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Congress Declares War On Charities

WASHINGTON, Nov. 9, 2001 -- Congress has no trouble spending money so it's at a loss to understand why the Red Cross and other charities have not spent all the funds that were donated following the Sept. 11 terrorist attacks. The Red Cross is taking most of the heat but other charities are also facing increased scrutiny and many fear the wave of criticism will stifle future contribjutions.

In the days following the catastrophic attacks on the World Trade Center and Pentagon, the American Red Cross collected nearly half a billion dollars in contributions. Its president, Bernadine Healy, put all the money into the Liberty Fund and said it would be used solely for Sept. 11 victims.

But it turns out that the Red Cross expects to spend $300 million, slightly more than half, on the immediate aftermath of the Sept. 11 attacks. The rest is being "stockpiled" for use in future disasters and possibly for a second wave of assistance to those still reeling from the aftermath of the September disasters.

Congress, which to put it mildly does not rely on voluntary donations, is pretending to have a hard time understanding this. "It appears there are two groups of people who are confused -- donors and the families of the victims," said Rep. Billy Tauzin (R-La.), who chairs the House Energy and Commerce Committee.

Facing growing criticism and internal dissent from the Red Cross' unwieldly 50-member board, Dr. Healy last week said she would resign. Simultaneously, the Red Cross launched a campaign to defend itself, saying it has paid out $121 million in cash to victims, more than any other charity. Other funds have gone to support on-scene relief efforts and related activities.

The Red Cross payments average $25,000 to about 2,500 families. Another 500 families declined to accept the money. The charity says it may give additional cash assistance to families and may expand its efforts to the more than 100,000 people who have lost their jobs because of the attacks -- including hotel workers, cab drivers and airline employees.

Unspoken in all of this is the looming threat of additional attacks. A Salvation Army spokesman noted that all major charities have gone through a "learning curve" in meeting the "changing needs" of the largest one-day disaster in American history.

Joining the attack on the Red Cross was New York Attorney General Eliot Spitzer, who demanded that "every penny" of the $564 million be paid to victims of the Sept. 11 attacks. Spitzer told Congress he is considered bringing suit against the Red Cross, accusing it of violating consumer protection laws.

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