OK, really poorly worded title.
If I were going to donate to an international relief organization say to help the tsunami victims, would donating to a country where the dollar is worth more than the local currency have a corresponding effect on what the final outcome is? That is, will the presumably lower overhead, material costs, etc. allow more stuff to be sent/done than if I donated my American dollars to a US-based agency?
Presumably, the dollars you donate to the Poor Tiny Asian Nation Fund will be spent in Poor Tiny Asian Nation anyhow; so whether you convert the currency, or the charity does, it shouldn’t, in theory, make a difference.
Agreed. Probably not. In the end it equals USD to local tsunami-affected country’s currency anyway. Routing it through a third nation would just result in extra financial institutions skimming off their fees for the extra conversion. Do it direct.
Perhaps, but that’s what I’m wondering. Is the food being sent being purchased in the US or in other countries where the price is presumably different? How about medical supplies? Is the overhead that a given charity will take from the donation to keep operating a significant concern?
That’s true. Medicines may be better off sourced thuough Australia or Canada for example, but I wouldn’t like to be quoted on that.
On NPR the director of USAID was urging people to make cash donations to US charities with infrastructure already in place over there, because some things are cheaper locally, and some are simply impossible to acquire anywhere but in the US. In every case, however, the charities have been buying this for years and they will know how to go about getting the best price.
For example, if you want to get them Tylenol, how do you get the best price? You don’t even try; just donate $20, and USAID uses that $20 to ship $5,000 worth of Tylenol that was donated by the manufacturer. On the other hand, it’s often easiest to buy food or water from as close to the disaster as possible, because that ensures cultural compatibility, and helps the local economy stay strong in the wake of a refugee disaster. Australia is close by, and might be able to beat the US price on some goods; Japan and Taiwan are close, too, and can probably sell or loan things like power inverters, generators, or heavy equipment.
Last but not least, if you convert the money to the local currency, you’re doing it in a small batch. You may think you’re getting a great conversion price, but the charity – which converts orders of magnitude more money – almost certainly gets a more favorable exchange rate.
Normally WHO and UN bodies try to buy all the food in the country where it’s needed. It supports local economy and avoids transportation problems.
One other point, if a self-centered one: The IRS does not generally allow you to deduct payments made directly to foreign charities, although there are exceptions made for certain Canadian, Israeli, and Mexican charities.
Payments made to U.S. charities which are transferred to foreign charities are deductible, of course.
Ed