Reflecting upon the Charitable Response of September 11: We’ve Just Begun

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It is still quite early to take a retrospective look at the lessons of the September 11 charitable response. Funding is still flowing in, despite announcements by the Red Cross, the United Way, and the New York Community Trust, the lead charitable actors in the disaster response, that state they have received enough. Many large pledges have yet to be collected. Hundreds of millions of dollars remain to be distributed. And everyone, except perhaps the television attack dogs, has begun to realize exactly how complex the job of disaster relief in New York City really is.

Years after homegrown U.S. terrorist Timothy McVeigh bombed the Murrah federal office building in Oklahoma City, the victims continue to receive disaster relief and assistance. The complexity and magnitude of the September 11 disaster will continue to ripple through New York City and the nation. Families have lost loved ones, thousands more suffered serious injuries, and over 100,000 people lost their jobs. It is naïve to expect a quick wrap-up of the New York City response.

Yet the task of examining the September 11 response will not wait. In the wake of the resignation of their CEO, Bernadine Healy, the Red Cross has hired former Senator George Mitchell, fresh from his stint negotiating a truce in the Northern Ireland troubles, to steer the organization through its remaining disaster relief activities. September 11, as massive and unprecedented as it was, exposed problems in the realms of charitable giving and disaster relief that predated the terrorist attacks. The nonprofit sector has to raise tough-minded questions about what happened now, before Congressional committees and the Fox television network take over the task of quarrying for answers.

On the positive side, there is no question that the outpouring of charitable giving by Americans of all stripes demonstrated American altruism at its best. Big corporations and foundations made lump-sum commitments of several million dollars, celebrities emoted through countless telethons, but the under-publicized story of the charitable response was the giving of ordinary working Americans. According to a Wirthlin Worldwide poll conducted for Independent Sector,1 almost three-fourths of all Americans say they either made charitable donations or volunteered their time in response to the tragedy.

How donors gave was also noteworthy: 40 percent of contributors to September 11 causes participated in workplace fundraising through donations through the United Way and other funding federations. Ten percent of September 11 donations were made with credit cards through the Internet. Factoring out charitable giving for churches, the end-of-the-year charitable giving totals for 2001 will likely show a huge relative increase in e-philanthropy, to perhaps as much as 15 percent of total charitable giving.

The charities receiving all this largesse have been subjected to consistent criticism, some of it clearly warranted. National nonprofit bodies have responded by taking the public relations approach, getting feel-good stories out to the public about the charities’ disaster relief and victim assistance efforts. They do this at the peril of failing to learn from the problems that caused the criticism.

Mythology of no administrative expenses: The fundraising “sell” was on, the stories of helping victims ubiquitous, but there were excessive message shortcomings. The key shortcoming was the message of so many charities that “all” of the funds would go to direct assistance without any management and administrative costs. This fed a mythology that services could be delivered without trained professionals, without back offices and support staff. It represented an underestimation of the intelligence of the American donor and dumbed down the charitable process.

Had the charities taken the opportunity to educate donors about what is really entailed in disaster relief, most Americans would have “gotten it,” as demonstrated by a CNN/USA Today/Gallup poll. The poll, reported in the December 20, 2001 USA Today, revealed that less than a third of Americans believe that all of the funding should have been given directly to victims. Two-thirds thought it entirely reasonable to provide money for victim services such as counseling, health care, and other kinds of charitable program support in addition to cash payments to the victims’ families.

Victims and needs narrowly defined: Too many charities communicated a simplistic definition of victim as only people who were injured or killed in the terrorist attacks. The much more complex reality is that a massive disaster such as the World Trade Center attacks produces multiple types of victims. In October alone, 79,000 New Yorkers lost their jobs. The New York City comptroller estimated a total job loss of over 115,000 jobs, 2.4 percent of the city’s total employment. Many jobs simply evaporated. The largest proportion of workers filing for unemployment insurance were not Wall Street brokers, but janitors, cleaners, maids, housekeepers, restaurant wait staff, and other bar and restaurant workers, most earning $11 an hour or less (not much of a wage in New York City). Many of these newly unemployed were also black, Latino, and immigrants.
To their credit, some of the charitable players, particularly foundations such as the Ford Foundation, the Rockefeller Foundation, the New York Foundation, the Robin Hood Fund, and the New York Community Trust, promoted a broader understanding of disaster relief. Their inclusive thinking led to grants to protect immigrant and Arab communities from harassment and discrimination, invest in nonprofits serving and strengthening the neighborhoods such as Chinatown abutting the city’s financial district, and respond to the massive direct and indirect economic dislocation of September 11.

