```

[House Hearing, 107 Congress]
[From the U.S. Government Publishing Office]

 CHARITABLE CONTRIBUTIONS FOR SEPTEMBER 11: PROTECTING AGAINST FRAUD, 
                            WASTE, AND ABUSE

=======================================================================

                                HEARING

                               before the

                            SUBCOMMITTEE ON
                      OVERSIGHT AND INVESTIGATIONS

                                 of the

                    COMMITTEE ON ENERGY AND COMMERCE
                        HOUSE OF REPRESENTATIVES

                      ONE HUNDRED SEVENTH CONGRESS

                             FIRST SESSION

                               __________

                            NOVEMBER 6, 2001

                               __________

                           Serial No. 107-67

                               __________

       Printed for the use of the Committee on Energy and Commerce

 Available via the World Wide Web: http://www.access.gpo.gov/congress/
                                 house

                                _______

                  U.S. GOVERNMENT PRINTING OFFICE
76-307                     WASHINGTON : 2001

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                    COMMITTEE ON ENERGY AND COMMERCE

               W.J. ``BILLY'' TAUZIN, Louisiana, Chairman

MICHAEL BILIRAKIS, Florida           JOHN D. DINGELL, Michigan
JOE BARTON, Texas                    HENRY A. WAXMAN, California
FRED UPTON, Michigan                 EDWARD J. MARKEY, Massachusetts
CLIFF STEARNS, Florida               RALPH M. HALL, Texas
PAUL E. GILLMOR, Ohio                RICK BOUCHER, Virginia
JAMES C. GREENWOOD, Pennsylvania     EDOLPHUS TOWNS, New York
CHRISTOPHER COX, California          FRANK PALLONE, Jr., New Jersey
NATHAN DEAL, Georgia                 SHERROD BROWN, Ohio
STEVE LARGENT, Oklahoma              BART GORDON, Tennessee
RICHARD BURR, North Carolina         PETER DEUTSCH, Florida
ED WHITFIELD, Kentucky               BOBBY L. RUSH, Illinois
GREG GANSKE, Iowa                    ANNA G. ESHOO, California
CHARLIE NORWOOD, Georgia             BART STUPAK, Michigan
BARBARA CUBIN, Wyoming               ELIOT L. ENGEL, New York
JOHN SHIMKUS, Illinois               TOM SAWYER, Ohio
HEATHER WILSON, New Mexico           ALBERT R. WYNN, Maryland
JOHN B. SHADEGG, Arizona             GENE GREEN, Texas
CHARLES ``CHIP'' PICKERING,          KAREN McCARTHY, Missouri
Mississippi                          TED STRICKLAND, Ohio
VITO FOSSELLA, New York              DIANA DeGETTE, Colorado
ROY BLUNT, Missouri                  THOMAS M. BARRETT, Wisconsin
TOM DAVIS, Virginia                  BILL LUTHER, Minnesota
ED BRYANT, Tennessee                 LOIS CAPPS, California
ROBERT L. EHRLICH, Jr., Maryland     MICHAEL F. DOYLE, Pennsylvania
STEVE BUYER, Indiana                 CHRISTOPHER JOHN, Louisiana
GEORGE RADANOVICH, California        JANE HARMAN, California
CHARLES F. BASS, New Hampshire
JOSEPH R. PITTS, Pennsylvania
MARY BONO, California
GREG WALDEN, Oregon
LEE TERRY, Nebraska

                  David V. Marventano, Staff Director

                   James D. Barnette, General Counsel

      Reid P.F. Stuntz, Minority Staff Director and Chief Counsel

                                 ______

              Subcommittee on Oversight and Investigations

               JAMES C. GREENWOOD, Pennsylvania, Chairman

MICHAEL BILIRAKIS, Florida           PETER DEUTSCH, Florida
CLIFF STEARNS, Florida               BART STUPAK, Michigan
PAUL E. GILLMOR, Ohio                TED STRICKLAND, Ohio
STEVE LARGENT, Oklahoma              DIANA DeGETTE, Colorado
RICHARD BURR, North Carolina         CHRISTOPHER JOHN, Louisiana
ED WHITFIELD, Kentucky               BOBBY L. RUSH, Illinois
  Vice Chairman                      JOHN D. DINGELL, Michigan,
CHARLES F. BASS, New Hampshire         (Ex Officio)
W.J. ``BILLY'' TAUZIN, Louisiana
  (Ex Officio)

                                  (ii)

                            C O N T E N T S

                               __________
                                                                   Page

Testimony of:
    Amundsen, Chris, President and CEO, Interim, United Way of 
      America....................................................    68
    Beales, J. Howard, III, Director, Bureau of Consumer 
      Protection, Federal Trade Commission.......................    88
    Bender, Robert, Jr., Executive Director, American Red Cross 
      in Greater New York........................................    60
    Bollon, Vincent J., General Secretary-Treasurer, 
      International Association of Fire Fighters.................    75
    Bove, Joyce M., Vice President for Grants and Special 
      Projects, September 11 Fund New York Community Trust.......    71
    Farley, Michael, Vice President, Chapter Fundraising, 
      American Red Cross.........................................    65
    Healy, Bernadine, President, American Red Cross..............    33
    McLaughlin, Elizabeth........................................    22
    Spitzer, Hon. Eliot, New York State Attorney General.........    25
    Steiner, Russa, wife of William R. Steiner, employee of 
      Marsh, Inc., 97th floor of North Tower, World Trade Center, 
      accompanied by Robert O. Baldi.............................    12
    Taylor, Herman Art, President and CEO, Better Business Bureau 
      Wise Giving Alliance.......................................    95

                                 (iii)

  

 
 CHARITABLE CONTRIBUTIONS FOR SEPTEMBER 11: PROTECTING AGAINST FRAUD, 
                            WASTE, AND ABUSE

                              ----------                              

                       TUESDAY, NOVEMBER 6, 2001

                  House of Representatives,
                  Committee on Energy and Commerce,
              Subcommittee on Oversight and Investigations,
                                                    Washington, DC.
    The subcommittee met, pursuant to notice, at 2:30 p.m., in 
room 2123, Rayburn House Office Building, Hon. James C. 
Greenwood (chairman) presiding.
    Members present: Representatives Greenwood, Stearns, Burr, 
Whitfield, Bass, Tauzin (ex officio), Deutsch, Stupak, and 
DeGette.
    Also present: Representative Markey.
    Staff present: Jennifer Safavian, majority counsel; Casey 
Hemard, majority counsel; Ann Washington, professional staff 
member; Brendan Williams, clerk; Chris Knauer, minority 
investigator; and Bruce Gwinn, minority professional staff 
member.
    Mr. Greenwood. Good afternoon. This hearing of the House 
Oversight and Investigations Subcommittee will come to order. 
The Chair recognizes himself for 5 minutes with an opening 
statement.
    No people in the world are more cheerful givers than the 
people of the United States. This generosity springs from our 
enduring legacy of volunteerism and self-reliance. As early as 
1831, Alexis de Tocqueville in his celebrated work Democracy in 
America observed that a citizen of the United States is taught 
from infancy to rely upon his own exertions in order to resist 
the evils and the difficulties of life. He looks upon the 
social authority with an eye of mistrust and anxiety, and he 
claims its assistance only when he is unable to do without it.
    More than 70 percent of American households make annual 
charitable contributions to an astonishing array of worthy 
causes. Equally remarkable is the fact that more than 100 
million Americans volunteer their time on behalf of their less 
fortunate neighbors. The monetary value of the time devoted to 
volunteer work is equally as staggering, an estimated $225 
billion a year.
    Following the horrific events of September 11, the people 
of our magnificent Nation have extended their hands to help 
those in need in a measure unprecedented, even for Americans. 
Millions of our fellow countrymen, many of them children, have 
given freely of their time, their talents, their wallets, 
pocketbooks and piggybanks. We have given freely not only our 
money, but also our blood. More than $1.2 billion has been 
collected by organizations working on relief and recovery 
efforts. To put this number into some context, contributions 
following the Oklahoma City bombing totaled $45 million. 
Hurricane Andrew evoked $110 million in donations for the 
American Red Cross. Again, we are at $1.2 billion for the 
September 11 event, and still the donations pour in.
    All of us in Congress owe a profound and heartfelt 
gratitude to the patriotic American people who have responded 
to our Nation's greatest tragedy with an unprecedented charity. 
We have met the true test of giving, which John Wesley, the 
founder of the Methodist Church, described in these words: Do 
all the good you can, by all the means you can, in all the ways 
you can, in all the places you can, at all the times you can, 
to all the people you can, as long as ever you can.
    Distributing the proceeds of this generosity both 
efficiently and fairly, however, poses unparalleled logistical 
challenges never before confronted by even the most experienced 
aid officials. It is for this reason that it is important to 
hear directly from the charitable organizations that have 
raised this unprecedented amount of money, to discuss their 
efforts to distribute these funds.
    We will hear today from a representative of one of 
America's most honored organizations, the American Red Cross, 
including from its president, Dr. Bernadine Healy. You will 
also hear from representatives of the United Way and the New 
York Community Trust, two organizations that have worked 
together to create the September 11 Fund. And we will hear from 
the International Association of Firefighters.
    The most donations to date have been received by the 
American Red Cross, which has received pledges and 
contributions totaling $564 million, with at least $437 million 
of that total already received. The September 11 Fund has 
received $337 million in pledges and contributions, with $250 
million of that having been received so far. The International 
Association of Firefighters has raised almost $51 million. To 
date, they have distributed $20,000 to each family of the 340 
firefighters, 3 EMS workers and 1 fire patrol officer who lost 
their lives in the line of duty on September 11.
    With so much money raised and with so many charities 
involved, it is critical that the trustees who serve as 
stewards of these gifts provide the public with an accounting 
of how they will be distributed and to whom, for it is equally 
important that everyone who needs financial assistance receives 
that assistance and no one is overlooked.
    All of us who hold public office appreciate the daunting 
task of determining how to distribute public funds equitably 
and efficiently. The shared responsibilities of these charities 
in managing these vast amounts of charitable contributions is 
no less a public trust. Unfortunately, recent reports have 
raised a number of concerns regarding the distribution of these 
funds. Accounts continue to surface of individuals who are 
either unable to obtain monetary assistance from any of the 
disaster organizations, nonprofit groups, foundations, 
government agencies and corporations involved, or who find the 
processes that are required to navigate to obtain the 
assistance too lengthy and too complex.
    Mrs. Russa Steiner is just such an individual. I am sorry 
to say that Mrs. Steiner lost her husband of 32 years in the 
attack on the World Trade Center. Mrs. Steiner has graciously 
offered to provide the subcommittee with her story and to 
explain to us what she has had to go through in an effort to 
receive the financial assistance she will need to keep her home 
and to educate her children. I wish she were appearing before 
us today under happier circumstances, and I am grateful that 
she has mustered the courage to testify so that others may gain 
from her efforts.
    We will also hear from Liz McLaughlin. Tragically, Mrs. 
McLaughlin lost her husband Robert in the World Trade Center. 
Mrs. McLaughlin's experience with the various charitable 
organizations is different from Mrs. Steiner's, and I hope the 
two perspectives will assist us in getting a better picture of 
what victims' families are going through.
    I am also pleased that Eliot Spitzer, the attorney general 
of the State of New York, is here today to explain his efforts 
with the relief organizations to ensure equitable fund 
distribution. And he has already started a public Website that 
describes what various charities are doing to provide relief. 
It can be located at www.wtcrelief.info. That is 
www.wtcrelief.info. We look forward to learning more about this 
site as well as a creation of a data base that these relief 
organizations can use to coordinate assistance to victims with 
other organizations. His vision and his leadership were the 
impetus for its creation.
    We are also interested in reports of fraudulent 
solicitations that Attorney General Spitzer and others have had 
to contend with in aiding the victims of September 11. Sadly, I 
understand that there have been reports of potential scams 
targeting donors. As painful as it may be to acknowledge that 
there are people so lacking in human compassion that they would 
try to capitalize on the suffering of others, it is essential 
that any reports of fraudulent solicitations be investigated 
thoroughly and immediately. Anyone found to be responsible for 
these despicable acts must be swiftly brought to justice. That 
is why I am pleased that we have also before us today the 
Federal Trade Commission and the Better Business Bureau's Wise 
Giving Alliance. They are here to speak about complaints 
received and their investigations into these potential scams 
and abuses. They are also here to help us be aware of the 
potential for this type of fraud and to know how to guard 
against becoming victims of these scams.
    I hope the testimony from today's witnesses will encourage 
the public to continue its outpouring of support while 
providing renewed confidence in charitable fund-raising. I hope 
that the information provided to us today can assist families 
of victims who are still in need of assistance. I thank our 
witnesses for their testimony.
    And now I recognize the ranking member of the subcommittee, 
the gentleman from Florida, Mr. Deutsch, for his opening 
statement.
    Mr. Deutsch. Thank you, Mr. Chairman.
    Just to share a couple of thoughts. Up until September 11, 
I represented a community in south Florida that had the 
distinction of having the largest, at least in terms of 
monetary value, disaster in the history of America, which was 
Hurricane Andrew. And I think when we think about the disaster 
of Hurricane Andrew, even though I represent south Florida, it 
obviously pales in comparison in order to many, really, if not 
thousands, literally tens of thousands of magnitude compared to 
what America and what New York in particular is facing and 
individuals are facing because of the September 11 disaster.
    I think one of the things that has hit us in terms of 
September 11 is, again, just the magnitude, incomprehensible 
magnitude, of what occurred and has affected so many of us 
directly, personally. Five thousand people at least who 
perished--just on a personal note, my wife lost a cousin by 
marriage, a firefighter, who actually passed away at the World 
Trade Center on that date. But as someone who originates from 
New York and had the distinction actually to be a high school 
classmate with the attorney general from New York, so many 
Americans and people around the world feel they are New Yorkers 
now. Some of us are New Yorkers by birth. Some of us are New 
Yorkers by circumstance since September 11.
    I happened to be in New York just this past weekend and 
been there previously since September 11 to visit Ground Zero, 
but I was there this weekend on some family issues and was in 
the Soho area. And it was a very bizarre experience because you 
can still smell the World Trade Centers. It is very, very eerie 
a number of weeks later. And just in a sense, our job in terms 
of this committee is really hopefully going to be constructive 
at this hearing today.
    I think that much has been raised, and it is probably not 
enough. I spoke with someone involved in President Clinton's 
efforts in terms of scholarship funds, and the actuarial 
numbers for the children who lost a parent is probably going to 
be at least $100 million, and that they are continuing to raise 
money--only about one-tenth toward their goal. And I think so 
many other needs are there. So I hope that no one leaves this 
hearing, even with the astronomical support of the American 
people that has occurred, to think that we have met those 
needs.
    Obviously, there is a lot to learn in terms of just 
distributing the effort, but as someone who up to this point 
came from a community that had experienced, as I said, the 
largest disaster in American history--in fact, it is 
interesting, our slogan was the same slogan as has been so 
often stated now: United we stand. That was the name of the 
community organization in south Florida. And I am sure we will 
be successful. And I believe that this hearing hopefully will 
be a constructive effort in those regards.
    Mr. Chairman, I would like to submit Mr. Dingell's 
statement for the record as well and yield back the balance of 
my time.
    Mr. Greenwood. Without objection, the statement of the 
ranking member of the full committee Mr. Dingell will be 
incorporated into the record.
    [The prepared statement of Hon. John D. Dingell follows:]

    Prepared Statement of Hon. John D. Dingell, a Representative in 
                  Congress from the State of Michigan

    Mr. Chairman, I want to thank you for holding this hearing. In the 
aftermath of the cowardly attacks on innocent citizens on September 11, 
we all watched in awe at the bravery of the firefighters, emergency 
personnel, and police officers who, in selfless acts of heroism, rushed 
into the center of danger to save as many as they could. Immediately 
thereafter, we saw the American people also rush to the forefront and 
respond with a level of generosity and compassion as great as at any 
other time in our history.
