New York and Arizona to Investigate Sham 9/11 Charities: It’s About Time!

August 29, 2011; Source: Associated Press) via Rapid City Journal | Following the Associated Press story about the many 9/11 charities that fell short of delivering what they promised, with a few functioning as scams and frauds, two states, New York and Arizona, have announced 9/11 charity reviews. These two states host a couple of the worst predators to allegedly rip off charitable donors while wearing a 9/11 cloak: Arizona is home to the American Quilt Memorial charity that raised $700,000 for a never-delivered 9/11 quilt, and New York has several of the questionable charities outed by AP, including Urban Life Ministries, which raised $4 million, most of which AP reported the charity somehow cannot account for.

But something’s really wrong here: This is 10 years after the fact! As a matter of governmental oversight of nonprofits, the New York and Arizona announcements highlight how excruciatingly far we are from “real-time” oversight and accountability. Give credit to the AP and to the press in general on this score: their reporting is an example of the necessary watchdog role of the Fourth Estate.

And where is the IRS? Remember that in the wake of 9/11, partially due to pressure from politicians who had their own 9/11 charitable endeavors—such as New York City Mayor Rudy Giuliani—the IRS fast-tracked approval of tax-exempt charity applications from 9/11 nonprofits. The IRS review of these groups was thinner, much thinner than it usually is. Shouldn’t the IRS now be actively engaged and leading a review of 9/11 charities given the Associated Press investigation?

So what happens now, 10 years after 9/11? Are these slimeballs going to go to jail? Or will they be able to avoid prosecution, say that they “tried their best” or that they lacked the skills and knowledge to do the kind of accounting that running a nonprofit demands?

And then there is the nonprofit sector’s own muscularly indignant response to enhanced governmental oversight, arguing that self-regulation is sufficient. Well, self-regulation didn’t do much or anything to reign in the excesses of 9/11 predators. Nor did it do much for the well-intentioned organizations formed in the wake of 9/11 by victims’ families and others that simply lacked the knowledge, wherewithal and training to function with any sort of effectiveness. The long term damage of documented misspending and ineffectiveness of charities like those reviewed in the AP article is serious.  Government has to act to get rid of the charitable predators, but so does the nonprofit sector, which has the additional challenge of helping improve the performance of those charities that want to do a good job but aren’t structured and managed in a way to get there.

Truth be told, a number of new 9/11 charities did good work, but so did a great number of already-existing nonprofits that were in position to deliver important services and advocacy to deal with a host of 9/11-related issues and needs. Our sector needs a vigorous dialogue about what nonprofits do and how government carries out its regulatory oversight functions. We need to figure out what works well and what doesn’t work quite so well. And we shouldn’t have to wait for 10-year anniversaries to do so.—Rick Cohen