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Thank$ a Million 

Uncomfortable questions about the outpouring of disaster donations

Wednesday, Oct 3 2001
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Within days of the attacks on the World Trade Center and the Pentagon, warehouses were packed to the rafters and emergency-response agencies were turning away donations. Within a week, the Red Cross said it had all the blood it could use. Now, while few are ready to say so publicly, the hundred-odd charities raising funds for victims are pondering how they’re going to spend all the money.

There’s nothing wrong with giving, of course. It’s a comforting response to a national trauma, a positive answer to a devastating assault. The U.S. Congress had the same impulse, and in a little-noticed rider to the airline-bailout bill passed into law last week, committed the federal government to spending as much as $18 billion to compensate the families of anyone killed in the disaster.

In addition, there are state and federal programs, some longstanding and some established in response to the attacks, that provide short- and medium-term funding for unemployment, housing and medical needs, and replacement of lost or damaged personal property.

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With all the money coming in, some observers are beginning to question the point of the surging philanthropy. “There’s a real concern that people are not thinking things through,” said Daniel Borochoff, president of the American Institute of Philanthropy, based in Bethesda, Maryland. “People are throwing money at the disaster, and that may not be the most appropriate response.”

Borochoff said his organization is tracking allegations of fraud, particularly in connection with fundraising appeals launched on the Internet, but said his primary concern is that donations be directed to those most in need: “We need to be strategic when it comes to limited charitable dollars. There are still homeless people out there. There are still abused women. There are still all the issues we were facing before September 11.”

As to the situation in New York, where the death toll exceeds any peace-time disaster in the nation’s history, Borochoff and others counsel patience and deliberation in doling out the funds — $650 million, as of Monday — that have been collected. Most of those directly affected will be compensated by the government, or through pension funds or other private means. “What the charities need to do is focus on who else is not getting help,” Borochoff said.

The same issues are quickly emerging on the ground in Manhattan.

“The smaller funders are meeting and trying to figure out what to do,” said Daniel Myers, a consultant with the Nonprofit Coordinating Committee of New York. Larger organizations are having the same problem. “We haven’t decided where it’s going yet,” said a spokeswoman for the World Trade Center Relief Fund, a charity established by the State of New York that had garnered $15 million by last week.

New York State Attorney General Eliot Spitzer attempted to introduce a degree of order last week, convening a meeting with representatives of more than 20 charities. “We have no idea yet how it’s going to work,” said Scott Brown of the U.S. Attorney General’s Office. “It’s like the first day of school — everyone’s just trying to figure out where the classes are, where the lockers are.”

The schoolyard analogy seemed particularly apt early this week when New York Mayor Giuliani moved to challenge Spitzer for the role of arbiter in coordinating relief efforts. But most of the charities involved acknowledge the need to coordinate services and focus dollars on needs overlooked by the government. “We’re trying to fill in the grid,” said Ani Hurwitz of the New York Community Trust, a philanthropic clearing-house and partner with the United Way in the September 11 Fund, which had banked $215 million in disaster-relief contributions by last Sunday. “We want to supplement government money, not duplicate it.”

That may take some time to sort out. Just as the assault on the nation’s financial center was unprecedented, so was the government’s response. The September 11 Victim Compensation Fund that was attached to the airline-bailout bill was hastily crafted and open-ended, meaning that who gets covered, and for how much, may not be clear for months.

“I don’t think anybody knows how it will play out,” said Carlton Carl, spokesman for the American Trial Lawyers Association, which pushed for the fund.

The new law calls for a “special master” to be appointed by Attorney General John Ashcroft, who would in turn appoint hearing officers to review claims brought by the families of anyone killed or injured in the plane crashes in New York, Washington, D.C., and Pennsylvania.

Awards from the fund are to cover both “economic losses,” including future earnings and medical or funeral costs, and “non-economic losses” such as loss of companionship. The awards will be reduced by any insurance or government payments, but should still be substantial. According to Robert Hartwig, an economist with the Insurance Information Institute of America, the average payment made by airlines to the families of people killed in plane crashes ranges between $1.5 million and $2.5 million.