    Not only has the amount of money collected broken all records, but 
the fact that this money was collected largely without solicitation 
demonstrates the tremendous depth of caring and resolve that Americans 
feel. I am pleased to have learned that the Federal Trade Commission 
(FTC) has found no evidence of fraud in connection with funds collected 
to help victims of the September 11 atrocities. All complaints received 
by the FTC have been investigated and not a single case of fraud has 
been substantiated.
    At the same time, I understand some have found the process of 
applying for assistance to be unduly burdensome. Therefore, I am very 
interested to know what the charities and other officials are doing to 
get needed assistance to people in the most efficient manner possible.
    These tragic and horrific events have tested many of our 
institutions. None have been more tested than those charged with 
initial and early response, including charitable organizations. The 
American Red Cross, for example, operates under a congressional charter 
which holds it responsible for maintaining an adequate, safe supply of 
blood and blood products. Recognizing that its supply of blood is not 
adequate to deal with mass casualties from terrorist attacks, the Red 
Cross has begun to set up additional facilities. However, some have 
raised questions about the appropriateness of using contributions to 
its Liberty Fund to fund a program that will allow it to freeze and 
store blood for up to 10 years. Charities such as the Red Cross 
certainly must be prepared to provide all needed services should a 
terrorist attack occur in the future, and increasing the supply of 
frozen blood is a necessary and useful step. The only question is how 
best to fund these important programs.
    Mr. Chairman, again I thank you for holding this hearing. The 
American public deserves to know that its generosity and benevolence is 
not being misdirected, and how their donations are being allocated to 
help those in dire need.

    Mr. Greenwood. The Chair recognizes the chairman of the 
full committee, the gentleman from Louisiana, Mr. Tauzin.
    Chairman Tauzin. Thank you, Mr. Chairman.
    Mr. Greenwood, I want to deeply express to you the 
appreciation of the committee for holding this very timely 
hearing. This public forum will allow charitable organizations, 
law enforcement authorities and other charity experts and 
members to explore several important issues surrounding the 
massive outpouring of contributions arising from the September 
11 attacks upon our country, issues that are meaningful to tens 
of thousands of Americans who have sought to help many victims 
of these attacks. It also provides us an opportunity simply to 
appreciate this enormous heartwarming generosity of the 
American people.
    Think about it with me. Since September 11, America has 
given more than $1.2 billion--$1.2 billion to charitable 
organizations working on the relief and recovery efforts 
related to these attacks. This amount dwarfs contributions 
following any previous disaster in our Nation's history. As 
others have mentioned, this is more than 25 times that which 
was generously provided to the victims of the Oklahoma City 
bombing and more than 10 times the amount of monies that were 
donated in the wake of Hurricane Andrew, a hurricane that we in 
Louisiana were familiar with as it tore through the heart of my 
district after ripping up the Florida communities. These 
figures do not account for the many, many ways that Americans 
are otherwise giving unselfishly of their time and effort to 
lend support to the victims' families.
    Of course, this immense and sudden outpouring of relief 
efforts also creates some rather large logistical problems. 
Today we hope we can examine and perhaps ease many of the 
concerns related to making certain that the money goes to where 
people intended it to go. What mechanisms, for example, are 
being created to assure that funds directed to relief and 
recovery are distributed as efficiently as possible; how the 
charity is keeping track of victims to ensure that nobody in 
need of assistance is left out.
    There is no doubt that the charitable organizations at the 
heart of this influx of donations are providing very valuable 
and necessary services, yet questions have been raised about 
the disbursement of funds, particularly by charitable 
organizations that have many nonrelated projects to fund. So 
how can Americans be sure that the money they send out of the 
enormous generosity of their hearts is being distributed as 
they intended?
    And finally, sad to say there is the ever present 
temptation for fraud in circumstances like these. Our 
responsibility as members of this committee is to help head off 
any scam artists in the marketplace who always show up and prey 
on America's best intentions with their own evil designs. So we 
look forward to the discussion about measures that guard 
against deception and scams: What people need to know to avoid 
the high-tech fraud schemes that everyone seems to be faced 
with these days, and what are the law enforcement authorities 
doing to protect against this and other types of charity fraud.
    Some of the questions and discussions here today will touch 
an area troubling to donors, yet the hearing should be seen in 
the end as an effort to strengthen our trust in the charities 
that are doing so much to help Americans express a wonderful 
spirit of giving.
    Again, Mr. Greenwood, I want to thank you on behalf of the 
committee for the hearing, and we look forward as always to the 
testimony of the witnesses who have generously given their time 
to explore these serious questions with us. Thank you, Mr. 
Chairman.
    [The prepared statement of Hon. W.J. ``Billy'' Tauzin 
follows:]

 Prepared Statement of Hon. W.J. ``Billy'' Tauzin, Chairman, Committee 
                         on Energy and Commerce

    Thank you, Chairman Greenwood, for holding this very timely hearing 
today. This public forum will allow charitable organizations, law 
enforcement authorities, other charity experts, and Members to explore 
several important issues surrounding the massive outpouring of 
contributions arising from the September 11 attacks--issues that are 
meaningful to the tens of thousands of Americans who have sought to 
help victims of these attacks. It also provides us an opportunity 
simply to appreciate this heartwarming generosity of the American 
public.
    Think about it. Since September 11, American's have given more than 
1.2 billion dollars--1.2 billion dollars--to charitable organizations 
working on relief and recovery efforts related to the attacks. This 
dwarfs the contributions following any previous disaster.
    As others have mentioned, this is more than 25 times what was 
generously provided the victims following Oklahoma City, more than 10 
times what was donated in the wake of Hurricane Andrew. And these 
figures do not account for the many, many ways Americans are otherwise 
giving unselfishly of their time and effort to lend support to the 
victims' families.
    Of course, the immense and sudden outpouring of donations to relief 
efforts also creates an immense logistical problem. Today I hope we can 
examine, and perhaps ease, many of the concerns related to making 
certain the money goes where people intended it to go.
    What mechanisms, for example, are being created to assure that 
funds directed to relief and recovery are distributed as efficiently as 
possible? How are charities keeping track of victims to assure nobody 
in need of assistance is missed?
    There is no doubt that the charitable organizations at the heart of 
this influx of donations are providing valuable and very necessary 
services. Yet questions have been raised about the disbursement of 
funds, particularly by the charitable organizations that have many 
other, non-related projects to fund. So how can Americans be sure the 
money they send to a general relief organization is distributed as they 
intended it to be?
    Finally, sad to say, there's the ever-present temptation for fraud 
in these circumstances. One responsibility of the members of this 
Committee is to help head off scam artists in the marketplace who prey 
on American's best intentions with their own evil designs.
    I look forward to our discussion today about measures that guard 
against deception and scams. What do people need to know to avoid the 
high-tech fraud that seems so easy to pull off these days? What are the 
law enforcement authorities doing to protect against this and other 
types of charity fraud?
    Some of the questions and discussion today will touch on areas 
troubling to donors. Yet this hearing should be seen, in the end, as an 
effort to strengthen our trust in the charities that are doing so much 
to help Americans express their wonderful spirit of giving.
    Again, I thank you Mr. Greenwood for holding this hearing, I look 
forward to an open discussion with the witnesses that appear before us 
today.

------------------------------------------------------------------------
          Organization               Amount Raised     Amount Disbursed
------------------------------------------------------------------------
New York Times 9/11 Neediest      $43 million.......  $9,500,258.26
 Fund.
American Red Cross..............  $564 million        $154 million
                                   pledged ($505
                                   received).
Families of Freedom Scholarship   $30 million.......  $0 \1\ (Awards
 Fund.                                                 begin 1/2001)
United Way September 11th Fund..  $337 million        $47 million
                                   pledged ($250
                                   received).
New York State WTC Relief Fund..  $32 million.......  $0
NYC Firefighters 9/11 Disaster    $51,972,262 \2\...  $6,880,000 \3\
 Relief Fund.
Savation Army...................  $62,470,786.......  $8,500,000
------------------------------------------------------------------------
\1\ Given students' financial aid process, awards begin in January 2001.
\2\ As of 11/5/01.
\3\ They have sent $20,000 checks to 344 families. One $10,000 check was
  sent out on 9/25. Another $10,000 check was sent out on 10/19.

    Mr. Greenwood. The Chair thanks the chairman of the 
committee and recognizes the gentleman from Michigan Mr. Stupak 
for an opening statement.
    Mr. Stupak. Thank you, Mr. Chairman, and thank you for 
holding this hearing.
    Since September 11, countless Americans have reached in 
their pockets in response to the horrors perpetrated on our 
country by terrorists. They reached into their pockets and have 
given more than $1.2 billion. This is by far the biggest 
charitable contribution response ever to an event, and we must 
make sure that the donor intent is honored. Hundreds if not 
thousands of people in my own district in northern Michigan 
have held dozens of fund-raisers and have made huge efforts to 
give money, food and equipment to those affected by the events 
of September 11. Ed Janisse of WCUP Radio and Mr. Paul 
Tesanovich representing the Keweenaw Bay Indian community drove 
over 19 hours from my district here to Washington, DC, to hand-
deliver a check to the Red Cross. They drove all the way down 
here because they wanted to be absolutely sure that the money 
went straight into the hands of those directly involved with 
assisting the victims.
    In making sure that victims are getting what they need, the 
Trial Lawyers of America have established Trial Lawyers Care, a 
nonprofit organization that will provide free legal services to 
victims and their families who file claims with the September 
11 victims compensation fund. Over 1,500 attorneys throughout 
the country have volunteered to represent fund claimants 
throughout the process without a fee. That is the level of 
dedication and care we Americans are showing.
    But where is the money going? American Red Cross has raised 
most of the money of all the charitable organizations. Through 
their Liberty Fund they have received pledges and contributions 
totaling $564 million, over half a billion dollars. How can we 
be sure the money is being used to benefit those most in need? 
Those are the questions we should be asking today throughout 
this hearing. I look forward to hearing the testimony of 
today's witnesses to shed some light on this urgent question.
    Mr. Chairman, I thank you holding for this hearing and 
yield back the balance of my time as I look forward to hearing 
the witnesses.
    Mr. Greenwood. I thank the gentleman for his statement and 
for yielding, and recognize the gentleman from Florida Mr. 
Stearns for 5 minutes for his opening remarks.
    Mr. Stearns. Mr. Chairman, thank you for holding this 
hearing, and I think all of us, given the outpouring of support 
for Americans since the tragedy of September 11, we as Members 
of Congress have a fiduciary responsibility to ensure that the 
contributions that are made by the American people are 
expressly for the purpose of aiding the fellow citizens in the 
wake of these attacks.
    In my home State of Florida, we had Hurricane Andrew, and 
that raised about $110 million, and that has been dwarfed by 
the contribution by Americans for this tragedy on September 11. 
And I would like to say, Mr. Chairman, publicly that there is a 
direct correlation or relationship between the degree of 
charitable contributions that this Nation has provided because 
of September 11 and the goodness of this Nation. And the 
goodness of this Nation is recognized by this outpouring.
    Mr. Stupak mentioned he had a constituent who came down 
with a check. That is the kind of involvement the Americans 
have. When people look at this tragedy, there is goodness 
coming out through the Americans' hearts and its outpouring and 
a generous amount, and that alone should establish this Nation, 
throughout history, we have been charitable. But this is 
another case that we're charitable for ourselves.
    As I mentioned earlier, we do have responsibility to look 
at some of the complaints perhaps from watchdog groups that 
have expressed alarm at the Red Cross that the money is not 
getting to the victims and their family members. And as the 
chairman Mr. Greenwood and Mr. Tauzin has indicated, there is a 
possibility of fraud, and we want to make sure that doesn't 
occur.
    When you look at the average contribution from the American 
family, it is roughly about 3 percent of their income, and so 
there is an outpouring. There is a desire to help out.
    Mr. Chairman, I have a bill involving charitable 
foundations, which I introduced to abolish an antiquated excise 
tax on nonprofit foundations' pay on their net investment 
income. But basically, if my bill passed, it would give the 
charitable foundations more money to help more Americans. And I 
hope my colleagues will help me pass this part of the stimulus 
package.
    As I mentioned, one of our biggest challenges perhaps in 
this hearing is to understand--because the intentions of people 
are not being impugned, we are just trying to understand in a 
large measure this enormous amount of goodness and outpouring 
by the American people, how is it efficiently and effectively 
being used. And with our ability of telecommunications software 
and the like, we are able to focus that and understand where 
the money is going.
    We have had, obviously, reports of scam activities, and we 
should get to the bottom of that. The FTC has indicated in its 
testimony that, ``today the findings of fraud are few and far 
between.'' So we cannot let the few and far between overwhelm 
the goodness that is occurring here. So with the three panels, 
keep that in mind, because I'm heartened that the Federal Trade 
Commission is going to continue to aggressively monitor and 
investigate these reports.
    The findings of fraud are few and far between, but this 
hearing is very important, Mr. Chairman, as Mr. Tauzin has 
mentioned. You ought to be commended for bringing this to the 
forefront in allowing the American people to understand this. I 
look forward to the hearing, and I yield back the balance of my 
time.
    Mr. Greenwood. I thank the gentleman from Florida, and I 
recognize the gentleman from New Hampshire Mr. Bass.
    Mr. Bass. And I thank the chairman for holding this timely 
hearing and wish to associate myself with the remarks of my 
colleagues on this subject so as not to repeat myself.
    I would add that, having read over the last week or 2 
articles that begin to intimate that much of the generosity and 
outpouring of concern and compassion for those who were victims 
of September 11--I see, for example, today in the Wall Street 
Journal an article entitled ``Giuliani's Fund for Uniformed 
Survivors Has Yet to Disburse Any of the $100 Million.'' We are 
beginning to hear stories about that many survivors--we may 
hear some today--have yet to receive anything from any 
charitable organization beyond what their insurance company may 
have paid.
    This is all very disturbing to me and certainly justifies 
this hearing, because the obligation that we have as the 
committee of jurisdiction and oversight here to assure that the 
public trust is held and that there is tremendous generosity 
that has been shown that has really unified this country 
doesn't turn to cynicism and mistrust of government and 
charitable institutions is really paramount. And I hope that we 
can reassure America through this process that these funds that 
are really American peoples' funds are going to be put to good 
use and going to wind up helping the victims of this horrible 
tragedy that occurred on September 11.
    Now, as most of my colleagues and some of the witnesses may 
know, my friend from Florida Mr. Stearns, and Mr. Tauzin, and 
Mr. Deal and I and some other members of the committee 
introduced a bill called the American Spirit Fraud Prevention 
Act on October 2. The bill has been marked out of this 
committee. It would double penalties that the FTC may impose 
for violations of the FTC Act that aim to take advantage of 
emergencies and disasters, and this would apply to those 
fraudulently posing as charities and those perpetrating more 
commercial traditional scams.
    In preparing the legislation, I was surprised to find that 
the FTC, which is the Federal Government's principal consumer 
protection agency, actually has very little authority to 
protect citizens from false, misleading or deceptive practices 
involving organizations that might claim a charitable purpose. 
These organizations must, of course, answer to the IRS, but 
their focus is and should be the tax treatment and status and 
not consumer protection. These organizations are also regulated 
to a varying degree by State law, but it is not hard to imagine 
that one could easily file papers with the State to create a 
shield for consumer protection laws while State charity 
overseers and tax examiners consider the true benefit of the 
organization.
    I want to be clear, I believe that most charities, or 
basically almost every charity, do an amazing job and provide 
comfort and support that allows many Americans to simply get 
through the types of tragedies that we are talking about. 
Nevertheless, perhaps Congress should examine changing the 
oversight and consumer protection rules that apply to 
charities. And I am very much interested in hearing from 
whoever cares to comment, and I yield back.
    Mr. Greenwood. The Chair thanks the gentleman from New 
Hampshire and recognizes for her opening statement the 
gentlelady the from Colorado Ms. DeGette.
    Ms. DeGette. Thank you, Mr. Chairman. I don't have a formal 
prepared statement, and I just did get off an airplane so I 
could be here for this hearing.
    Let me just say that I am concerned, as all of us are, that 
an unprecedented amount of contributions from everybody from 
multimillionaire rock stars and movie stars on down to the kids 
at Adams City High School and elementary schools in my district 
have contributed to this relief effort, and every single person 
who contributed to this effort has done so with the best of 
intentions that these funds will go to help the victims' 
families of this terrible tragedy, to help the firefighters' 
funds, to help all of the caregivers who helped. And it is our 
job as Congress to have ongoing oversight to make sure there is 
no fraud or abuse.