Funding did get out. The September 11 fund administered by the United Way and the New York Community Trust made $191 million in grants as of January 31, nearly half of the over $447 million that was raised, and the Red Cross distributed $317 million to people in need—leaving Senator Mitchell with the challenge of disbursing another $360 million. Both charities have asked for donations to stop, the United Way and New York Community Trust claiming that they believed that enough money, combined with federal government resources, had been raised to meet the needs of victims and their families.

Excess donations: To some extent, however, the charities lost sight of an important lesson in charitable relief—to avoid focusing on raising and announcing big dollars and big contributions in an ever-escalating chase for brand name recognition. The results are charities virtually swimming in money and stuck on how to get the money out the door, an increasing volume of criticism over how much money was really needed, and some significant waste. The most egregious example is the Red Cross mismanagement of blood donations. According to a Reuters report in February, only 258 of the more than 475,000 units of blood donated after the World Trade Center attacks were actually used for disaster victims, and 17 percent of the blood collected by the Red Cross had to be tossed out because the Red Cross lacked facilities to freeze and store the surplus.

Balancing needs and equity: The complexity of the disaster meant that the difficulty of identifying people as victims was more than matched by the difficulty of measuring their needs and determining just compensation. It is nearly impossible to determine exactly how the various charities have negotiated the issue of social equity, balancing the restitution provided to the families of uniformed public safety officers, various classes of workers in the financial offices in the World Trade Center towers, and the largely minority, frequently immigrant victims who worked in low-wage service jobs, such as the hundreds working in the Towers’ restaurants and building maintenance positions.

This issue is coming to a head in the administration of the victim compensation fund created as part of the federal government’s bailout of the airline industry after September 11. The average federal payout will be an estimated $1.65 million per family—adjusted for “collateral compensation” such as insurance payments, death benefits, pensions, and so on—though not adjusted for charitable payments through sources such as the September 11 or Twin Towers funds. That the payments will be adjusted according to the economic circumstances of the victims’ survivors has created a commotion likely to end up back in Congress and probably in the U.S. courts. The exclusion of charitable contributions, which have disproportionately benefited police, fire department, and other uniformed services victims, makes the issue of equity that much more difficult to grapple with.

Almost no one wants to be the bad guy to own up to this critical issue, which is obscured for the moment by the surfeit of cash and the large size, regardless of formula, of per family distributions. Yet Oklahoma governor Frank Keating, experienced as he is with man-made disasters, spoke up and called the various charitable and governmental compensatory structures discriminatory in the way they diminish the lost income earnings of poor people compared to those of displaced stockbrokers. In the next huge disaster faced by this nation, if there isn’t a couple billion dollars to distribute, the charities—and government—will have to provide difficult but necessary answers on social equity.

Coordination with government: When New York State Attorney General Elliot Spitzer called for a database of victims to coordinate assistance, the Red Cross balked, hardly contended by any of its peers in the New York environment. Eventually Spitzer (whose office monitors charitable giving in the state) won the battle, but the charities had set the tone—charitable activity should proceed in a sphere apart from oversight and regulation by the public sector. The attorney general’s attempt to develop a database hardly constituted governmental coordination and regulation—but that is what might have been actually necessary. With so many players, some governmental entity should have taken on the role of coordinating the cacophony of charitable actors. In hindsight, it probably should have been the New York City government rather than the state.

Coordination among nonprofits: Two-thirds of the disaster relief donations went to some of the largest and most sophisticated charities in the United States. One might have expected the New York City nonprofit colossi to be able to get ahead of this crisis. Certainly the immensity of the World Trade Center tragedy contained enough opportunities for everyone to stumble and err, but the problems of the nation’s largest charities in responding to the challenge of September 11 charitable grantmaking has given the American public—and some members of Congress—pause.

