Podcast Summary: "Providing Charitable Assistance to Survivors of a Disaster"

ACTEC Trust & Estate Talk
Host: Chung Choi, ACTEC Fellow, Los Angeles, CA
Guest: Sue Abbott, ACTEC Fellow, Boston, MA
Date: March 31, 2026
(Content timestamps follow MM:SS format.)

Episode Overview

This episode addresses the vital role that charitable organizations play in supporting survivors in the aftermath of disasters. Host Chung Choi and guest expert Sue Abbott explore how attorneys and advisors can assist with structuring and navigating charitable aid, including working through existing organizations, using fiscal sponsorship, or creating new entities. The conversation provides detailed legal and practical guidance on best practices and compliance for providing disaster relief in alignment with IRS requirements.

Key Discussion Points & Insights

1. The Importance of Thoughtful Planning for Disaster Relief

[00:38 - 01:43]

Disasters are unpredictable, but effective, pre-planned charitable assistance is crucial for recovery.
The previous episode covered preparedness; this episode zeroes in on the aftermath and the legal structuring of relief efforts.

2. Advising Charitable Organizations in Disaster Relief

[01:43 - 09:49]

Focus: The discussion targets attorneys advising charities rather than direct giving or employer-sponsored aid, though those topics are referenced in the new ACTEC Foundation Handbook.

a. Working with Existing Charities

Best practice is to partner with established organizations, leveraging their experience, reach, and resources.
Mission Alignment: "The charity's mission must encompass the disaster relief that is envisioned. If it does not, its organizational documents may need to be amended." (Sue Abbott, [02:28])
New activities must be reported on Form 990, and activities must comply with 501(c)(3) requirements.

b. Fiscal Sponsorship as an Alternative

Fiscal sponsorship allows projects to seek charitable funds without forming a new 501(c)(3).
Key Requirements: Sponsor must maintain discretion over donated funds; mission alignment and a written agreement are a must.
Ideal when needs are immediate or project lifespan is brief.
Quote: "A fiscal sponsorship can sometimes be a good option in the disaster relief context, where needs are immediate and a project may be limited in duration." (Sue Abbott, [04:11])

c. Forming a New Charity

Necessary if no existing charity or sponsor is viable.
New charities must meet all 501(c)(3) standards: exempt purpose, no private inurement, and compliance with limits on political activities.
Classification as a public charity vs. a private foundation depends on funding sources and activities.
The process, including expedited IRS approval (Form 1023), can still take weeks.
IRS Publication 3833 provides guidance for expedited approval in disaster contexts.
Quote: "One of the big issues for any new charity will be timing. It will probably need to request expedited approval of its Form 1023, the application for 501 status, and it will need to be aware that even expedited approval will likely take weeks." (Sue Abbott, [05:54])

Legal and Practical Requirements for Disaster Relief Charities

3. Charitable Purpose Requirements

[06:26 - 08:46]

The organizational documents of the charity must explicitly cover disaster aid.
Immediate aid (food, shelter) qualifies as charitable.
Long-term aid (especially financial assistance) generally requires financial need assessment.
The IRS typically requires documentation showing aid recipients are selected based on demonstrated need, not just disaster survival.

Needs Assessment Best Practices

Establish objective, documented criteria for aid disbursement.
Keep records of: recipient selection processes, needs determinations, the aid’s nature and value, and the identities of recipients.
If unable to implement these controls, consider granting to other charities that can.
Quote: "Charities lacking the infrastructure to engage in this type of needs testing may wish to consider granting funds to other charities that do have that ability." (Sue Abbott, [08:13])

4. The Charitable Class Requirement

[08:46 - 09:35]

Aid must benefit a sufficiently large and indefinite group ("charitable class").
Challenges arise when a new charity is limited to a small, defined group of survivors.
Consider expanding scope to include future disasters, and reflect this in organizational documents and operations.
Donor gifts cannot be earmarked for specific individuals or families.

5. The “Lessening the Burdens of Government” Approach

[09:35 - 09:49]

Some charities may qualify under 501(c)(3) by helping with what is traditionally a government function.
Example: The One Fund Boston (Boston Marathon bombing, 2013), which operated with significant government involvement and lessened a governmental burden.
Approach is specialized; discussed in detail in the ACTEC Handbook.

