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Disaster Relief: Meaning of "Needs-Based Test"

What is meant by needs-based test?

Under the law, disbursements of aid to victims of a disaster are to be based on “an objective evaluation of the victim’s needs at the time the grant is made.”  Publication 3833, Disaster Relief, Providing Assistance through Charitable Organizations, articulates this standard.

The Service applies this rule with common sense and sympathy for the plight of victims:

  • In the chaotic and disorienting aftermath of a disaster, a charity can attend to a victim’s immediate needs without regard to financial means.  When flood waters drive people from their homes, everyone urgently needs shelter, warmth, food, clothing, medicine, transportation, and some cash for incidental expenses.  A charity may provide this immediate aid to everyone without pausing to conduct an individual needs assessment.  However, the charity is still responsible for documenting and maintaining records of this type of assistance.
  • But as time goes on, the danger recedes, and people are able to call upon their individual resources, it becomes increasingly appropriate for charities to conduct individual financial needs assessments.  Those who require additional assistance can have it, but those who do not need such continuing assistance should not use charitable resources.  For example, families displaced by a hurricane may have a need for longer term emergency housing assistance if they do not have adequate resources to meet basic living needs.
  • Appropriate documentation is needed to support activities undertaken to carry on a relief program.  Supporting documents should show the amounts paid, the purpose of the payments, and information to establish that distributions were made to meet charitable purposes and victims’ needs.