    I think that the agencies, to my knowledge, have acted 
remarkably well and in an orderly fashion today. But the thing 
we need to balance is on the one hand getting relief to the 
families of those who died and getting it quickly. As the 
mother of two young daughters, I can only imagine what it must 
be like to suddenly lose the main breadwinner of the family and 
then to have to go around begging hat in hand even to pay the 
mortgage payment or to pay for Halloween costumes or 
Thanksgiving dinner or anything that constitutes the fabric of 
a family. On the one hand, we need to expedite those payments. 
On the other hand, we need to make sure that the processes that 
we put into place are not fraught with waste or abuse, which 
would be so easy because we are talking about such large sums 
of money.
    I commend you for having this initial hearing. I am not 
sure what we will learn today in substance, but maybe we can 
get some parameters, Mr. Chairman, for future hearings of this 
subcommittee. And I look forward both to the testimony today 
and also for our future oversight of this issue and yield back 
the balance of my time.
    Mr. Greenwood. The Chair thanks the gentlelady and 
recognizes the gentleman from Kentucky Mr. Whitfield for an 
opening statement.
    Mr. Whitfield. Mr. Chairman, I also want to thank you for 
having this timely hearing. I think, as has been said many 
times already today, the American people have shown they are a 
compassionate people by contributing over $1.2 billion to this 
incident alone. And all of us know and have read and have 
followed and have been admirers of the Red Cross, the United 
Way, Salvation Army and many other charitable organizations 
throughout our country, and all of them have really good 
reputations, and I don't think that any of us think that they 
have involved themselves in any deliberate wrongdoing. However, 
I do think it is imperative with the amount of money involved--
and I can imagine the complexity of distributing that much 
money, that it is a difficult process, and I hope today we can 
focus on those difficulties. And I am glad that the attorney 
general of New York is here today because I know that he was in 
the forefront of establishing a data base to help prevent 
duplicative payments and to help charitable organizations have 
a better understanding of who is receiving funds and who is not 
receiving funds, and I would like to hear about that.
    I also saw a recent survey that said many if not most 
Americans have trouble finding the information they need to 
evaluate charities and make decisions about giving, and I think 
that is another area we can look in. But, as I said, I don't 
think this is a hearing that anyone is being accused of 
anything, but all of us hope that from the information gathered 
we can come out with a more effective system that will provide 
the necessary help for people who need it desperately at this 
time. And I yield back my time.
    Mr. Greenwood. The Chair thanks the gentleman and thanks 
all the members for their opening statements.
    [Additional statement submitted for the record follows:]

   Prepared Statement of Hon. Michael Bilirakis, a Representative in 
                   Congress from the State of Florida

    Mr. Chairman, I want to commend you for holding this hearing today 
to examine charitable giving in the wake of the September 11th 
terrorist attacks and to discuss ways in which charitable organizations 
deliver promised assistance to the victims and their families.
    Since the devastating events of September 11th, Americans young and 
old have opened their hearts and their pocketbooks to help the victims 
of this terrible tragedy. To date, over $1 billion has been raised for 
relief efforts, proving once again that Americans are the most 
compassionate and generous people in the world.
    Mr. Chairman, I am alarmed at reports which suggest that charitable 
organizations are not acting in good faith to use the contributions of 
generous Americans to deliver timely assistance to the victims of 
September 11th and their families. How do we explain to elementary 
school children that their hard-raised contributions may not actually 
be used to help the families in need?
    Today I am wearing a pin made by the students of Cypress Woods 
Elementary School in Tarpon Springs, Florida. These students sold 
patriotic pins for $1 each and raised a total of $3,500. This amount 
was matched by a corporation for a total of $7,000. Another elementary 
school in Tarpon Springs, Brooker Creek, raised $2,300 for relief 
efforts.
    It would send a terrible message to these children and the 
community if charitable organizations do not use their contributions to 
directly aid the victims and their families.
    I have introduced a resolution--H. Con. Res. 259--praising the 
people of the United States for their patriotism and generosity in 
donating their money, time, and blood to support the victims of 
September 11th. The resolution also commends charitable organizations 
for their hard work in providing assistance but urges them to use the 
funds collected for the purposes for which the money was given. H. Con. 
Res. 259 also urges charities to limit the extent to which donations 
are used for administrative costs and condemns individuals or groups 
that fraudulently use contributions for their own personal gain.
    Mr. Chairman, I look forward to hearing from our witnesses today to 
assess the current situation and to determine what actions we may all 
take to improve the delivery of aid to those who need it most: the 
victims and families of September 11th. Many Americans lost their lives 
by the hands of terrorists on September 11th, and their memory and 
sacrifice for their country should be honored by providing for the 
needs of their families in a timely and effective fashion.

    Mr. Greenwood. I would like to introduce the first of three 
panels. We have with us Mrs. Russa Steiner from New Hope, 
Pennsylvania, my constituent, and Ms. Elizabeth McLaughlin of 
Pellham, New York. And let me say it is an extraordinary thing 
to have witnesses here just 8 weeks after their loss. And this 
committee thought long and hard about even inviting victims 
such as yourself to be with us, and let me honor your presence 
by noting for the record that it was only because in each of 
your cases you thought you might be able to speak for and help 
other victims that you have agreed to come and testify, and we 
thank you for that.
    Mrs. Steiner is accompanied by her attorney Mr. Robert 
Baldi.
    And we also welcome the Honorable Eliot Spitzer, New York 
State attorney general. And we welcome Dr. Bernadine Healy, the 
president of the American Red Cross. And thank you for joining 
us today.
    I believe you are aware that this committee is holding an 
investigative hearing, and in doing so, it is our custom to--it 
is our practice of taking testimony under oath. Do any of you 
have any objections to offering your testimony under oath?
    Seeing no objections, I would also advise you under the 
rules of this House and rules of this committee you are 
entitled to be represented by an attorney. Mrs. Steiner has her 
attorney with her as much for moral support as anything else. 
Do any of the others of you wish to be represented by an 
attorney?
    Seeing no such concern, I would ask you to rise and raise 
your right hand.
    [Witnesses sworn.]
    Mr. Greenwood. So saying, you are now under oath and may be 
seated.
    And, Mrs. Steiner, we will begin with you. You are 
recognized for your statement. And, again, thank you for your 
courage in being with us today.
    Mrs. Steiner. Thank you.
    Mr. Greenwood. If you turn on your microphone and pull it 
very close, because it is rather directional.

  TESTIMONY OF RUSSA STEINER, NEW HOPE, PENNSYLVANIA, WIFE OF 
  WILLIAM R. STEINER, EMPLOYEE OF MARSH, INC., 97TH FLOOR OF 
   NORTH TOWER, WORLD TRADE CENTER, NEW YORK, ACCOMPANIED BY 
 ROBERT O. BALDI, ESQUIRE; ELIZABETH McLAUGHLIN, PELLHAM, NEW 
   YORK; ELIOT SPITZER, NEW YORK STATE ATTORNEY GENERAL; AND 
         BERNADINE HEALY, PRESIDENT, AMERICAN RED CROSS

    Mrs. Steiner. Tuesday, September 11, began for me like any 
other. My husband awoke at 4:30 a.m. to prepare for a commute 
to a job that he loved. He left at 5:30 a.m. to get a head 
start on his workday, which had been his practice throughout 
his career. I fell back to sleep, which was my routine.
    Since it was a beautiful Tuesday morning on my way to work 
at a nonprofit mental health facility, I stopped off at Rice's 
Outdoor Market. While walking through the aisles, I overheard a 
news bulletin on the radio which prompted me to ask a vendor to 
please repeat what I thought I had just heard, a plane hit the 
World Trade Center. I remember saying to this vendor, my 
husband works there, and noticed her horrified expression.
    I proceeded immediately to my car to phone my husband. 
Unsuccessful in my attempt, I went home and tried again to 
reach him, to no avail. I called work and explained that I 
would be in as soon as I heard from my husband. I next put on 
the television in our family room with the phone by my side and 
witnessed the second plane hit the South Tower, saw both towers 
crumble, and watched in disbelief as the horrors of that 
infamous day unfolded.
    After speaking with our three children, my daughter 
Meredith, 23, who was at work in Philadelphia, my son Jordan, 
who is 21, attends the University of Delaware, and my youngest 
son Darren, 18, at Penn State, our two older children came 
directly home to be with me and to await the revelations.
    While dealing with the confusion and shock of what was 
transpiring, we held out hope for a miracle not unlike 5,000 
other families. We frantically took turns calling hospitals, 
radio and television stations, coworkers of my husband and 
researched the Internet to obtain information. In our 
desperation, we filed a missing person's report with the FBI 
and notified New York State and local police departments. We 
gathered and submitted dental records for my husband, DNA 
samples, and presented them to the authorities. We created 
missing posters, which family members placed around New York 
and on the Internet asking for any information on my husband's 
status.
    After 3 weeks of being in shock and frozen at home, the 
status of the missing persons from the Ground Zero area changed 
from missing to missing, presumed dead. It was at this time 
that I realized that I had to address the extensive amount of 
mail that I had thrown in a box on September 11. As my husband 
customarily handled the mundane chore of family maintenance, I 
was both inexperienced and overwhelmed by the enormity of this 
task. In my attempt to manage our affairs, I forwarded a letter 
to our creditors explaining the situation, asking for 
consideration and extensions, if possible, without penalties.
    As my children attempted to resume regular life, I 
continued at home by following all leads for assistance by 
calling numbers which would appear in the newspapers, on CNN, 
on MSNBC, and any referrals that were offered to me.
    On Saturday, October 6, at 7:30 a.m., I left the house for 
the first time since September 11, along with an advocate from 
NOVA, who picked up my family for a trip to New York. She took 
us on an appointment to the New Jersey Family Assistance Center 
at Ground Zero. After the site visit, I left our three children 
at the family center in the company of volunteer companions 
because I did not want to subject them to the continuing pain 
of retelling our story, explaining our financial status or be 
subjected to asking for handouts. I visited the trailers with 
advocates who assisted me in navigating me through the mazes of 
service, charities and organizations that potentially we would 
qualify for, along with addressing the legal necessities. We 
returned home that day at 11:30 p.m.
    As my husband was the sole supporter of our family and kept 
all records on his computer, I attempted to reconstruct 
documentation to satisfy all obligations and handle accessing 
benefits by myself in order not to incur any additional 
expenses. As the majority of creditors have shown some 
compassion, I have also had to deal with threats to incur 
additional collection activities.
    During this time, I have felt supported and been deeply 
moved by family, friends, neighbors, community members and 
total strangers. I was especially touched by an organization at 
the New Jersey Family Assistance Center, a Taiwan Buddhist 
Compassion Relief Organization, Tzu Chi Foundation, USA, who 
donated $1,000 to my family on the spot. Additionally, Penn 
State University donated a scholarship for my younger son 
Darren, a freshman at their Altoona campus. Another act of 
kindness shown to us was by the Count Your Blessings Fund 
established by a Bucks County builder, C.W. Schrenck, who 
offered to pay a semester's tuition for my older son Jordan.
    After 32 years of a successful and happy marriage, I am 
struggling to adjust to my new life situation both emotionally 
and financially. By sharing my personal experience with this 
committee, I hope it is beneficial to your investigation. I 
have requested that Robert Baldi assist me in sharing the 
specific information regarding details of all donations. Thank 
you.
    [The prepared statement of Russa Steiner follows:]

    Prepared Statement of Russa Steiner, Wife of William R. Steiner

    Tuesday, September 11th began for me like any other. My husband 
awoke at 4:30 a.m. to prepare for a commute to a job that he loved. He 
left at 5:30 to get a head start on his workday which had been his 
practice throughout his career and I fell back to sleep, which was my 
routine. Since it was a beautiful Tuesday morning, on my way to work at 
a non-profit mental health facility, I stopped off at Rices Outdoor 
Market. While walking through the aisles, I overheard a news bulletin 
on the radio, which prompted me to ask a vendor to please repeat what I 
thought I heard. ``A plane hit the World Trade Center''. I remember 
saying, ``My husband works there'' and noticed her horrified 
expression. I proceeded immediately to my car to phone my husband. 
Unsuccessful in my attempt I went home and tried again to reach him, to 
no avail. I called work and explained that I would be in as soon as I 
heard from my husband. I next put on the television in our family room 
with the phone by my side and witnessed the second plane hit the south 
tower, saw both towers crumble and watched in disbelief as the horrors 
of that infamous day unfolded.
    After speaking to our three children; Meredith (23) at work in 
Philadelphia, Jordan (21) at school at the University of Delaware and 
Darren (18) at Penn State, our older two children came directly home to 
be with me and await revelations.
    While dealing with the confusion and shock of what was transpiring, 
we held out hope for a miracle, not unlike five thousand other 
families. We frantically took turns calling hospitals, radio and 
television stations, co-workers of my husband and researched the 
Internet to obtain information. In our desperation, we filed a 
``missing person's'' report with the F.B.I. and notified New York State 
and local police departments. We submitted dental records and D.N.A. 
samples to the authorities. We created ``missing'' posters, which 
family members placed around New York and on the Internet, asking for 
any information on my husband's status.
    After three weeks of being in shock and frozen at home, the status 
of the missing persons from ``ground zero'' changed from ``missing'' to 
``missing, presumed dead''. It was at this time that I realized I had 
to address the extensive amount of mail that was thrown in a box since 
September 11th. As my husband customarily handled the mundane chore of 
family maintenance, I was both inexperienced and overwhelmed by the 
enormity of the task. In my attempt to manage our affairs, I forwarded 
a letter to all creditors explaining my situation, asking for 
consideration and extensions, if possible, without penalties.
    As my children attempted to resume life, I continued at home by 
following all leads for assistance by calling any number which would 
appear in the newspapers, on C.N.N. and M.S.N.B.C. and any referrals 
offered to me.
    On Saturday, October 6th at 7:30 a.m. I left the house for the 
first time since September 11th with an advocate from N.O.V.A. who 
picked up my family for a trip to New York. She took us on an 
appointment to the N.J. Family Assistance Center and ``ground zero''. 
After the site visit, I left our three children at the family center in 
the company of volunteer ``companions'', because I didn't want to 
subject them to the continuing pain of retelling our story, explaining 
our financial status or be subjected to asking for ``hand-outs''. I 
visited the trailers with advocates who assisted me in navigating 
through the maze of services, charities and organizations that 
potentially we could qualify for, along with addressing the legal 
necessities. We returned home at 11:30 p.m.
    As my husband was the sole supporter of our family and kept all 
records on his computer, I attempted to reconstruct documentation to 
satisfy all obligations and handle accessing benefits by myself in 
order not to incur additional expenses. As the majority of creditors 
have shown some compassion, I have also had to deal with dunning 
notices and threats to incur additional collection activities.
    During this time, I have felt supported and been deeply moved by 
family, friends, neighbors, community members and total strangers. I 
was especially touched by an organization at the N.J. Family Assistance 
Center, a Taiwan Buddhist Compassion Relief Organization (Tzu Chi 
Foundation, USA), who donated $1000 to my family on the spot. 
Additionally, Penn State University donated a scholarship for Darren, a 
freshman at their Altoona campus. Another act of kindness shown to us 
was by the ``Count Your Blessings'' fund, established by a Bucks County 
builder, C. W. Schrenck, who offered to pay a semester's tuition for my 
older son.
    After thirty-two years of a happy and successful marriage, I'm 
struggling to adjust to my new life situation, both emotionally and 
financially. By sharing my personal experience with this committee, I 
hope it's beneficial to your investigation.
    I have requested that Robert Baldi assist me in sharing specific 
information regarding details of all donations.

    Mr. Greenwood. Thank you, Mrs. Steiner.
    Mr. Baldi, you are recognized to add additional remarks.
    Mr. Baldi. Thank you, Mr. Chairman. I have some statements 
that I prepared in writing, and I will try to go through them 
quickly because I don't want to take up too much of your time.
    It was my understanding that you wanted very specific 
information in terms of the process that a victim would go 
through in trying to get help from charitable organizations, so 
I met with Mrs. Steiner and tried to gather this information 
for you.
