Charitable Giving in Times of Crisis

There have been few events as consequential and as universal in their impact on everyday life around the globe as the COVID-19/Coronavirus Pandemic of 2020. At the time of this writing, reported cases of the Coronavirus have just crossed the one million mark1, and it’s estimated that about one-third of the world’s population is under some form of government-declared lockdown as a measure to slow the spread of the highly infectious disease.2

As governments attempt to allocate resources to best achieve the goal of slowing the spread of the virus, many organizations, families, and individuals are also looking for ways to marshal their own resources to help those who have been negatively impacted by the crisis due to the loss of a job or even a family member or friend. Crises like the current pandemic cause immeasurable emotional distress and hard-to-calculate economic turmoil, and these effects, in turn, create numerous opportunities to support those who have been impacted, either directly through individual support, or through collective support facilitated by charitable organizations and ministries.

With so many charities and ministries working to make a difference, and all of them vying for financial support, it can be difficult to make sense of which organizations are (a) legit and (b) actually effective in having a meaningful, positive impact on the community. The first presents a simpler test than the second; several reputable websites exist that offer information on the “legitimacy” of any given charity or ministry. These sites will typically allow anyone to see the filing status of a searched-for charity, and, with that information, one can at least rest assured that the organization is a legitimate non-profit, at least in the eyes of the IRS.3

The second hurdle is a bit higher, and with thanks and full credit to Marguerite H. Griffin, Director, Philanthropic Advisory Services at The Northern Trust Company, the following is a list of criteria that can be used to help you navigate which charities will help you realize the most substantial impact with your charitable gifts. Answering the following questions may help you to narrow down the list of options as you try to navigate through them: (1) Is this organization’s cause relevant and necessary under the current crisis? (2) Is the organization capable of actually helping in the way they promise and do I trust them to carry out their promise? (3) Can the organization leverage my gift to secure further funding? (4) Is the organization in a position to continue its work after this current crisis has passed? (5) Is it possible for me to redirect prior restricted or earmarked gifts that I’ve made to this organization?4

Taking some time to do some basic research about the organizations asking for your financial support can go a long way toward giving you peace of mind about how your gifts are being used and that your support is being focused in the areas that are most critical in times like these. If you’re still wary of offering your support to an organization you’re not familiar with, it may be for good reason. Crises offer opportunities for fraudsters and scammers, and this one is no different in that regard.5 The one surefire way to avoid falling for a charity fraud or scam is to support the causes you’re most familiar with. There’s a reason you supported these causes and ministries in the past, so why not continue to support them now? This crisis has put some strain on everyone, and the organizations that typically depend on your support will certainly welcome it now as they strive to assist a growing number of people looking for help.

1 https://www.worldometers.info/coronavirus/coronavirus-cases/#total-cases

2 https://www.businessinsider.com/countries-on-lockdown-coronavirus-italy-2020-3

3 Some of these sites include: CharityWatch.org, GuideStar.org, or CharityNavigator.org.

4 Griffin, Marguerite H., “Insights from Northern Trust,” April 6, 2020.

5 https://www.consumer.ftc.gov/features/coronavirus-scams-what-ftc-doing

The information provided is general in nature, educational and is not intended as either tax or legal advice. Consult your personal tax and/or legal advisor for specific information. Covenant Trust is incorporated in the State of Illinois and is supervised by the Illinois Department of Financial and Professional Regulation. Covenant Trust accounts are not federally insured by any government agency. Clients may lose principal as a result of investment losses.