Can a charity help businesses affected by a disaster? If a charity benefits the poor and distressed or underprivileged directly, the intended charitable purpose is clear. By assisting businesses located in a disaster area, a charity may indirectly accomplish a charitable purpose, such as combating community deterioration or lessening the burdens of government. This is permissible as long as (1) the assistance is reasonably related to the accomplishment of an exempt purpose, and (2) private benefit to the business is incidental. Although a business is not itself a member of a charitable class, and thus not an appropriate charitable object, it may be the means to accomplish charitable purposes. Evidence of incidental private benefit would include a showing that the business does not have adequate resources from its own assets, conventional financing, or insurance to recover from the disaster. Moreover, a charity would need to determine that without its intervention the business would not locate or remain in the area.