    First of all, my name is Robert Baldi, and I am a lawyer 
who has had the honor of representing both William Steiner and 
Russa Steiner prior to the tragic events of September 11, 2001. 
I am here today not as Russa Steiner's lawyer, but as a 
spokesperson whose purpose is to help provide you with 
information concerning the impact that the terrorist attack had 
on her life. She has asked me to speak because she still finds 
it difficult to discuss many of the events that are relevant to 
your investigation.
    Russa and her family live in a community located close to 
Philadelphia. Some people would consider it a bedroom community 
of New York City. Many people commute from Bucks County to New 
York City. She and her husband Bill have been married 32 years 
at the time of his death. He was a successful executive with 
Marsh, Inc., a large insurance company with offices located on 
the floors 93 through 99 of the Twin Towers at the World Trade 
Center.
    The first terrorist attack hit close to the 90th floor in 
the North Tower. For obvious reasons, nothing has been 
recovered associated with Bill, not a shred of DNA nor any 
personal effects. From what we can tell, most of Bill's 
personal records were destroyed. Bill kept a lot of information 
on his laptop computer, which he took to and from the office. 
Russa has tried to gather information to help her get through 
this time.
    Because Bill was a successful businessman, the children 
were able to afford the college of their choice. The Steiners 
have been paying the entire cost of the education for each of 
their children. Because of Bill's income tax bracket, the 
children were not entitled to any financial assistance, and, 
therefore, the full tuition was being paid by the Steiners.
    Their older daughter is a graduate--recent graduate of 
college. She is living with Russa and had been planning to go 
to law school. Bill and Russa were planning to pay her tuition. 
In fact, they told her that would be her gift when she 
graduated from college. Jordan is 21 years old and a senior at 
the University of Delaware, and Darren is a freshman at Penn 
State.
    If you try to calculate the tuition that the Steiners paid 
in after-tax dollars, you can begin to appreciate the 
responsibility that Bill Steiner was carrying with him every 
day he went to New York.
    Russa's financial future is now fragile and uncertain. She 
has had to seek the assistance of others, a situation which 
makes her extremely uncomfortable even today as we present this 
testimony to you. When the status of Bill went from missing to 
missing and presumed dead, Russa realized that bills had to be 
paid and then began the process of taking over the management 
of the family's finances, a task previously performed by Bill. 
As she mentioned, she wrote letters to creditors and got 
extensions of time. Neighbors and friends gave her newspaper 
articles and information that they came across to help her 
locate charitable organizations which would be able to provide 
her with assistance. There is an agency in Bucks County known 
as NOVA. This agency has appointed an advocate by the name of 
Mia Alan to help Russa.
    Russa has spent many, many hours writing letters and making 
phone calls to various agencies. I have provided copies of some 
documents with some written material giving you some idea of 
some of the things she was doing. But to give you a sense of 
what the victim goes through, on October 6, 2001, Russa spent 
the day visiting Ground Zero. She was there with other victims' 
families. An advocate took her on that same day to trailers 
which are located on Liberty State Park, which were set up to 
help people such as Russa Steiner. She was escorted from 
trailer to trailer where she would wait in line to talk to 
someone to schedule an appointment. She then went to the next 
trailer to wait in line to schedule another appointment and 
ultimately returned to the various trailers at the appointed 
time to meet with representatives to tell and retell the story 
over and over gain.
    One of the trailers was sponsored by a Buddhist compassion 
relief fund known as the Tzu Chi Foundation. Russa knew nothing 
about this organization; however, when she went and told them 
her story, they issued her a check on the spot for $1,000. This 
money was available to her immediately, no strings attached. I 
have supplied you with a copy of a letter which identifies the 
organization.
    Russa also spent many hours visiting other trailers. Some 
of them were charitable organizations, some of them were 
government agencies. She went to the Salvation Army trailer, 
and she was told she would receive a holiday meal. We assume 
that at some point in the future someone will contact her from 
the Salvation Army to provide her family with a meal over one 
of the upcoming holidays.
    She went and visited the Red Cross trailer. She brought 
with her copies of bills. She had contacted the Red Cross 
previous to this to apply for the emergency family gift. She 
received a case identification number for that specific 
application. Separate and apart from that application that 
Russa had made by telephone, when she arrived in New York, her 
advocator told her to bring with her actual bills to be 
considered by the Red Cross. When she arrived on this day, she 
brought with her about 20 bills. The representative went 
through the bills and selected certain ones that the Red Cross 
agreed to pay. A separate disbursement order was then issued 
for each separate item selected by the Red Cross 
representative. Russa was then provided the disbursement order 
to be used as if it were a check to pay the specific bills.
    I provided copies of the disbursement orders, which have 
been added as an exhibit to this statement. For your 
information, the Red Cross on that day provided the following 
disbursements to her in response to the 20 some bills that she 
gave them. They gave her a disbursement order for $60 for a 
trash bill for services in Bucks County. You pay for your trash 
personally. And this was for about a 3-month period. They gave 
her $227.50 for an electric bill for the month of September. 
They gave her a disbursement order for $99.07 for one of the 
phone bills. She had several bills and they picked out one of 
them and gave her a disbursement order of whatever the name of 
the phone company was. They gave her a disbursement order for 
$138 for the security company who had just recently repaired 
the burglar system in her home. They provided her with two 
separate disbursement orders made payable to a local grocery 
store in the amount of $135 each and gave her another 
disbursement form which advised her they would be sending her 
$450 at a later time. Several days later, she received a check 
in the amount of $450, which was then for her to use for family 
maintenance.
    Now, up until--and I say this, by the way--this information 
is being provided to you to give you facts and information. I 
offer this to you in a neutral fashion. I am just telling you 
the manner in which it came through to us. The total sum 
received from the Red Cross up until this morning had been 
$1,244.57. This afternoon, shortly before this hearing, Russa 
Steiner was presented with a check in the amount of $27,507.12, 
which I understand is the cash gift, which was in response to 
the application that I referred to that she had made earlier. 
In a document that I have provided to you was a list of 
charities contacted. I supplied to you the date that she 
originally contacted the charity and the response. This 
particular response of the $27,000 is not on that because we 
received that this afternoon, but she is very grateful and 
wishes to thank the Red Cross for that and appreciates it very 
much.
    She was told--and I think it becomes important just to put 
things in perspective, again, as a way of information-
gathering--by a representative from the Red Cross that because 
she was able to obtain additional time from her creditors, they 
did not feel that her personal situation at that time was an 
emergency, and therefore she did not require funds on an 
emergency basis.
    Russa had made many applications to organizations over the 
phone and by letters. One of the organizations is her local 
United Way. On September 28, 2001, she applied by phone to the 
New York City United Way September 11 Fund. On November 2, 
2001, that was last Friday, a representative from her local 
Bucks County United Way arrived at her house and presented her 
a check in the amount of $1,500 from the local United Way. Now, 
I was coincidently in the office when this arrived, and as I 
understand it--and this is the information that he provided to 
me--he did not have any idea that she was coming to testify 
here today, and we did not tell him that she was about to.
    The gift from the local United Way was unprecedented. 
Normally the local United Way only provides assistance to 
agencies. The gentleman who delivered the check to Russa 
explained that the Bucks County local United Way is applying to 
or applying for the victims of--let me stop and explain. There 
are about 20 individuals identified in Bucks County, residents 
of Bucks County, who died in this tragedy. There may be more, 
but so far that is the number that the United Way is aware of. 
They are applying, we are told, for funds from the September 11 
Fund. He explained that the September 11 Fund is the fund 
raised by the United Way of New York. It is our understanding 
that these funds will be distributed to the local United Way 
organizations. He advised me that 20 families were identified 
from Bucks County, and that they made a request for an initial 
grant, which, if they receive it, would provide Russa Steiner 
with $3,000 per month for 3 months. The $1,500 payment that the 
local organization has given to her from their own funds would 
be part of that ultimate $9,000 grant, if, in fact, they 
receive that grant from the other organization.
    By no means am I qualified to speak for the local United 
Way in terms of what their intent is or in terms of what their 
efforts have been. The gentleman who brought the check to Russa 
was very kind and gracious. The funds being provided to her 
were unrestricted. We have no information which tells us when 
or if the full $9,000 grant would be approved, and we have no 
information to suggest if there would be any more money that 
would be distributed to her.
    Russa has contacted many potential sources of aid. She 
promptly called the Families of Freedom Scholarship Foundation 
after hearing President Clinton and Senator Dole talk about the 
fund on television. She called September 29, 2001, to register 
her children. They called her back on October 5 and explained 
that the application would be sent out sometime close to the 
end of the year.
    However, no money would be available for this year, and 
ultimately it would be based on financial need. This has been a 
very painful process for Russa and her family. People have been 
very kind. However, the Steiner family financial situation 
remains fragile. As she mentioned, Penn State was kind enough 
to provide a $2,500 scholarship for the one young man who is in 
Penn State. Congressman Greenwood connected Russa Steiner with 
a local builder who raises money for charitable organizations. 
They have an organization they call Count Your Blessings. Micky 
and Margery Shrank, the creators of the foundation, have told 
Russa that they are going to pay one semester's tuition for one 
of the children at the school. Congressman Greenwood asked that 
she contact them. She faxed information to them, and they 
called back immediately and said that they were going to 
provide that support.
    She and her family have monthly mortgage payments which 
have to be met. Though her mortgage company has given her a 6-
months' reprieve while she tries to straighten out the 
finances, she will ultimately have to meet these financial 
obligations, or she and her children will have to remove 
themselves from their home where their children have been 
raised and where, of course, their closest connection to Bill 
remains.
    Today--up until today, the money she has received from 
charitable organizations are as follows: The initial payment 
from Red Cross in the amount of $1,244.57, the payment made--or 
that contribution made by Red Cross today in the amount of 
$27,507. The United Way has provided her with $1,500, and the 
Tzu Chi Foundation has provided $1,000. The Count Your 
Blessings Tuition Fund has agreed to pay a semester for Russa 
Steiner.
    Thank you.
    [The prepared statement of Robert O. Baldi follows:]

   Prepared Statement of Robert O. Baldi, Esquire on Behalf of Russa 
                                Steiner

    Good afternoon, my name is Robert Baldi. I am a lawyer who has had 
the honor of representing both William Steiner and Russa Steiner, prior 
to the tragic events of September 11, 2001. I am here today, not as 
Russa Steiner's lawyer, but as a spokesperson whose purpose is to help 
her provide you with information concerning the impact the terrorist 
attack had on her life. She has asked me to speak because, she still 
finds it difficult to discuss many of the events which are relevant to 
your investigation. I have agreed to help her provide you with some of 
the details.
    Russa Steiner and her family live in a pleasant community located 
close to Philadelphia. She and Bill had been married 32 years at the 
time of his death. He was a successful executive with Marsh, Inc., a 
large insurance company with offices located on floors 93 through 99 of 
the Twin Towers at the World Trade Center. The first terrorist attack 
hit close to the 90th floor of the North Tower. For obvious reasons, 
nothing has been recovered associated with Bill. Not a shred of DNA, 
nor any personal effects. From what we can tell, most of Bill's 
personal records were destroyed. Bill kept a lot of information on his 
lap top computer, which he took to and from the office.
    Because Bill was a successful businessman, their children were able 
to afford to go the college of their choice. The Steiners have been 
paying the entire cost of the education for each of their children. 
Because of Bill's income tax bracket, the children were not entitled to 
any financial assistance and therefore, the full tuition was being paid 
by the Steiners. Meredith, their oldest daughter, is 23, a graduate of 
the University of Delaware. She is living home and was planning to go 
to law school. Bill and Russa were planning to pay her tuition. Jordan, 
is 21 years old and a senior at the University of Delaware. Darren is 
18 years old and a freshman at Penn State. If you calculate the tuition 
that the Steiners paid in after-tax dollars, you can begin to 
appreciate the responsibility Bill Steiner was carrying with him 
everyday he went into New York. Russa's financial future is now fragile 
and uncertain. She has reluctantly had to seek the assistance of 
others; a situation which makes her extremely uncomfortable.
    Since Bill's death, Russa spent most of her time, sitting at home 
looking at the television set watching news reports, as events have 
unfolded. When the status of Bill went from ``missing'' to ``missing 
and presumed dead'', she realized that bills had to be paid and then 
began the process of taking over the management of the family's 
finances, a task previously performed solely by Bill. She wrote to her 
creditors and asked them for extensions of time while she tried to 
straighten things out. She copied down telephone numbers shown on 
television, advising her of sources of assistance. Neighbor's and 
friends gave her newspaper articles and information that they came 
across. Ultimately, the local Network of Victim Assistance Agency, 
known as NOVA, provided her with a wonderful advocate by the name of 
Mia Alan. Mia has helped her with this process. Russa has spent many, 
many hours, writing letters and making phone calls to various agencies 
searching for assistance for her family.
    On October 6, 2001, Russa spent the day visiting Ground Zero with 
other victims' families and then an advocate took her to trailers 
located on Liberty Island, which have been set up to help victims of 
this horrible tragedy.
    She was escorted from trailer to trailer where she would wait in 
line to talk to someone to schedule an appointment. She then went to 
the next trailer to wait in line to schedule another appointment and 
ultimately, return to the various trailers at the appointed time to 
meet with representatives to tell and retell her story. One of the 
trailers was sponsored by a Buddhist Compassion Relief Fund known as 
the Tzu Chi Foundation, USA. Russa knew nothing about this 
organization, however, when she told them her story, they issued a 
check to her in the amount of $1,000.00. This money was available to 
her immediately, no strings attached. We have supplied a copy of the 
letter that was given to her by this most generous organization, along 
with their check. On October 6, 2001, Russa visited many other 
trailers, some of them were charitable organizations, others were 
government agencies.
    Russa went into the Salvation Army trailer. She was told that she 
would receive a holiday meal. We assume that at some point in the 
future, someone will contact her from the Salvation Army to provide her 
family with a meal over one of the upcoming holidays.
    While visiting the trailers, she was able to submit an application 
to the New York State Victim's of Crime Compensation Board, as well as 
the New York State Worker's Compensation Board. Approximately one week 
later both of the State agencies contacted her, each advising that she 
qualified for State Funds.
    When she visited the Red Cross trailer she brought with her copies 
of actual outstanding bills. She had contacted them previously to apply 
for the Emergency Family Gift and received a case identification number 
for that specific application. Her advocate told her to bring actual 
bills for consideration by the Red Cross for emergency vouchers. This 
request was separate from her first phone application. The 
representative onsite at the trailer from the Red Cross, reviewed the 
bills and selected certain ones that they agreed to pay. A separate 
disbursement order was then issued for each separate item. Russa was 
then provided the disbursement order to be used as if it were a check, 
to pay the specific bills. Copies of the disbursement orders have been 
provided as an exhibit to this statement. The Red Cross has provided 
her the following disbursements:

1. $60.00 for a trash bill for services 10/1/01-12/31/01--this is the 
        cost for her to have her trash picked up at her house.
2. $227.50 for the Steiners' electric bill for the month of September
3. $99.07 for the Steiners' telephone bill for 9/15/01-10/14/01. The 
        Steiners have several different phone bills. The Red Cross 
        picked one of the monthly bills and issued the disbursement 
        order.
4. $138.00 for the Security company that provides a security service 
        for the burglar alarm system in the Steiner house.
5. $135.00 and $135.00 (two separate disbursement orders) for food made 
        payable to the Giant, Russa's local grocery store.
6. Several days later, a check arrived in the mail from the Red Cross 
        to Russa in the amount of $450.00. This money was made payable 
        to Russa to use at she deemed fit for family maintenance.
The total sum received from Red Cross to date is $1,244.57.
    Russa was led to believe that there may be some additional money 
coming from the Red Cross from her phone application of September 28, 
2001, for the Emergency Family Gift. There has been no suggestion of 
the amount or when it will come. A representative said to her that 
because she was able to obtain additional time from her creditors, they 
felt that she did not qualify for assistance on an emergency basis.