Maybe it was due to the number of charitable providers or simply the complexity and scale of the disaster, but coordination among the charities—regardless of the role of the city, state, or federal government—was hard to come by early on. Coordination came slowly and late. Even the logical task of generating a common intake form bedeviled the major charities. Over time, the process improved greatly, but for a long time Pier 94, the primary intake and referral location, was a scene of confusion and bureaucracy for victims’ families.

Guiding policies of special funds: By mission and function, the United Way and the Community Trust, among others, are designed to coordinate. But the nonprofits in general, led by the bigger players, failed to articulate a clear vision of what they were going to do in response to the terrorist tragedy. For the most part, they have been in a defensive posture responding to the unrelenting criticism of people advocating for a simplistic financial pass-through process of cutting checks to victims.

For example, after distributing its initial $300 million, the Red Cross said that it wanted to use some of its remaining money for future disaster needs outside of New York and preparing for possible future terrorist acts. This provoked a firestorm of protest. Senator Mitchell has plans to push $360 million out of the door by the September 11 anniversary, meant to demonstrate that the Red Cross’s Liberty Fund would not sit on the moneys or divert funds from their New York City and Washington targeted beneficiaries. The September 11 Fund recently revised its strategy along similar lines.

Capacity to manage enormous demand: Remarkably, even the technical process of cutting checks for third party payments—checks for rent, utilities, and food for the families of people who lost family members or jobs—bedeviled some of the charities despite their histories of successful disaster relief and service delivery. There is plenty of opportunity for the nonprofits to rethink what they should be prepared to do and how they should be strategically positioned when the next mega-tragedy hits this nation. Otherwise, donors and legislators might think that government agencies such as FEMA (the Federal Emergency Management Administration) should relieve charities of this function.

In Congress, September 11 has provoked the party of governmental deregulation, the Republicans, to call for hearings and introduce legislation to create a charities review board to oversee disaster relief administration. As September 11 donations sit longer in nonprofit bank accounts, members of Congress are raising questions about nonprofit spending rates and the composition of the payout of endowed charities. Governmental oversight in just the first weeks and months of September 11 disaster relief was unwelcome to some. It may be the case, however, that the cascade of public attention will result in an ongoing long-term legislative probe of nonprofits and charity.

Recognizing that analysis will continue for years given the magnitude and unprecedented nature of such events, we must begin now to reflect and learn from our accomplishments and mistakes. Overall the vast majority of nonprofits continue to do a tremendous job at helping the wide range of individuals impacted by the attacks.

Regarding the distribution of funds and long-term support, in an odd coincidence, the Council on Foundations released a guide on disaster grantmaking, prepared with the European Foundation Centre, this past November. The report, Disaster Grantmaking: A Practical Guide for Foundations and Corporations, was in the works long before September 11. It mirrors virtually all of the challenges outlined in this piece, calling on grantmakers to maintain a long term (five to 10 years or more) perspective on their roles in disasters, to “stop look and listen” before taking action, to resist the desire to act in isolation, and to be downwardly accountable to the intended and actual beneficiaries of the disaster relief.

Unfortunately, one challenge the report is nearly silent on is the presence and roles of local, state, and federal government agencies in disaster relief and the need for funders and charities to coordinate across sectors as well as among themselves.
Regarding issues associated with fundraising, we know Americans will contribute in significant amounts in times of national crisis. They will support different kinds of assistance, understand the need for administrative expenses, and resist the demand to spend it all up front. Nonprofit leaders should not misrepresent or be bashful about the actual costs of delivering services to those in need—staff and volunteers have administrative expenses like any other organization.

In short, leaders should communicate to donors’ intelligence—providing more details on why donors should give and the intended use. And we know we haven’t done such a good job at this to date—prior to September 11, nearly three-fourths of Americans found it difficult to tell whether nonprofits asking for contributions were legitimate.2 Perhaps nonprofits will have learned from the story of September 11 that communications truly matter, and therefore to structure fundraising pitches to appeal to donors’ minds as well as their hearts.

1. A Survey of Charitable Giving After September 11, 2001, prepared for Independent Sector by Wirthlin Worldwide, October 23.
2. BBB Wise Giving Alliance Donor Expectations Survey, 2001, an opinion poll conducted by Princeton Survey Research Associates, September.

Rick Cohen is the president of the National Committee for Responsive Philanthropy located in Washington, D.C.