“It’s an extraordinarily comprehensive and humane law,” said trial-lawyers association president Leo Boyle.

It also goes well beyond any redress extended to families of people killed in other terrorist attacks, a discrepancy that moved James Sensenbrenner (R-Wisconsin), to speak against the fund on the House floor: “No entitlement was enacted by Congress to compensate victims of the Oklahoma City bombing, earthquakes in California, hurricanes in Florida and floods along the Mississippi River . . . Stop and think of the precedent this bill sets when a future disaster strikes.”

The special handling financed under the bill is already creating some degree of backlash. “It’s like a big slap in the face,” said LaDonna Battle, who lost both her parents to the bombing of the Murrah Federal Building in Oklahoma City.

“It’s not the money, it’s the principle of the thing,” said Battle, who said she had to take her children out of private school because she could no longer afford the tuition. “It hurts, when people start to pick and choose what ä kind of tragedy means something, and which ones don’t.”

Like the government, the insurance industry responded vigorously to the disaster, establishing a warehouse-sized claims center on Pier 94 along the New York waterfront, where as many as a dozen firms process hundreds of claims daily. In addition, according to Bill Bailey, a spokesman for the New York Insurance Disaster Coalition, several “claims vans” are posted near Ground Zero. Historically in major disasters, insurers cover about two-thirds of the losses incurred, said Robert Hartwig of the Insurance Institute. “In this case, that figure may well be higher,” Hartwig said.

In the meantime, the fundraising continues, a national phenomenon with a life of its own. The urge to pitch in has spurred lemonade stands and bake sales, fund drives by media conglomerates and a parade of $10-million corporate donations. The Cincinnati Reds donated a day’s salary. Hip-hop heavy Dr. Dre kicked in a cool million. “We had one woman who called in and wanted to donate her skin,” said an aid worker with Connecticut-based AmeriCares.

Along with the flag fad, the impulse to give has emerged as a signature of the public response to the attacks in New York and Washington, D.C. “It’s absolutely unprecedented,” said Dorothy Ridings, president of the Council on Foundations in Washington, D.C. “Nothing’s ever come close to this at all.”

Like Borochoff at the Institute of Philanthropy, Ridings said the response seemed more rooted in individual feelings than in answer to specific needs. “It’s just the horror of the thing. I think every one of us feels violated.”

Ridings said she fielded one call from a foundation in Bangladesh seeking to make donations. “I just had to think of all the terrible problems they have there,” Ridings said.

Bob Phillips, a marketing executive with Coca-Cola, which donated $12 million to several national and New York relief agencies in response to the terror attacks, reflected on the impulse to give in a telephone interview.

“We really didn’t go out looking for publicity on this,” Phillips said. “People tend to look at that with a jaundiced eye. It’s more internal than that. We’re all searching for some sort of response to what happened. A lot of people feel lost. We’re wondering, ‘What do I do? How do I rid myself of this despair inside?’”

For Phillips, for the Coca-Cola Company, and for individuals all across the country, that means writing a check, making a donation. “It’s cathartic for all of us,” Phillips said.

As the weeks go by, new players are devising new ways to make that connection. Last Tuesday, 80 movie-theater chains across the country donated the day’s proceeds to the Red Cross. October 11, the one-month anniversary of the attacks, will be commemorated at restaurants across the country with a “Dine for America” campaign. In Southern California, Wells Fargo Bank is soliciting donations on its ATM screens. And on the Web, auction site eBay is pressing on with its $100-million-in-100-days promotion.

While nobody’s ready to call a halt to the upwelling generosity, charity watchdogs like Borochoff are becoming wary. “What I’m worried about is that when it gets in the news that some people are receiving millions of dollars in payments, there’s going to be a backlash,” Borochoff said. “We’re asking people to pace themselves.”

Jennifer Smith, in New York, contributed to this story.

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