Memorable Quotes & Notable Moments

“Nothing is certain except death, taxes and disasters.”
— Chung Choi, [00:38]
"In most cases, it will be best to work through an existing charity, leveraging the charity's experience and resources.”
— Sue Abbott, [02:11]
"Disaster victims are not automatically eligible for all forms of charitable assistance simply by virtue of surviving a disaster... charitable organizations providing aid generally must show that distributions are made based on demonstrated financial need."
— Sue Abbott, [07:21]
"For any charitable activity, the group of individuals served must be sufficiently large and indefinite to qualify as a charitable class. This requirement can be difficult to satisfy in the disaster relief context, particularly for a new organization formed specifically to benefit survivors of a particular disaster..."
— Sue Abbott, [08:46]
"That is a quick overview of the legal framework for charitable organizations providing aid to the survivors of a disaster. I hope it is helpful to you if you are ever asked to advise charitable organizations in your community in the wake of a disaster."
— Sue Abbott, [09:49]

Key Takeaways

Partnering with existing charities or using fiscal sponsorship often provides the fastest, most compliant means of delivering disaster aid.
New charity formation is possible but can be time-consuming and complex, requiring careful IRS compliance.
Long-term or financial assistance demands a needs-based approach, with careful record-keeping and recipient selection.
The "charitable class" requirement is crucial—avoid narrowly defined, closed beneficiary pools.
In some cases, a charity may be structured to lessen government burdens, offering an alternative pathway to compliance.

Resource Mentioned:

ACTEC Foundation Handbook – a comprehensive attorney resource for disaster aid (available via ACTEC Foundation website).
IRS Publication 3833 – guidance on disaster relief and expedited IRS procedures.

Transcript

A (0:05)

Providing charitable assistance to survivors of a disaster that is the subject of today's ACTEC Trust and Estate Talk.

B (0:13)

Welcome to ACTEC Trust and Estate Talk from the American College of Trust and Estate Council, a professional society of peer elected trust and estate lawyers in the United States and around the globe. This series offers professionals best practice advice, insights and commentary on subjects that affect our profession and clients. And now, our ACTEC Fellow host with today's topic.

A (0:38)

This is ACTECH Fellow Chung Choi of Los Angeles, California. Nothing is certain except death, taxes and disasters. Although we can't predict when disaster will strike, thoughtful planning can help individuals, families and communities prepare, respond and recover. In last week's episode, Disaster Preparedness for Trust and Estate Planning, we discussed steps families can take before disaster occurs. Today, we're continuing that conversation by focusing on what comes next when the unthinkable happens. Charitable organizations and community support often play a critical role in helping survivors rebuild their lives. ACTEC Fellow Sue Abbott of Boston, Massachusetts will discuss some of the many ways charitable resources can be directed to disaster relief victims. She will explore working with existing charities and community foundations, as well as creating new charitable entities designed specifically to assist disaster survivors. Welcome, Sue.

C (1:43)

