Congressman Urges Better Accounting of Charity Funds for Terror Victims

By Jim Burns | July 7, 2008 | 8:19 PM EDT

( - Many people have complained about not receiving money they were promised from charity organizations in the wake of last month's terrorist attacks. A New York Republican congressman said Tuesday he is drafting legislation to establish a board to act as a clearinghouse in order to assure that charity funds reach the people who need them. The measure will be formally introduced in Congress before this week is over.

Rep. Benjamin Gilman (R-N.Y.) said, "Millions of citizens throughout our nation opened their hearts and their wallets to the victims of September 11th. I am concerned that certain organizations are not providing the funds they have collected appropriately or expeditiously to those in need."

Gilman's congressional district borders New York City. Many firemen and police officers live in his district and over 100 families lost their loved ones as a result of the terrorist attacks. It was when he began hearing from many of these families that they weren't receiving promised charity money that he decided to act.

Gilman said he became concerned when he learned that the Red Cross was planning to use a portion of the funds that had been donated to victims' families to instead purchase computers and other items.

"While I commend the Red Cross for all the humanitarian work they do, those funds that were donated for the victims of September 11th should be expeditiously provided to them and to their families, not for other purposes," said Gilman.

Bill Blaul, a spokesman for the Red Cross, confirmed that a small portion of the relief funds were used to buy the computers, but said it is a common practice, "in any disaster relief operation, especially of this magnitude.

"It's necessary to have cell phones, fax machines and database management so we can keep track of all of the people we are helping. We need it to keep track of the people we are helping," Blaul said.

Blaul added that media reports showing the Red Cross spending huge amounts of money on computers and other needs are erroneous.

Gilman called on the charities that have collected more than $1.2 billion in donations to provide a report accounting for their donations and how those donations are being spent.

"I believe the American people need to know that their charity is being appropriately directed to those families who were victims of the terrorist attacks. Accordingly, I am calling on every organization which collected funds in response to the September 11th attacks to report on the status of these funds, how they've been expended, for what purpose, and at what cost," Gilman said.

The legislation would establish a board to collect and provide information to assist both the victims and those wishing to contribute to various disaster funds. The board would also keep track of the collection and dispersal of those funds and issue periodic reports to both the president and the Congress on the status of the money.

"Congressman Gilman," according to Blaul, "can count on the American Red Cross to be the first at the table in terms of any formal effort to coordinate the disaster relief."

The Red Cross, in an official statement on its website, said it was "ceasing active solicitations for the Liberty Fund, a separate account created to raise, hold and disburse funds related to the September 11 attacks and the aftermath." That fund has received $547 million in pledges as of October 29, according to the Red Cross, which the organization's board members consider "sufficient to address immediate, near-term and long-range needs relating to the September 11 tragedies as well as necessary public education and terrorism preparedness actions."

The Red Cross also said, "Funds received after October 31 will be placed in its Disaster Relief Fund, which enables Red Cross disaster responses to hurricanes, tornadoes and other emergencies.

The relief agency has hired the firm, KPMG, to audit the Liberty Fund with results to be made public later this year. Donations to the Liberty Fund will be held in a separate, segregated account and the money will not be commingled with any other Red Cross accounts.

"As of October 29," the statement continued, "the Red Cross has spent more than $140 million on disaster relief related to September 11. Of that amount, $43.8 million has been disbursed directly to 2,296 families of the victims of the attacks, under the Family Gift Program, to help them pay for rent, mortgages, child-care, food and all other living expenses for a minimum of three months."

The Red Cross statement concluded, "More than $66.9 million has been spent on immediate disaster relief needs such as on-site food, shelter and other support for recovery workers and victims' families, including emotional and spiritual counseling. The Red Cross has committed about $320 million overall for Liberty Fund expenditures reflecting a range of activities that is similar, though larger in scale, to what it normally does in response to disasters."