    Russa has made many applications to organizations over the phone 
and by letters. One of those organizations is her Local United Way. On 
September 28, 2001, she applied by phone to the New York City United 
Way September 11th Fund. On November 2, 2001 a representative from her 
local Bucks County United Way arrived at her house and presented her a 
check in the amount $1,500.00 from the local United Way. This gift from 
the local United Way was unprecedented. Normally, the local United Way 
only provides assistance to agencies. The representative explained that 
the Bucks County Local United Way is applying for money, for victims of 
Bucks County, from the September 11th Fund. He explained to us that the 
September 11th Fund is the fund raised by United Way of New York. It is 
our understanding that these funds will be distributed through the 
local United Way Organizations. I have been advised that 20 families 
have been identified from Bucks County. An initial grant has been 
requested which would pay to the Steiners a grant of $3,000.00 per 
month for 3 months. The $1,500.00 payment, just recently received, 
would represent a portion of the grant which has been applied for. By 
no means am I qualified to speak for the local United Way, in terms of 
what their intent is or in terms of what their efforts have been. The 
gentlemen who brought the check to Russa was very kind and gracious. 
The funds being provided to her were unrestricted. We have no 
information which would suggest when she will know if the full 
$9,000.00 grant was approved, or if and/or when there will be any 
consideration for providing her with additional money over and beyond 
the outstanding request for $9,000.00.
    Russa has contacted many potential sources of aid. She promptly 
called the Families of Freedom Scholarship Foundation after hearing 
President Clinton and Senator Dole talk about the Fund on television. 
She called September 29, 2001 to register her children. They called her 
back on October 5, 2001 and explained that the application would be 
sent out sometime close to the end of this year. No money would be 
available this year and ultimately, it would be based on financial 
need.
    This has been a very painful process for Russa and her family. 
People have been very kind, however, the Steiner family financial 
situation remains fragile. Penn State was gracious enough to provide a 
$2,500.00 scholarship for Darren. Congressman Greenwood connected Russa 
Steiner with a local builder, whose family has created a Foundation 
called ``Count Your Blessings'' tuition fund. Mickey and Marjorie 
Schrenk, the creators of the Foundation are arranging to pay a 
semester's tuition for Jordan at the University of Delaware. 
Nonetheless, the children's educational future is uncertain. Russa's 
ability to remain in her house is uncertain. She has monthly mortgage 
payments which have to be met. The mortgage company has given her a 6 
month reprieve while she tries to straighten out finances. She will 
ultimately have to meet those financial obligations, or she and her 3 
children will have to move from the home where her children have been 
raised, and where their closest connection to Bill remains.
    By no means do I offer this comment in a judgmental way, but I 
would simply state that Russa's financial position right now is 
precarious. Russa has never had to ask people for assistance. Russa 
would never say to someone, that she needs financial help on an 
emergency basis. Nonetheless, part of the trauma associated with this 
horrible tragedy is not only the loss of her dear husband, but the 
financial uncertainty which now plagues the Steiner Family. To date she 
has received the following financial assistance from the following 
charities:

------------------------------------------------------------------------

------------------------------------------------------------------------
Red Cross......................................               $1,244.57
United Way.....................................               $1,500.00
Tzu Chi Foundation.............................               $1,000.00
Count Your Blessings Tuition Fund..............   1 semester of tuition
------------------------------------------------------------------------

    We will be happy to try and answer any questions that you may have 
for us.

              LIST OF CHARITIES CONTACTED BY RUSSA STEINER

1. Red Cross
    Russa Steiner applied over the phone on September 28, 2001 for what 
she was told was the ``emergency family gift''. She was assigned a case 
number and she immediately faxed her family expenses for their 
consideration. She has not received any response to date with respect 
to this request.
    On October 6, 2001, she applied in person for disbursement orders 
with the help of her advocate. She received $794.57 in disbursement 
orders on October 6, 2001. Several days later she received a check from 
the Red Cross for family maintenance in the amount of $450.00.
    Total sum received from the Red Cross to date: $1,244.57

2. Tzu Chi Foundation
    Russa Steiner applied in person at a trailer located at the New 
Jersey Family Assistance Center on Liberty Island. She received a check 
in the amount of $1,000.00
    Total sum received from the Tzu Chi Foundation: $1,000.00

3. United Way
    Russa Steiner applied over the phone for a United Way grant from 
the September 11th Fund on September 28, 2001.
    On November 2, 2001 a check in the amount of $1,500.00 was 
delivered to her from the Local United Way. The Local United Way has 
applied for additional funds from the New York United Way-September 
11th Fund.
    Total sum received from the Local United Way: $1,500.00

4. Salvation Army
    Russa Steiner applied in person at a trailer located in Liberty 
Island on October 6, 2001. She was told that she would be provided with 
a holiday meal at some time in the future.

5. New Jersey Realtor's Housing Relief Fund
    Russa Steiner applied in person on October 6, 2001 at a trailer 
located at Liberty Island. During a follow-up phone call on October 15, 
2001 she was told that they would forward her request to the National 
Branch in Chicago, because they only cover New York and New Jersey. She 
has heard nothing further from them.

6. Families of Freedom Scholarship Foundation
    Russa Steiner called this foundation on September 29, 2001 after 
hearing Senator Dole and President Clinton discuss it on the 
television. She received a telephone call back October 5, 2001 advising 
her that applications would be sent at the end of the year. She was 
told that there would be no money available for this year and that 
future grants would be based on financial need.

7. Twin Tower Fund
    Russa Steiner learned of this fund from television and made a 
telephone call to the organization on September 30, 2001.

8. Sylvan Learning
    Russa Steiner applied by phone on September 28, 2001. She received 
a telephone call back on October 5, 2001. They suggested that she 
contact the Families of Freedom Scholarship Foundation.

9. Count Your Blessings Tuition Fund
    This is a foundation created by Mickey and Marjorie Schrenck. At 
the suggestion of Congressman Greenwood, Russa Steiner applied October 
29, 2001. She heard back the same day that they would be providing one 
semester tuition payment for one of the children.

    Mr. Greenwood. Thank you, Mr. Baldi.
    Mrs. McLaughlin?

                TESTIMONY OF ELIZABETH McLAUGHLIN

    Mrs. McLaughlin. Thank you, Chairman Greenwood and the 
subcommittee, for inviting me here today. Honestly, I feel an 
awesome sense of responsibility to the nearly 4,700 families 
whose loved ones died on September 11. I think it is important 
that this committee and the millions of generous contributors 
across America know the unnecessary, and at times overwhelming, 
obstacles the surviving victims face when trying to receive 
assistance from the government and charities.
    I hope that my testimony and the work of this committee 
will aid the victims' families in our efforts and improve upon 
the current system.
    First and most importantly, I am absolutely amazed at the 
outpouring of support and generosity from the American people. 
When I drive through New York and elsewhere and I see flags 
raised, I feel like they are raised for me. I know if my 
husband Rob had died any other way under any other 
circumstances, that I would not have this kind of support, and 
I would not be here today. Rob was 29 years old, and our only 
child Nicholas was 9 months on September 11. We had just moved 
into our first home. It was a fixer-upper, and we sank our life 
savings into it. Rob worked at Cantor Fitzgerald on the 104th 
floor of the North Tower, and like most of the world, I watched 
the towers tumble that morning.
    The events of September 11 have changed our lives forever, 
but now, Mr. Chairman, I am tired, and I want to spend time 
with my son. Shortly after the attacks, I saw news reports and 
telethons that continuously mentioned the fund-raising efforts 
for the families of the victims of September 11. I asked 
friends and family to see what funds were available. No one 
really had much information, but we were all hopeful that these 
organizations would help. Rob was the sole source of income for 
our family, and I thought for the first time maybe I can keep 
my house. But then the real work began. You have to really 
focus, which some days is very hard to do, to satisfy the 
various registration requirements, qualifying criteria, keep up 
with policy changes, find out what groups sent money where, 
determine what documents need to be sent and to whom, speak to 
uninformed representatives and volunteers, repeat my story to 
the same organizations, sometimes 4, 5 and 6 times, countless 
faxings, sending e-mails and traveling in person, at least once 
a week, to reapply to the same organizations.
    Before when I had friends and family helping me full-time, 
the task did not seem so daunting. We have contacted over 40 
organizations. I have received some emergency funds. I have a 
different experience from Russa, and I thought I was doing 
everything right. I have an 18-page spreadsheet on all the 
charities and government organizations that we started on 
September 12, and it is updated every day. It has registration 
information, contacts, documentation required, follow-up 
required, but now as time goes on and my friends have less time 
to devote to this effort, the responsibility and pressure 
increased as my bills mount.
    Ironically, I have a master's degree in not-for-profit 
management. I do understand the magnitude of this project for 
charitable groups is unprecedented. I appreciate the work they 
are doing for me and for thousands of other families. And I do 
think my situation could have been worse. But I don't think 
contributors to the various September 11 funds thought that 
their donations would be caught up in so much red tape and 
become such a source of frustration for the families. It seems 
this process could have been better streamlined and centralized 
so that families can move on with their lives.
    That is why I am here today. It is not too late. Mayor 
Guiliani and the city of New York very quickly set up the 
Family Assistance Center in Manhattan, Pier 94. They gathered 
the charities, government organizations, legal assistance, 
translators, volunteers, food, counseling. Why then haven't 
these charities been able to get together and agree on one 
uniform application? Why haven't they been able to get together 
and develop a quicker way for families to receive these funds? 
We all have the missing person's reports, death certificates 
and any other proof needed to avoid fraud, but the charities 
are not sharing these documents or information with each other. 
The system is not believing--it is not working the way I 
believe it was intended. I know a family in my town of four 
children who lost their father on September 11. Their mother 
has to support all of these children now, both emotionally and 
financially. How can she spend each day making these phone 
calls, visiting these organizations and following up? Many 
charities are giving out funds on a first-come, first-served 
basis. Does that mean she will not receive the donations that 
she and her family will need?
    Sadly, a friend of mine whose husband worked also at Cantor 
Fitzgerald who was 6 months pregnant told me yesterday morning, 
I give up. And that is one of the reasons I came today. I don't 
want to let her down, and you should not either. There are too 
many people who need help, and I think that is why these 
charities were set up in the first place.
    Mr. Chairman, the American people have shown time and again 
that they are kind and generous. Because of the unspeakable 
tragedy to my family on September 11, I now am forever grateful 
to be experiencing firsthand this kindness and generosity, but 
as I testified, it has not been easy, and many people are not 
getting the help they need. I sincerely hope this committee 
will do everything it can to help the thousands of families 
suffering across this Nation more quickly and more easily 
receive the generosity that millions of Americans intended they 
receive. Thank you.
    As I said--sorry--I have several different experiences and 
information that I would be happy to submit. I didn't decide to 
do this until about 11 o'clock last night. So I don't have--I 
am not quite as organized. But thank you.
    [The prepared statement of Elizabeth McLaughlin follows:]

               Prepared Statement of Elizabeth McLaughlin

    Mr. Chairman. Members of the Subcommittee. My name is Elizabeth 
McLaughlin. Thank you Chairman Greenwood and the Subcommittee for 
inviting me to speak at this hearing today. Honestly, I feel an awesome 
sense of responsibility to the nearly 4,700 families whose loved ones 
died on September 11th. I think it is important that this Committee and 
the millions of generous contributors across America know the 
unnecessary--and, at times, overwhelming--obstacles the surviving 
victims face when trying to receive assistance from the government and 
charities. I hope that my testimony and the work of this committee will 
aid the victims' families in our efforts and improve upon the current 
system.
    And, I think--with all due respect to their fine team--that the 
Arizona Diamondbacks should have thrown the World Series for New York.
    First and most importantly, I am absolutely amazed at the 
outpouring of support and generosity from the American people. When I 
drive through New York and elsewhere and I see American flags raised, I 
feel like those flags are raised for me. I know if my husband Rob had 
died under any other circumstances, I would not have this additional 
level of support--and be able to be here today.
    Rob was 29 years old and our only child, Nicholas, was 9 months old 
on September 11th. We had just moved into our first home, a fixer upper 
where we sank our life's savings. Rob was a partner at Cantor 
Fitzgerald on the 104th floor. Like most of the world, I watched the 
World Trade Center towers fall down that morning.
    The events of September 11th have changed our lives forever. But 
now, Mr. Chairman, I am tired--and I want to spend time with my son.
    Shortly after the attacks, I saw news reports and telethons that 
continuously mentioned the fund raising efforts for the families of the 
victims of September 11th. I asked friends and family to help see what 
funds were available. No one really had much information, but we were 
all hopeful that these organizations would help.--Rob was the sole 
source of income for our family, and I thought, ``Maybe I can keep our 
house.''
    But then, the real work began. You have to really focus--which some 
days is very hard--to satisfy the various registration requirements; 
qualifying criteria; keep up with policy changes; find out what groups 
sent money where; determine what documents need to be sent and to whom; 
speak to uninformed representatives; repeat my story to the same 
organization four, five and six times; countless faxing, sending 
emails, and traveling in person each week to reapply.
    Before, when I had friends and family helping me full-time, the 
task did not seem so daunting. We have contacted over 40 organizations. 
I have received some emergency funds, and I thought I was doing 
everything right. We developed an 18-page spreadsheet to organize the 
registration, contacts, proper documentation and required follow-up. 
Now, as time goes on and my friends have less time to devote to this 
effort, the responsibility and pressure increase as my bills mount.
    Ironically, I have a Masters degree in not-for-profit management. I 
understand the magnitude of this project for charitable groups is 
unprecedented. I appreciate the work they're doing for me and the 
thousands of others families. I think my situation could have been 
worse. But I don't think contributors to the various September 11th 
funds thought that their donations would be caught up in so much red 
tape and become a source of frustration to the families. It seems this 
process could have been better streamlined and centralized so families 
can move on with their lives. That is the main reason I am here today. 
It is not too late.
    Mayor Guiliani and the city of New York very quickly set up a 
family assistance center in Manhattan that gathered the charities, 
government organizations, legal assistance, translators, volunteers, 
food and counseling. Why then, haven't these charities been able to get 
together and agree on a uniform application? Why haven't they been able 
to get together and develop a quicker way for families to receive the 
funds? We all have missing persons' reports, death certificates, and 
any other proof needed to avoid fraud, but the charities are not 
sharing these documents or information.
    The system is not working the way I believe it was intended. I know 
of a family with four children who lost their father on September 11th. 
Their mother has to support all of these children both emotionally and 
financially now. How can she spend each day making the necessary phone 
calls, visits and follow-up to these organizations? Many charities are 
giving out funds on a first-come, first-served basis. Does that mean 
she will not receive the donations that she and her family need?
    Sadly, a friend told me yesterday, ``I give up.''
    I don't want to let her down, and you should not let her down 
either. There are too many people that need help. Isn't that why these 
charities were set up in the first place?
    Mr. Chairman, the American people have shown time and time again 
that they are kind and generous. Because of the unspeakable tragedy to 
my family on September 11th, I now am forever grateful to be 
experiencing firsthand this kindness and generosity. But, as I 
testified, it has not been easy, and many are not getting the help they 
need. I sincerely hope that this Committee will do everything it can to 
help the thousands of suffering families across this Nation more 
quickly and more easily receive the generosity that millions of 
Americans intended they receive.
    Thank you. I will happy to answer any questions the Committee may 
have.

    Mr. Greenwood. Thank you, Mrs. McLaughlin. Thank you for 
being here.
    And again, Mrs. Steiner and Mrs. McLaughlin, you are 
courageous, indeed, to come and be with us this afternoon, and 
we will do everything that we can to honor your presence and 
your efforts by making sure that the families--the other 
families for whom you speak--also are given what they need for 
them and for their children to make it through.
    Mr. Spitzer, thank you for being here as well and you are 
recognized for 5 minutes for your testimony.

                 TESTIMONY OF HON. ELIOT SPITZER

    Mr. Spitzer. Thank you, Mr. Chairman, Congressman Deutsch, 
distinguished members of the subcommittee. Thank you for 
inviting me to testify here today. The physical and emotional 
impacts of the events of September 11 are staggering, as we 
have just heard. Several thousand people lost their lives on 
that day. Thousands more were wounded, and thousands lost 
family members, jobs or homes as a result of this terrible 
attack. Virtually all of these individuals will require some 
form of temporary or long-term assistance, ranging from medical 
care to financial aid, to mental health counseling. As a 
result, our response to this tragedy must be guided by a single 
focus: addressing the needs of the victims and their families 
as promptly and coherently as possible.
