Ninety percent of the near $1 billion raised for the victims of the Sept. 11 terrorist attacks is still sitting idle as charities struggle to overcome major problems in distributing the cash to those affected by the tragedy.
Tax concerns, worries about fraud and duplication, and logistic nightmares in processing claims have meant only token amounts from some funds have gone into the pockets of dependents of those killed in the attacks on the World Trade Center, The Post has learned.
In the month since the tragedy, more than $934 million has been raised by up to 160 charities, nonprofit groups and newly formed foundations, according to the Chronicle of Philanthropy.
But doling out the money is proving to be more difficult than raising it for some organizations.
The Red Cross, which set aside $100 million in emergency aid for relatives of those killed from the $350 million it has raised since the attacks, has confirmed little more than one-quarter of the cash available had been paid so far to some 1,200 family members.
Yesterday, the organization ran full-page ads in New York newspapers urging “those who lost loved ones” to call its hot line to re-establish contact with the charity.
Other charities have found they don’t have a suitable system in place to decide how to distribute the deluge of donations.
Tomorrow, the September 11 Fund – set up jointly by the United Way of New York City and the New York Community Trust -will announce the formation of a board to oversee the distribution of $316 million raised, of which just $9.8 million has been moved, a spokesman confirmed.
Tax worries are causing some of the biggest headaches, several charities told The Post.
At a recent meeting of WTC nonprofits, attorney Jane Wilton warned that charities must use money “for designated purposes” or risk losing their tax-exempt status. They also have to justify and document every dollar they give out, she said.
“Charitable funds may not be distributed to people merely because they are victims of a disaster.”
The Internal Revenue Service has granted tax breaks as short-term assistance to victims.
Mark Owens, a Washington lawyer who formerly directed the IRS Exempt Organizations Division, said tax liability would be assessed at the time any assistance was given to a victim’s family.
Once a family receives insurance and other payments, it may no longer be eligible for charitable aid or may have to pay tax, he said.
Red Cross spokesman Chris Thomas said the organization had 45 staff “detectives” manning telephones in an effort to establish communications with those who need assistance.
He said any cash-strapped dependents of those killed – from company executives to waitresses – could get “tax-free gifts” of up to $30,000 to pay for current mortgages or rent, child care, medical bills, other living expenses and funeral costs.
“If you need it, this gift is for you,” he said. The charity’s hot-line number is 1-877-746-4989.