Secretary of State, State Capitol, Charleston, WV 25305.
Wisconsin: A financial statement of the charitable organization disclosing assets, liabilities, fund balances, revenue and expenses for the preceding fiscal year will be provided to any person upon request.
Registration with a state agency does not constitute or imply endorsement, approval or recommendation by that state.