    The American people have responded to this call by pledging 
more than $1.2 billion to the relief effort, and the charities 
entrusted with these funds must spend them in a manner that 
fulfills the will of the donors. In particular, the donations 
made specifically in response to September 11 attacks must be 
used exclusively for the benefit of those who have suffered as 
a result of those attacks. Moreover, the funds should be 
distributed in an equitable manner, ensuring that no victim is 
left unassisted.
    Indeed, if this singularly important task is not performed 
well, then the public will lose faith in the entire not-for-
profit sector. As New York's attorney general, I am charged 
with overseeing the charitable organizations that solicit funds 
or hold assets in our State, which includes the vast majority 
of the charities involved in the relief effort. Most of these 
organizations must register with the State and comply with 
annual financial reporting requirements. In addition, my office 
helps to ensure that the interests of the public are protected 
when charitable funds are raised and spent. Nevertheless, the 
essence of charity is its voluntary nature.
    My office does not and cannot tell the charities how to 
spend money, and most Americans probably agree, as I do, that 
government should not control this private giving, which is a 
uniquely American phenomenon. Very soon after the September 11 
disaster, it became clear to me that we needed to improve the 
coordination of the terrible response to the tragedy, and I 
have been working ever since to achieve that goal. While there 
was some initial resistance from some charities, that 
resistance has been largely overcome, and my office is now 
working cooperatively with many of the charities involved in 
this effort.
    In particular, my office identified five critical areas 
that needed to be addressed: Improving the process for victims; 
improving coordination among charities; providing information 
to the public; preventing fraud; and addressing long-term 
issues. And we have made substantial progress toward achieving 
all of these goals. First, as we have heard, we need to make it 
easier for victims to learn what relief is available and to 
access that aid. Although thousands of victims have already 
received aid, others are having difficulty obtaining the relief 
they need. Many of these victims are baffled by the process, 
which involves submitting a dizzying array of forms and making 
daily phone calls to scores of different organizations offering 
assistance. We need to address these issues as soon as 
possible.
    The good news is that the charitable organizers are 
responding positively to our efforts. For example, almost 100 
charities and other private entities have already provided my 
office with detailed information about their programs and 
funding criteria, and we have created a public Web site for 
this information, www.wtcrelief.info. This Web site helps 
victims and their families locate charities that are providing 
aid, assists donors in deciding which charities to give money 
to and helps charities learn more about their colleagues' 
efforts.
    In addition, I hope in the near future to develop a 
mechanism enabling individual victims and families to use this 
Web site to send information about their needs directly to the 
listed charities so that those charities can contact them more 
promptly.
    At the same time, however, we must remember that many 
victims and their families do not have computers or are not 
proficient in English, and thus any Internet-based assistance 
can only fill a part of the existing needs, as a result, with 
need to streamline the written application process to the 
greatest extent possible. There is no reason why those affected 
by the September 11 tragedy must complete dozens of different 
applications for dozens of different organizations.
    Instead, I have urged the major charities to work together 
and develop a single, uniform application available in as many 
languages as possible that all organizations will accept. We 
must strive to make the application process as easy for the 
victims as we possibly can.
    A second goal has been encouraging the charities to work 
together to expedite the provision of aid, avoid duplication of 
services, and ensure fairness in providing relief. With over 
200 major charities raising funds for September 11 relief, the 
challenge of coordinating will not be an easy undertaking, but 
it is an essential one. Fortunately, we are making substantial 
progress on this front. Last week, I announced a team of 
private firms, including McKinsey & Company, IBM, SilverStream 
Software, Qwest Communications and KPMG, that are working pro 
bono to create a private, secure listing of the grants that 
have been provided to victims and their families. This effort 
is modeled on a similar approach developed after the 1995 
bombing of the Murrah Federal Building in Oklahoma City. Their 
jointly managed data base served a crucial case management 
role, helping ensure both the integrity of the process and the 
equitable distribution of relief.
    Over the past several weeks, many of the largest charitable 
organizations, including the American Red Cross, the Salvation 
Army, the September 11 Fund, and Safe Horizon, which together 
account for approximately 80 percent of the charitable pledges, 
have agreed to participate.
    My office is in the process of working with the charities 
to finalize the details of the data base, which will become an 
essential component of the efforts to prevent duplication and 
will also help them to reach and serve the broadest range of 
victims. I am pushing aggressively to get this data base 
created, and Congress similarly should express its desire that 
the data base be created quickly and utilized to the fullest 
extent possible.
    The third critical goal is to ensure that the charities 
provide information about the use of the funds that they have 
received. Charities can provide assistance to the victims of 
the September 11 attacks only because of the long-standing 
generosity of the American people. The American people in turn 
expect to see that these funds are provided to those in need 
promptly and equitably. Services are still being provided to 
victims of the Oklahoma City bombing, even though more than 6 
years have passed since that tragic event, and so we know that 
the needs of the September 11 victims and their families will 
continue for many years.
    While the charities, therefore, should not spend all of the 
money immediately, they still must demonstrate to the American 
people that they are fulfilling their charitable mission. I am 
thus urging each charity to publicize on a regular basis the 
amount of money it has received, detailing how much it has 
spent and identifying the purposes for which its funds have 
been targeted. My office has volunteered to collect and 
aggregate the data and to place it on our Web site so that 
updated information is readily available in a central location.
    Fourth, we must be vigilant in our efforts to prevent the 
diversion of funds from the victims through fraud, waste and 
abuse. We have already seen a few instances of individuals 
raising funds with little assurance that the money will reach 
the victims of the September 11 attacks, and we have even seen 
isolated cases of unscrupulous individuals falsely claiming to 
be victims of this tragedy. Our responsibility in government 
includes the obligation to move swiftly and aggressively to 
enforce the laws against those who engage in fraud, and there 
are ways that Congress can help. In particular, Congress should 
modify those provisions of the Internal Revenue Code that 
impede disclosures to State law enforcement authorities 
regarding IRS audits and enforcement actions and should 
encourage greater disclosure of charitable fund-raising 
practices.
    Finally, I have called for the creation of a permanent 
working group of the major charitable organizations and victim 
groups, which can meet on a regular basis to address the needs 
of victims who have not been assisted and to solve other 
problems in the process as they arise.
    A similar working group was created in Oklahoma City and 
was extremely helpful in the response to that tragedy.
    This kind of focused collaboration is especially crucial 
for the retail level charities, which are actually delivering 
cash assistance and services to individual beneficiaries. In 
addition to addressing the needs of individual victims, the 
working group can focus on some of the difficult questions that 
all charities are facing, such as balancing the desire to 
provide assistance quickly against the need to keep funds in 
reserve for the future; deciding how to allocate funds among 
the many survivors of a single victim; guarding against the 
prospect of individuals who may try to defraud the charities; 
and determining how to help undocumented aliens and other 
victims who are afraid to come forward.
    On balance, the charitable organizations have done an 
excellent job in responding to the events of September 11. On 
behalf of all of us in New York, I wish to express our 
tremendous gratitude to all Americans--to all Americans and 
indeed people throughout the world who have contributed to this 
remarkable relief effort. Nevertheless, we must recognize the 
events of September 11 demand a team response. Only through an 
ongoing cooperative effort can we possibly hope to ensure 
meaningful and sustained care for the victims of this terrible 
tragedy. This cooperation is essential if the charities are to 
earn and keep the confidence of the American people. Faith not 
only in wise use of the donations raised for this crisis, but 
also faith in the integrity of our great tradition of private 
philanthropy. Thank you.
    [The prepared statement of Eliot Spitzer follows:]

  Prepared Statement of Eliot Spitzer, Attorney General, State of New 
                                  York

    Chairman Greenwood, Congressman Deutsch and distinguished Members 
of this Subcommittee, thank you for inviting me to testify before you 
today on the important issues that face us in the wake of the September 
11th attacks and the charitable outpouring that followed that tragedy.
    The physical and emotional impact of the events of September 11th 
is staggering. Several thousand people lost their lives at the World 
Trade Center, the Pentagon and in Pennsylvania, and so the relief 
effort plainly begins with an understanding of the thousands of 
grieving families and friends they have left behind. Many children will 
grow up without a parent, and thus families may need support for years.
    In addition, thousands of people were injured as they fled the 
World Trade Center or tried to rescue others. Many will require years 
of medical treatment and other assistance. Thousands of others in New 
York lost homes, jobs, businesses and sense of security. The individual 
and aggregate physical, emotional and economic losses are huge. The 
need for services ranging from education and training to mental health 
counseling is equally enormous and will endure for years to come.
    Our response to this tragedy must be guided by a single overriding 
principle--the needs of the victims and their families must be 
addressed as promptly and coherently as possible.
    The American people have already responded to this call, by opening 
their hearts and wallets in an unprecedented way. Charitable 
institutions have collected more than $1.1 billion in donations and 
pledges, making appeals to their donors that directly cited the need 
for relief of this disaster. Collectively, the American public has 
great expectations that this outpouring of relief will make a 
difference for those who are suffering, both on an immediate basis and 
over the long haul.
    As a result, the charities that have been entrusted with these 
funds must spend them in a manner that fulfills the will of the donors. 
In particular, the donations made specifically in response to the 
September 11 attacks must be used exclusively for the benefit of those 
who have suffered as a result of those attacks. Moreover, the funds 
should be distributed in an equitable manner, ensuring that no victim 
is left unassisted. Indeed, if this singularly important task is not 
performed well--with dignity, fairness, equity and justice for all of 
the victims--then the public could lose faith in the entire not-for-
profit sector.
    As New York's Attorney General, I am charged with overseeing those 
charities that solicit funds in our state, as well as the charitable 
organizations, including foundations and charitable trusts, which are 
created in or hold assets in our state. It is my duty to help ensure 
that the interests of the public are protected when charitable funds 
are raised and spent. I consider it a privilege to perform this 
important function, especially in this time of great need.
    Nevertheless, the essence of charity is its voluntary nature. 
Americans decide individually, often in a manner closely linked to our 
individual views and faiths, how to make contributions to charities 
that serve our shared goals. There are many diverse ways in which 
relief can be provided effectively, in keeping with our country's 
strong tradition of private philanthropy.
    In New York, most not-for-profit groups (other than religious 
organizations and certain other exempt entities, such as the Red Cross) 
are required to register with the state and comply with annual 
financial reporting requirements. My office makes those reports public, 
so that donors can make informed choices as they plan their 
contributions. We oversee not-for-profit groups, including those that 
are exempt from registration and reporting rules, to ensure that they 
use their charitable assets in ways that fulfill the intent of the 
donors and further the public interest. My office tries to ensure that 
charitable solicitations are truthful, that charities invest their 
funds carefully and that the officers, directors and trustees who 
manage not-for-profit institutions uphold their fiduciary duties to the 
beneficiaries of the charities they run.
    But my office does not and cannot tell the charities how to spend 
money--and most Americans probably agree that government should not 
control this private giving process.
    As regulators, our goal in general has been to help donors' efforts 
to obtain information more easily concerning what each charity has done 
and pledges to do with the funds it collects from the public. Here, 
with the magnitude of the September 11th tragedy, and the huge numbers 
of its victims, we must also pay special attention to helping those 
individuals and families obtain the information they need to locate the 
assistance they deserve.
    Very soon after the disaster, it became clear to me that we needed 
a coordinated charitable response, and that we could not afford to wait 
for that coordination to evolve over an extended time period. I 
therefore have tried to use my office to jump start the necessary 
collaboration. While there was some initial resistance from some 
charities, that resistance has been largely overcome, and my office is 
now working very cooperatively with many of the charities involved in 
this effort.
    In particular, my office identified five critical areas that needed 
to be addressed, and we have made substantial progress toward achieving 
all of these goals:

1. making it easier for victims to learn what relief is available, and 
        to access that aid;
2. creating a victims database, to facilitate coordination, avoid 
        duplication and ensure fairness in the aid distribution 
        process;
3. providing the American public with information about the amount of 
        donations received and expended, and the purposes of those 
        expenditures;
4. investigating and prosecuting any instances of fraud and abuse that 
        arise; and
5. ensuring that a working group of charities and victim advocates is 
        established, to solve problems as they arise and swiftly 
        identify gaps in the services required to meet victims' needs 
        in the future.
    I will devote the remainder of this testimony to a more detailed 
discussion of each of these initiatives.
Victims' Need for Access to Information and Streamlined Process:
    The government agencies and charitable organizations that have 
stepped in first to meet victims' most immediate and acute needs have 
distributed tens of millions of dollars in aid, but already reports of 
delays and gaps in service are emerging. Although thousands of victims 
have already received aid, many others are still in need. Moreover, 
almost all are baffled by the process, which involves a dizzying array 
of forms and scores of phone calls, ever-changing assistance personnel, 
perceived delays in receiving relief and, as yet, very little 
explanation of how to go about accessing relief for longer-term 
expenses. These problems are very troubling.
    The lack of coordination also affects the charities, particularly 
those seeking to support longer-term needs of the victims, which are 
finding it difficult to identify the victims they have pledged to 
serve. It is certainly reasonable for those charities--as well as 
charities whose relief focuses on broader, community-wide losses--to 
take additional time to assess the needs, consult with other charities 
and develop effective service plans, but that process should be as open 
as possible, so that the victims and donors can monitor progress. As 
yet, we know very little about the plans for this portion of the 
charitable dollars raised.
    One of my top priorities has been to bring all of the various 
charities together in an effort to address these issues--particularly 
the problems faced by the victims--as quickly as possible. The good 
news is that the charitable organizations are responding positively to 
our efforts. For example, almost 100 charities and other private 
entities have already provided my office with detailed information 
about their programs and funding criteria, and we have created a public 
website for this information: www.wtcrelief.info.
    This website--which has been up and running for more than a month--
contains a search function which helps victims and their families 
locate those charities that are providing the precise type of 
assistance the victims need. Increasingly, as more data is accumulated 
each day, this website also includes contact information and other 
guidelines, so that victims will find it easier to obtain relief.
    The website can also easily be used by donors in deciding which 
charities to give money to. Donors can find the charities that are 
providing the specific kinds of assistance they wish to support, can 
link to those charities' financial reports on an independent website 
(www.GuideStar.org), and in many instances can link directly to the 
charities' own websites to get more information or donate on-line.
    The www.wtcrelief.info website also provides charities with a 
vehicle to learn more about their colleagues' efforts, so that they can 
work closely with those serving the same goals as their own, and can 
identify those needs that may be receiving less attention.
    I hope in the near future to work out with the charities a 
mechanism enabling individual victims and families to use our 
www.wtcrelief.info website to send information about their needs 
directly to the listed charities, so that those charities can contact 
them more promptly. My goal, which I know the charities share, is to 
facilitate outreach by the charities to the victims, especially those 
who are frustrated, fearful or otherwise experiencing barriers to 
assistance.
    We must remember, however, that many victims and their families do 
not have computers, or are not proficient in English, or both, and thus 
any Internet-based assistance can only fulfill a part of the existing 
needs. As a result, we need to streamline the written application 
process to the greatest extent possible. Although it is wonderful that 
so many organizations are stepping forward to provide assistance, this 
outpouring of support can result in confusion and reams of paperwork 
for the victims. While many of the victims who lost a close family 
member or were injured or displaced by the tragic events of September 
11th have completed extensive applications in seeking their initial 
emergency relief grants, there is no reason why they must be required 
to chase down and complete multitudes of different applications for 
dozens of different organizations in order to have their longer-term 
needs met.
    Instead, I have urged the major charities to take the lead in 
developing a single, uniform application--available in as many 
languages as possible--that all organizations will accept. We must 
strive to make the application process as easy for the victims as we 
possibly can.
Importance of a Victims Database to the Charities' Coordination:
    With over two hundred charities raising funds for September 11th 
relief, the challenge of coordinating this effort began eight weeks ago 
and will continue for many years to come. The charitable organizations 
that have tapped the reservoir of public generosity so successfully 
must now work together as never before to expedite assistance, avoid 
duplication of services, prevent fraud and ensure fairness in providing 
relief. This will not be an easy undertaking.