Thank you, Chung. Today I'm going to talk about how we as attorneys may be able to help with efforts to provide charitable assistance to survivors of a disaster. I'll focus in particular on advising charitable organizations that are operating in this space. Before I begin, I want to point out that the ACTEC foundation recently put together a detailed handbook as a resource for attorneys who are asked to assist in the aftermath of a disaster. That handbook is available on the ACTEC foundation website. In addition to going into more detail on the topics discussed today, it also looks at how individual clients may be able to make charitable or private gifts and including through crowdfunding platforms and ways in which employers may be able to provide charitable aid to employees who are disaster survivors. But today we'll focus on advising charitable organizations. When considering options for the provision of aid by a charitable organization to survivors of a disaster, in most cases, it will be best to work through an existing charity, leveraging the charity's experience and resources. Community foundations, in particular may be uniquely positioned to assist in advising an existing charity. There are a few points to consider. First, the charity's mission must encompass the disaster relief that is envisioned. If it does not, its organizational documents may need to be amended. If disaster relief is a new activity for the charity, it will need to report the activity on its next Form 990 filed with the IRS. And of course, the provision of relief must meet the 501 requirements as they're applied in the context of disaster relief. I'll talk about that in more detail in a few minutes. A variation on the theme of working with an existing charity is the use of a fiscal sponsorship structure. A fiscal sponsorship is a way of allowing a project to attract and receive charitable funding without having to create a new charity. The existing charity, the fiscal sponsor, accepts donations and makes the funds available to the project to be used for charitable purposes. There are several ways of structuring a fiscal sponsorship, and care needs to be taken to ensure it is structured properly. The project can operate either as a direct program of the fiscal sponsor or as a separate legal entity to which the fiscal sponsor makes grants that have the correct guardrails in place to ensure they are restricted to use for charitable purposes. The fiscal sponsor must retain discretion over use of the funds that are donated to it. The project must fall within the mission of the fiscal sponsor, and there should be a written agreement governing the fiscal sponsorship. A fiscal sponsorship can sometimes be a good option in the disaster relief context, where needs are immediate and a project may be limited in duration. However, if for some reason working through an existing charity or a fiscal sponsor is not a viable option, organizers of relief efforts may wish to create a new charity. Of course, any new charity must meet the general 501C3 requirements applicable to all charities. It must have an exempt purpose, there must be no private inurement, and there will be limitations on its ability to engage in certain political activity. It will be classified as either a public charity or a private foundation, depending on the type of relief efforts it will engage in and the sources of funding it wishes to attract. It may be important for the 501 to qualify as a public charity. In order to do so, it will need to either meet the public support test or or qualify as a supporting organization to another public charity. In many cases, meeting the public support test won't be a problem if the organization expects to attract broad public funding. One of the big issues for any new charity will be timing. It will probably need to request expedited approval of its Form 1023, the application for 501 status, and it will need to be aware that even expedited approval will likely take weeks. IRS Publication 3833 has some examples and explanation of how the expedited approval process might work in the disaster relief context. In addition, any new charity will need to comply with requirements specific to the disaster relief context. These rules also apply to existing charities providing Disaster Relief the first issue is whether the provision of disaster relief is a charitable purpose. For purposes of section 501, a 501 must be both organized and operated for one or more 501 purposes. On the organizational side, the charity's organizational documents must cover the planned assistance. On the operational side, the provision of aid to the needy and distressed is generally a charitable purpose. In the immediate aftermath of a disaster, the provision of food, shelter, and the like will almost certainly be considered a valid charitable purpose. In the longer term, however, continued provision of aid may require financial needs testing. While there is some authority indicating that need does not always have to mean financial need, the IRS takes the position in Publication 3833 that disaster victims are not automatically eligible for all forms of charitable assistance simply by virtue of surviving a disaster and that charitable organizations providing aid generally must show that distributions are made based on demonstrated financial need. This is particularly true in cases involving the provision of financial assistance to survivors. Publication 3833 directs charities to establish financial needs assessment procedures and to keep records the process for selecting aid recipients, the objective criteria that are used for disbursing aid, the needs and resources of each recipient, the types and amount of aid given to individuals and their identities, and the composition of any committee awarding the aid. Charities lacking the infrastructure to engage in this type of needs testing may wish to consider granting funds to other charities that do have that ability. In addition to ensuring that proposed relief complies with charitable purpose requirements, another concern in connection with the provision of relief by a 500 one has to do with the charitable class requirements. For any charitable activity, the group of individuals served must be sufficiently large and indefinite to qualify as a charitable class. This requirement can be difficult to satisfy in the disaster relief context, particularly for a new organization formed specifically to benefit survivors of a particular disaster, and particularly if the group of impacted individuals is relatively small. It may be possible to remedy concerns regarding a small charitable class by expanding the class to include victims of future disasters, but if so, this language should not only be included in the charity's organizational documents, but the charity should actually operate with this in mind. And of course, as is always the case, donations to a disaster relief charity cannot be earmarked by a donor to a particular individual or family. If a charity will not meet all of these charitable purpose and charitable class requirements, another alternative in the right circumstances is to structure the charity so that it meets the 501C3 requirements by virtue of lessening the burdens of government. This is the approach we took in creating the One Fund Boston to assist the survivors of the Boston marathon bombings in 2013. Typically, a charity seeking 501 status on the basis that it lessens the burdens of government must satisfy a two part test. Does a governmental unit consider the activity to be its burden and do the charity's activities actually lessen that burden? In the case of the One Fund Boston, there were a variety of factors that allowed qualification under a lessening the burdens of government standard. These are discussed in more detail in the ACTECH Foundation Handbook. There were some fairly unique circumstances involved in that particular case and this approach will not work in all situations, but it is an option where there is significant governmental involvement. That is A quick overview of the legal framework for charitable organizations providing aid to the survivors of a disaster. I hope it is helpful to you if you are ever asked to advise charitable organizations in your community in the wake of a disaster.