Donations left unspent
Almost 10 months after the terror attack on Sept. 11, the verdict is in on the charities that volunteered to collect and distribute donated money to the families of the victims. And that verdict, as you may know, is guilty of fraud in the inducement. According to The New York Times, roughly a billion dollars in charitable contributions sit in banks waiting for some kind of designation. There is heavy-duty interest coming in off that billion, so the charities are in no rush to disperse the funds.
The Red Cross leads the league in funds sitting on the bench with approximately $300 million. The Robin Hood Relief Fund, which gets money from the United Way, is staring at $23 million, and the World Trade Center Relief Fund has $29 million left over. Dozens of other charities are flush with cash as well.
The charities justify the holding pattern by saying that the “immediate needs” of the families have been taken care of, and to some extent that is true. Because Americans were so generous, thousands of people directly affected by the terrorism have received hundreds of thousands of dollars in aid. So no one is crying poverty. But some are crying fraud.
The cold truth is that nonprofit organizations are largely unsupervised in America. IRS Commissioner Charles Rossotti has publicly admitted that his agency, which has oversight on national charities, doesn’t have the manpower to do an effective job auditing the billions of dollars that Americans give each year to nonprofit organizations. In fact, some corporations even force their employees to donate to concerns such as the United Way. There is no recession in the nonprofit world. Just ask Jesse Jackson.
The Red Cross and the United Way both put forth that the banked money after 9/11 will be used for future disasters. But Americans did not donate for future shocks — they gave to help those hurt by the terrorists. Therein lies the problem.
In the arcane world of the law, if you induce someone to do something under false pretenses, you can be sued for “fraud in the inducement.” You can’t tell somebody you are collecting for UNICEF, for example, and then turn around and give the money to the People for the Ethical Treatment of Animals Organization. That is illegal.
But the most disturbing part of the big charity game is that some of those working in this sector live large, very large. The head of the Red Cross in San Diego, for example, made close to $300,000 before she was forced to resign. The head of the Washington, D.C. chapter of the United Way got into a controversy because the charity used $80,000 to redo some office space.
The charities will tell you that they must pay big salaries to attract skilled fundraisers. But do Americans who give their hard-earned bucks to help suffering people understand that expensive lunches and nice trips to “conferences” are part of the bargain?
The September 11 controversy isn’t the first time there was charitable trouble. The city of San Francisco threatened to sue The Red Cross after an earthquake because the charity would not hand over money raised by pitching the disaster. The City of San Diego has also had a bitter controversy over Red Cross dollars.
Americans need to realize that charity does indeed begin at home. If you don’t write the checks, folks in need can’t get help. But whenever big money is involved, there will be shenanigans, especially if the oversight authority is impotent. A billion dollars remains on the sidelines in the wake of the terror attack, and the federal government doesn’t seem to care. The big charities hit the proverbial jackpot immediately after Osama Bin-Laden and his killers hit theirs. There is something troubling about this entire situation. Something must be done.