    That is why I have recruited talented professionals from the 
private sector to create a victims database, which can maintain a 
private, secure listing of the grants that have been provided to 
victims and their families. Just last week, I announced a team of 
private firms, all of whom are providing services and products for this 
database effort on a pro bono basis. The team is coordinated by 
McKinsey & Company, and includes IBM, SilverStream Software, Qwest 
Communications and KPMG. I greatly appreciate the willingness of these 
entities to assist in this important effort.
    My role in the creation of this database has been as a catalyst, 
setting forth the parameters and seeking to have the database up and 
running as quickly as possible. In particular, the database must 
include strict security measures to protect the privacy of the victims 
and their families from unauthorized disclosure.
    This effort is modeled on a similar effort developed after the 1995 
bombing of the Murrah Federal Building in Oklahoma City. I am grateful 
to the staff of Oklahoma City's charities, including the United Way and 
the Oklahoma City Community Foundation, for sharing their wisdom, 
expertise and experience to aid us in developing our database. Despite 
the magnitude of the tragedy in Oklahoma City, because most of the 
victims worked directly for the government and the number of families 
impacted was smaller, the charities could meet around a table on a 
regular basis and work through the issues family-by-family. Their 
jointly-managed database served a crucial case management role, helping 
ensure both the integrity of the process and the equitable distribution 
of relief.
    In contrast, the scale of the September 11th disaster--with 
thousands killed and tens of thousands suffering severe physical, 
emotional and economic losses--is much more vast. Our challenge is to 
find a way for the charities to work together smoothly and with the 
same sense of shared purpose as their Oklahoma City counterparts.
    Over the past several weeks, many of the largest charitable 
organizations--including the American Red Cross, the Salvation Army, 
the September 11th Fund (the joint venture of United Way and the New 
York Community Trust) and Safe Horizon, which together account for 
approximately 80% of the charitable pledges--have agreed in principle 
to participate. These charities have acknowledged the need for the 
database, and indeed have expressed a desire to operate it themselves, 
rather than having it run by a government entity. It is important to 
emphasize, however, that the cooperation of the charities is essential 
to the success of the database, because only they have the information 
necessary to make it work, and the level of commitment varies among the 
many different charitable entities.
    My office is still in the process of working with the charities to 
finalize the details of the database, which will become an essential 
component of their efforts to prevent duplication and fraud, and will 
also help them collectively reach and equitably serve the broadest 
range of victims. These are very important goals, and as a result I am 
pushing aggressively to get this database created as soon as possible. 
Congress similarly should make clear that it is demanding a coordinated 
response to this tragedy, and should urge the charities to create the 
database quickly and utilize it to the fullest extent possible.
Obligation to the American Public:
    The charities must recognize that they are only able to provide 
assistance because of the overwhelming generosity of the American 
people, and that the American people, in turn, expect to see that these 
funds are provided to those in need promptly and equitably. There have 
been several publicized cases of victims who have not been able to 
obtain needed relief, and unfortunately this has overshadowed the fact 
that tens of millions of dollars have already been provided to 
thousands of individuals.
    One of the other lessons of Oklahoma City--where services are still 
being provided to victims more than six years after that tragic event--
is that the needs of the victims for services and funds will continue 
for many years. This clearly will be true in the aftermath of the 
September 11 disaster as well, and thus programs must be carefully 
designed and funds prudently managed so they remain available to meet 
evolving needs. The charities cannot and should not spend all of the 
money immediately. A coordinated process by which the charities account 
for their progress will demonstrate that they are fulfilling their 
mission and remaining faithful to their public trust.
    I am thus also urging each charity to publicize, on a regular 
basis, the amount of money it has received, detailing how much it has 
spent and identifying the purposes for which its funds have been 
targeted. My office has volunteered to collect and aggregate the data, 
and to place it on the www.wtcrelief.info website, so that updated 
information is readily available to the American people in a central 
location. Over the long term, I will work to expedite and improve the 
charities' disclosure of their programs, priorities and finances in 
other ways, to better inform and empower the donating public.
Vigilance Against Fraud and Abuse:
    As if the challenges ahead were not enough, we have seen evidence 
of a few individuals whose commitments to charity are questionable at 
best. Some of these have sought to raise funds from the public, making 
references to September 11th, but with little assurance that the funds 
raised will in fact serve that goal. Likewise, a handful of 
unscrupulous individuals have falsely claimed a connection to the 
tragedy--a supposedly lost loved one, for example--and have sought to 
profit from the generosity of an unsuspecting public.
    Thankfully, only a trickle of such fraud has emerged thus far. With 
the scale of this tragedy and the corresponding scale of the charitable 
outpouring, however, we must remain vigilant against fraud and waste if 
we are to preserve public confidence in the charities doing the work so 
desperately needed.
    Our responsibility in government includes the obligation to move 
swiftly and aggressively to enforce the laws against those who mislead 
the donating public or defraud the charities trying to serve the real 
victims here, and there are ways that Congress and the state 
legislatures can help.
    At the federal level, Congress should modify those provisions of 
the Internal Revenue Code that impede disclosures to state law 
enforcement authorities regarding IRS audits and enforcement actions, 
and should encourage greater disclosure of charitable fundraising 
practices. At the state level, I have recommended changes to New York 
State law to facilitate enforcement actions against those who engage in 
fraudulent charitable solicitations. Our existing law enforcement 
tools, together with the legislative and policy changes I have 
proposed, will better serve our goal of ensuring truthful solicitation 
and trustworthy distribution of funds.
Need for Ongoing Working Group:
    Because of the unprecedented scope of the September 11 tragedy, the 
process of delivering aid to victims will be long and complex, and many 
problems will arise. As a result, I have called for the creation of a 
working group of the major charitable organizations and victims groups, 
as occurred in Oklahoma City, which can meet on a regular basis to 
address these problems as they occur. Indeed, I have been encouraged by 
the charities' efforts to develop their own working group during the 
past two weeks. This kind of focused collaboration is particularly 
crucial for the ``retail'' level charities, which are actually 
delivering cash assistance and services to individual beneficiaries.
    Such a working group--which must include victim representatives--
will be able to coordinate their relief effort, and discuss the many 
thorny issues that all charities are facing. For example, the 
charities:

 must balance the desire to provide assistance quickly against 
        the need to keep funds in reserve to cover other future needs;
 must decide how to allocate funds among the many ``survivors'' 
        of a single victim, which can include spouses, ex-spouses, 
        children, grandchildren, domestic partners, parents, siblings 
        and others;
 must also guard against the prospect of individuals who may 
        try to defraud the charities (and thus defraud the public which 
        has relied upon them to provide relief and not waste their 
        donations on the undeserving); and
 must determine how to help undocumented aliens and other 
        victims who are afraid to come forward.
    There are no ``right'' answers here but, as the guardian of 
charitable assets in New York, I believe that it is essential for the 
charities and victims to sit down and coordinate their approach to 
these types of major issues. In addition, I believe that all of us--
government officials, charities, victims and their advocates--will 
benefit from a structure that can respond quickly when it becomes 
evident that a particular victim or category of victims has somehow 
been missed by the system and needs immediate help.
    On balance, the charitable organizations have done an excellent job 
in responding to the events of September 11th. On behalf of all of us 
in New York, I wish to express our tremendous gratitude to all of the 
Americans, and indeed, people throughout the world, who have 
contributed to this remarkable relief effort. However, the charities 
must understand the importance of coordinating their response to the 
disaster without further delay.
    Although each charity involved has its own unique mission, they 
must recognize that the events of September 11th demand a team 
response. Only through an ongoing cooperative effort can we possibly 
hope to ensure meaningful and sustained care for the victims of this 
terrible tragedy. This cooperation is essential if the charities are to 
earn and keep the confidence of the American people--faith not only in 
wise use of the donations raised for this crisis, but also faith in the 
integrity of our great tradition of private philanthropy.

    Mr. Greenwood. Thank you, General Spitzer. We appreciate 
your presence and your testimony.
    Dr. Healy, thank you for being with us, and you are 
recognized for your testimony.

                  TESTIMONY OF BERNADINE HEALY

    Ms. Healy. Well, it is clear that life in America changed 
forever on the morning of September 11. The events were 
extraordinary, and we responded in a way actually not seen 
since the world wars, and the historical point during the world 
wars, the American Red Cross raised in today's dollars in 
excess of several billion dollars, the same kind of level of 
philanthropy. Immediate and emerging efforts to alleviate the 
human suffering brought on by these hard attacks required 
activation of most of our lines of service. Disaster relief and 
recovery, blood services, international work and our Armed 
Forces emergency work. We sought blood, we sought financial 
donations, and we recruited volunteers to meet those needs.
    Early on and in lockstep with our board, we defined what we 
needed to do. We also created an entirely new fund, a separate 
fund, the Liberty Fund, as an independent separate segregated 
account created wholly to hold and disperse funds for this new 
kind of disaster, which clearly still engulfs our Nation today 
and surely for tomorrow. The Liberty Fund was borne out of a 
strong and immediate recognition that the victims of September 
11 were those lost, their families, the relief workers, those 
displaced from their homes, and those victims of terrorist 
attacks yet to come, such as the anthrax victims.
    The victims were also citizens grieving, healing and in 
search of preparedness, and our military suddenly called to 
serve in a new theatre of war. There is no question that the 
immediate response and highest priority, as it always is of the 
American Red Cross, is to move in very quickly to assist those 
in need at Ground Zero, and we had three Ground Zeros: in New 
York, in Pennsylvania and at the Pentagon.
    We did our usual disaster kind of work on relief and 
recovery at the sites, mainly a kind of social service, 
shelter, food, mass care, but we also developed an entirely new 
program called the family grant program, a gift to families 
like Mrs. Steiner, like Mrs. McLaughlin. We did it immediately, 
quickly, and our purpose, even though we only had about $50 
million in the bank at the time to cover what we knew was at 
least a $200 million effort initially, we said, we are going to 
get a family gift program out, get this money out the door, and 
we developed a one-page sheet of paper that had to be filled 
out and that required no receipts, and I am terribly distressed 
about Mrs. Steiner's experience, required no receipts and was 
purely based on the need of that family up to roughly $30,000, 
with a letter going with that check that said, if you need 
more, come back to us.
    This was intended for the first 3 months. I do know that 
Mrs. McLaughlin told me just before that she was pleased that 
she received almost $27,000 from the Red Cross, applying in 
September 24, getting her check on September 26, cashed on 
October 1. That is the way it was supposed to happen, a quick 
turnaround, in this case, within 48 hours. Unfortunately, we 
failed Mrs. Steiner, and there is no excuse for that.
    Clearly, proper stewardship of the Liberty Funds, when we 
are talking about $100 million, $200 million, now $500 million 
or more, was one of our highest priorities from the very 
beginning. A strict allocation of the money that was raised was 
put into the separate account, but also with a very clearly 
defined categories of use that were put under the oversight of 
a team of external auditors from KPMG, and one of those senior 
partners had experience in fraud--was experienced in fraud and 
abuse.
    Let me address a few issues that have been raised recently 
that I think should be clarified. First, the American Red 
Cross, to my knowledge, has never described its work as limited 
only to those people who were lost on September 11 and their 
family, in New York, and Pennsylvania and the Pentagon. We 
worked with them vigorously. Everything that we thought we 
could do, everything that was within our mission, we did.
    Now, other charities have said that, that it is only for 
the people who were lost on that day. We heard that background 
noise, so we repeatedly communicated to the public our range of 
service, through our chapter network, through PSAs, through 
contacts with donors, Web sites, in numerous TV appearances, 
press releases, in several--in full-page ads in several major 
newspapers listing the range of services, how much money we 
have raised and what it was being spent for. Very much along 
the lines of what Attorney General Spitzer has outlined. 
Perhaps not everyone heard it, but we certainly have tried, and 
we will continue to try and get that message out.
    Another issue that we must clarify is that we have helped 
over 25,000 people, and we have not flip-flopped on whether or 
not we could put personal information on these people that were 
helping, whether it be spiritual or mental health counseling, 
whether it be a cash grant, into an open common data base that 
could be accessible to numerous other groups, either from 
government or from charities. We have delayed participation 
because of a long-standing board policy protecting 
confidentiality of those victims, of those we helped. And as of 
today, that confidentiality policy has not changed. We will 
provide names, however, as we have said all along, if the 
victims, if the Mrs. Steiners and if the Mrs. McLaughlins, sign 
a waiver of confidentiality, which is the same process that we 
used in Oklahoma City, or a similar process that we used. You 
must have the confidentiality. If someone does not want us to 
release the help that we gave them, we will protect them if 
they wish us to.
    I think the third issue is that from the very first attack, 
blood preparedness loomed large. Sadly, because of the high 
mortality, significant blood needs did not materialize. We had 
already determined, however, we had determined months, if not a 
year before, that preparedness for terrorism in this country 
requires a strategic blood reserve of frozen O-type blood. 
Frozen blood lasts up to 10 years, and such reserves can be 
created when you have high levels of blood donations, as we 
have seen recently in the wake of September 11.
    We moved quickly on a scaled-up freeze program in order to 
amass what we hope will be 100,000 units of frozen blood, which 
means the next terrorist event will not put the entire medical 
system at risk if we suddenly need 50,000 units of blood. We 
cannot choose between the victims of a terrorist attack and 
those suffering throughout the country in hospitals everywhere. 
The blood reserve, the frozen blood reserve will also be 
available if it is needed for our military, particularly in the 
face of a ground war.
    The Liberty Fund is being used for phone banks, 800 
numbers, outreach to victims, for auditing costs and for other 
functions, but all must be related--again, all expenses 
disbursed from this fund must be related to the designated 
purposes of the fund, related to September 11 and its 
aftermath, preparedness of this country as well.
    And those purposes alone, September 11 and its aftermath, 
we created separate funds under external auditor scrutiny to 
assure that no unrelated disbursements would be made and to 
assure that all of our communications on those disbursements 
will be accurately reported to the public and to anyone who 
wishes to have that information on a moment's notice, including 
you, Mr. Chairman.
    In summary, our responsibility throughout this horrible 
national disaster, one that we have in the American Red Cross 
never seen before on our homeland, has been to see that the 
resources marshalled are spent wisely and caringly. We 
exercised judgment--some people may not agree with some of the 
categories of use that we have outlined, but we have experience 
in these areas, and exercised our judgment in the best interest 
of what we thought was wise and caring stewardship of these 
precious resources.
    I believe that they have been and will continue to be used 
wisely and caringly. This is what the American Red Cross 
Liberty Fund is all about.
    [The prepared statement of Bernadine Healy follows:]

  Prepared Statement of Bernadine Healy, President, American Red Cross

    Life in America changed forever on the morning of September 11, 
2001. We realized that what has taken place is extraordinary, and the 
American Red Cross was called upon to respond in an extraordinary way, 
and in a way we had not been called on to serve for many decades. The 
immediate and emerging efforts of the American Red Cross to alleviate 
human suffering brought on by the attacks of September 11 required 
activation of many lines of service--disaster relief and recovery, 
blood services, international, armed services emergency services--and 
we sought contributions of blood and financial donations to meet those 
needs. The generous contributions of blood and money came in for 
victims: victims of the opening salvo of this new kind of war, victims 
fearing and grieving across America, and victims yet to come.
    Early on and in lockstep with the Board we defined those response 
requirements and created an entirely new fund, the Liberty Fund, as a 
separate and segregated account to hold and disburse funds related to 
this ongoing new kind of disaster. Why did we believe it necessary to 
establish a new fund? For many reasons. This is a disaster unlike any 
other in U.S. history. This is not a ``regional'' disaster; it is not 
only about the hideous events that occurred in New York City, 
Pennsylvania and at the Pentagon. Rather this is a disaster that 
continues to affect our entire nation, at this time and as we look 
ahead. This account from the outset has been open to public review. We 
want it to stay that way and we believe the American public wants it as 
well.
    Proper stewardship of the Liberty fund was our highest priority. 
Strict allocation of money raised nationally and across the country 
into this separate account with clearly defined categories of use was 
placed under the oversight of a special team of external auditors, 
KPMG. The team included prominently one partner who was skilled in 
fraud and forensic auditing. (They also reviewed disbursement methods 
for the large cash gift program.) The discrete categories of use of 
these funds was articulated in our earliest telephonic meetings with 
the Board, fund raising directives throughout our nearly 1100 chapter 
and blood units across the country, through personal and written 
contacts with major donors, on our fund raising web site, through 
PSA's, and numerous TV appearances, press releases, during a press 
conference and through full page ads in three major newspapers. Our 
activities were communicated in formal and informal meetings with the 
United Way and the Salvation Army.
    The American Red Cross has come through a time of heroic service to 
our country. The outpouring of support by the public has been 
unprecedented, and a statement of their support for the work we have 
been doing. When one is dependent on contributions for support of that 
work, no one ever knows whether the blood or financial donations will 
be adequate to meet the task. We believed we needed over 300 million 
dollars for our immediate response and have laid out details for that 
use. We estimated that roughly 200 million dollars would likely be 
needed over the next year to eighteen months beyond that to prepare the 
organization for readiness for an ongoing new kind of war. Those 
investments--in volunteer mobilization, chapter development for 
response to weapons of mass destruction, expanded blood security, and 
continuity of operations efforts--are still under discussion. Also, we 
have not decided as to how large a reserve of funds the Liberty Fund 
should hold to assure the same kind of response to another attack that 
could involve as many or more victims.
    In the world of charitable contributions one never knows how fast 
and how large donations will be. I can assure you that the level and 
rapidity of contributions has far surpassed any persons imagination. 
Already we have 500 million dollars contributed and some additional 
pledged. Donations that have been specifically pledged for families, 
for blood, for help with international victims, or for other uses have 
been applied accordingly.
    Donors must be fully aware of the work of the organization they 
donate to and the range of their services, and the challenge for all 
charities--service organizations like the Red Cross or grant makers 
like United Way--is to find the perfect vehicle so that ever donor 
making spontaneous gifts are know the purposes for which their gift 
might be used. .
    This new kind of war engulfing America that started on 9/11 is 
evolving; the responsibilities of the American Red Cross to the 
communities we serve is evolving. As long as we keep the public fully 
aware of our work to the best of our ability, the trust with the 
American pubic will be secure.
National Obligations and Historical Responses:
    The American Red Cross draws its authority from a Congressional 
charter, functions as an auxiliary to the government in times of great 
national calamity, and has defined and broad based responsibilities to 
this nation as part of the Federal response plan in times of national 
mobilization such as war or weapons of mass destruction preparation and 
response at the local and federal level.
    In recent time most of our disaster responses have been one 
dimensional self-limited responses within the silo of our disaster 
operations group. The vast majority of the 60,000 disaster responses 
are single family fires within local communities. The large hurricanes 
or floods that require a national coordination and a national appeal 
are still local disasters with a self limited group of victims and a 
definable time line. They virtually never require the mobilization of 
other Red Cross established lines of service such as Blood, Armed 
Forces Emergency Service, or International services.
    The events of September 11th and its aftermath is a true national 
disaster with no clear end in sight. The present yet unfolding 
bioterrorist attacks on innocent civilians occurring now, and the 
reported threats of further biological, explosive, nuclear and chemical 
attacks that convulse our TV screens follow that first series of events 
of 9/11. Most horrifically, Americans wherever they live face an 
uncertainty and vulnerability that was simply not perceived as real two 
months ago. In this context, the American Red Cross under its mission 
draws heavy responsibility.
    Many have described the attacks on the World Trade Center, the 
Pentagon and the downing of an airplane in Pennsylvania as the opening 
battle in a new kind of war. For us, our response today does more 
closely mimics our responses during World War 1 and World War II . 
During those times our American Red Cross mobilization also involved 
multiple lines of service at both the local and national level. We 
oversaw major volunteer mobilization of nurses to serve in the theaters 
of war, nurses and health aids visiting families at home; physiatrists, 
ambulance drivers, and family assistance workers. We carried out 
extensive armed forces emergency services, and worked internationally 
with our allies and civilian populations displaced or harmed by battle.
    In World War II we also took on the vital and new effort of 
providing blood services, blood drawn from American volunteers which 
was sent overseas for our own military those of our allies (``Blood for 
Britain'' program). We served as part of America's civil defense effort 
and almost every family had a Red Cross volunteer. Fund raising during 
that time was the largest in the history of any charitable organization 
and in today's dollars exceeded several billions of dollars.
The Liberty Fund in support of September 11th and its aftermath:
    The Liberty fund was borne out of a strong and immediate 
recognition that the victims of 9/11 were those lost, their families, 
the relief workers, those displaced from their homes, and those victims 
of terrorist attacks yet to come. The victims were citizens grieving 
and healing and in search of preparedness. The victims were our 
military and their families suddenly called to serve in a new theater 
of war.
Immediate Disaster Response
    Our first priority was to the immediate disaster response in three 
different cities; and that work continues. Early on we estimated that 
we needed at least $200 million to meet those obligations to victims 
and their families and made commitments before even a quarter of that 
amount was in hand. As it turns we have already carried out the largest 
response we have ever made directly to victims in the recent history of 
the organization, with over 120 million dollars of the 200 million 
estimated already spent or in process.
    Our response also included emotional and spiritual counseling 
contacts that exceeded 100,000 carried out by thousands of volunteers; 
over 10 million meals and snacks; manning respite centers for rescue 
workers and compassion centers for social service support for the 
grieving families. Ground zero labor included help with evacuation and 
mass care. Early on we developed program to get cash gifts quickly into 
the hands of families who had just lost breadwinners and who confronted 
cash flow short falls. These gifts, on behalf of the American people, 
are intended to tide families through until other resources such as 
life insurance or longer term assistance would become available.
    So far more than 25,000 people have received some kind of help, 
and. the work continues. Our relief efforts extend to victims of 
anthrax, and must be there as well to others who might suffer in the 
uncertain time ahead. The latter costs which are not factored in the 
200 million dollars should be covered by reserves in the Liberty fund 
after other designated distributions are made.
Blood Services
    Blood service and preparedness is another vital responsibility of 
the American Red Cross that has been challenged by the unfolding events 
of 9/11. For over a year we had been developing plans for our response 
to weapons of mass destruction attack, attacks which we had previously 
designated the ``disasters of tomorrow''
    In our planning for response to a WMD attack we determined that we 
would need a strategic reserve of frozen blood, the universal O type, 
screened and tested and available for transfusion within a matter of 
hours. Frozen blood is good for ten years, and can be stored at depots 
throughout the country. After the 9/11 terrorist attacks, we not only 
positioned existing blood products near the attack sites, but also 
responded to the thousands of additional volunteers that came forward 
to give blood donations--even when they knew that there were almost no 
survivors who needed it. In the long waiting lines we suggested a 
return at a later time but most wanted to give then. They did it to 
``do something'' and they did it for needs of tomorrow. Working closely 
with the FDA we quickly scaled up our plans to freeze the extra O blood 
which was now becoming available to be ready for the period of 
uncertainty in which other WMD events were being threatened.
    During peacetime our inventory of blood is razor thin: on average 2 
days, roughly 40,000 units. This level so quickly fluctuates that it is 
not even adequate for peace time. I can assure you such inventory 
levels are woefully inadequate in times of uncertainty and this new 
kind of war. Were there a sudden need for 50,000 units of blood, our 
customary inventory would be more than wiped out--and its diversion 
would essentially shut down medical care for the thousands of other 
Americans needing blood for elective operations, trauma, cancer 
therapy, transplants, chronic anemia, and other life threatening 
illnesses.
    It takes roughly 2 days or more to obtain, screen and test blood 
for use, too late for those who need blood now. We cannot afford for 
this nation to face a shortage of ready safe blood as some fear we 
might face now with supplies of certain antibiotics or vaccines.
Recovery and Preparedness in our Communities:
    American Red Cross work includes preparedness within our 
communities: grieving and healing services; information about weapons 
of mass destruction, including bioterrorism; and about family 
preparedness. To be ready for the uncertainties of weapons of mass 
destruction we have to mobilize a new kind of volunteer. This would 
include what we have termed the Mercy Battalion of trained medical 
personnel skilled and willing to respond under our Federal Response 
Plan as auxiliary to the federal government in such settings as 
quarantined mass care shelters, immunization settings or caring for 
patients in a hospital overflow shelter. Our Armed Forces Emergency 
service work has expanded nationally and at the chapter level as 
reservists were called up and our troops deployed for a possible ground 
war.
    In the setting of the huge outpouring of donations for the 
September 11th terrorist attacks, it is essential that there be strong 
public review. With so many different charities receiving donations for 
very specific purposes and in some cases more limited designation than 
our Liberty Fund--such as those solely for rescue workers, or those 
solely for families of victims or for college scholarship programs for 
children of those lost--it is not surprising that confusion develop in 
the minds of the public over exactly what each group is doing. For this 
reason coordination among charities is important, as is public 
clarification of the different efforts.
    Let me address a few issues that have come up recently:

 The American Red Cross to my knowledge has never believed or 
        stated that its work or its request for donations were limited 
        only to those who were lost on 9/11 and their families. Other 
        charities have said that. Our messages referred to the broad 
        range of services in which service to the direct victims of the 
        9/11 attack was our highest priority. In fact within days of 
        the attack when we had some $50 million available our goal was 
        to get needed cash into the hands of those victims who needed 
        it as soon as possible. But we also had other work to do in 
        terms of the uncertainty of the times ahead with regard to 
        future attacks and the need for preparedness.
 We have provided assistance to over 25,000 people. We must set 
        the record straight on one frequently repeated misstatement in 
        the press and that is that we have flip-flopped on whether to 
        participate in a New York data base by including the names of 
        those recipients. Let me quote from a November 2 letter written 
        by the Red Cross Chairman of the Board of Governors and the 
        Interim CEO to The New York Times correcting their reporting to 
        the contrary: ``The American Red Cross has an organization-wide 
        policy protecting the confidentiality of those we serve. The 
        American Red Cross President Dr. Bernadine Healy, by declining 
        to participate in the New York Attorney General's database of 
        relief recipients, upheld this Red Cross Board of Governors 
        Policy. The Red Cross operated under the same policy after the 
        tragedy of Oklahoma City: Recipients' names were not released 
        without a signed waiver providing permission to release this 
        information. As of November 2, 2001 this confidentiality policy 
        has not changed.'' (copy attached)
 Blood preparedness has always been of high priority for us, 
        and that was apparent from the very first attack on the World 
        Trade Center. Even though the blood demands that we might have 
        expected did not materialize because so few survived, we 
        believe that preparedness for another attack requires a 
        strategic blood reserve of frozen O type blood. Such a reserve 
        can only be created when there are high levels of blood 
        donation as we have seen in the aftermath of 9/11. Since red 
        blood cells outdate in 42 days, we accelerated our investment 
        in a scaled up freezing program to assure that we could begin 
        freezing the ``extra O's'' immediately. In our judgement this 
        is one of our finest investments towards national preparedness 
        in the wake of 9/11.
 The Liberty fund is being used for telecommunications, phone 
        banks, auditing and other support functions but they must be 
        related to the 9/11 purposes of the fund and those purposes 
        alone. The reason for creating a separate and clearly 
        identified fund under external auditor scrutiny was to assure 
        that no unrelated or unspecified disbursements be made.
    After the attacks of September 11th we worked tirelessly to respond 
to these hideous attacks and their aftermath, and set about raising the 
blood, the money and the volunteers necessary to respond. We laid out 
the work we needed to do and the resources we needed to accomplish them 
in as precise a way as we could as the emergencies were evolving. Our 
responsibility throughout has been to see that the resources marshaled 
are being spent wisely and caringly. I believe they have been and will 
continue to be used wisely and caringly. This is what the American Red 
Cross Liberty Fund is all about.

    Mr. Greenwood. Thank you very much, Dr. Healy. Appreciate 
your testimony as well.
    And the Chair recognizes himself for 5 minutes for purposes 
of inquiry, and let me address my first question to you, Dr. 
Healy, and let me ask the $564 million question, if I can. And 
that is this: In the 8 weeks since the events of September 11, 
thousands and thousands of Americans have reached into their 
pockets and their checkbooks and written--given their money to 
the Red Cross. Can you assure them today that every dime of 
those contributions will go to heal the wounds that this 
country sustained on September 11?
    Ms. Healy. That is absolutely the commitment that I have 
made, that we have made, and I know that that commitment will 
continue. One of the most important issues from the very 
beginning is that these resources, not be put in an account in 
the general Red Cross disaster account that covers floods and 
hurricanes and disaster requirements of our chapters, but that 
it be segregated, held separately apart so that there would be 
no question about how well it could be audited, there would be 
no question about how the money was going to be used and there 
would be no question about the fact that it would be used for 
the specific requirements outlined and approved by our board, 
which were the events related to September 11 and to the 
aftermath, the healing of America, the preparation for future 
attacks. Already we have seen a----
    Mr. Greenwood. And let us assume that, God willing, there 
are no more future attacks, we have no way of knowing. The Red 
Cross has no way of knowing. But at what point could you 
imagine the Red Cross feeling sufficiently confident that the 
aftermath has passed and that the--to the extent that there 
remains a surplus collected in the name of September 11, that 
that would then be plowed back to the existing families who you 
are now serving?
    Ms. Healy. We outlined, in just estimates, that the need 
response, the next 6 months, including our family gift program, 
would be in the range of about $300 million. That is also the 
early preparedness on blood. That roughly $200 million--and 
this is up for discussion now. But the $200 million would cover 
sort of longer term, maybe the next 18 months, dealing with 
preparing our Nation for weapons of mass destruction in our 
communities where we have chapters, expanding the blood 
reserve, if we believe it should be expanded beyond 100,000 
units. Also looking at continuity of operations for the Red 
Cross, there are some of our facilities. If you knock them out, 
we could cripple America's medicine. And also to make sure that 
all along the way our chapters are preparing and ready to help 
people, including bringing in new kinds of volunteers, a mercy 
battalion. We don't have the volunteers today that can respond 
to shelters that need immunization, vaccination, hospice care. 
We need a new kind of volunteer to prepare.
    Now, to get specifically to your question, we have to make 
decisions, because the outpouring has been more than the Red 
Cross expected. We were hoping for about $300 million. What we 
have to determine is how much should stay in the Liberty Fund. 
Should it be the $500 million, which sort of outlines a 2-year 
plan? Should we have some reserves? If 5,000 people are harmed 
tomorrow, do we go out and ask for another billion dollars from 
the American public, or do we carefully steward the money that 
is here and make sure that we do have some reserves so that we 
can, as equitably, deal with the next attack if there are large 
numbers of people, as we have the first?
    We have extended our programs to the victims of anthrax, a 
small number, but if the number is larger, do we have the 
reserves to deal with this? These will be discussions. This is 
an evolving issue. These will be discussions held with the 
board, with management, and in one press conference where I 
laid out all of these range of services of the Red Cross, I was 
asked that question, Mr. Greenwood, and I guess my answer 
hasn't changed. And that is after a period of time, maybe a 
year, 2 years--and it is not going to be us that will determine 
that time. It will be what unfolds in this country and in the 
world.
    Perhaps after 2 years, if it appears that everything is at 
peace and we don't have these threats, if the Red Cross does no 
longer have to respond almost in a war mode with a war fund, 
then in its discretion, the Board of Governors will be able to 
take those dollars and reprogram them in some other way. What 
is most important is that if that reprogramming occurs, it be 
done in a public way and that it be used in some way in the 
spirit of how that money is collected. And as long as it is 
done publicly, I think we will be okay.
    Mr. Greenwood. Let me squeeze another question in here for 
Mrs. Steiner and Mrs. McLaughlin, because I think it is 
related. Could you just tell us what your long-range concerns 
are? Let us assume that you receive from various organizations 
something on the order of 30, 40, 50,000 dollars. That sounds 
like it might get you through some portion, a year or so, at 
best. What are your long-range views for your--you have a 10-
month old child, Mrs. McLaughlin. Mrs. Steiner, you have three 
children of college age. What are your concerns for the long 
run?
    Mrs. McLaughlin. The first concern of every spouse is going 
to be how do you keep your home, can you keep your home? If I 
receive 30-, $40,000, unfortunately, I could not keep my home. 
I can sell it. I can go to an apartment. My concerns really are 
for my son's future. My family and friends have--because of 
concerns about the charities and because of a lot of 
information in the press, especially recently, set up a private 
education trust for my son that people are now donating to 
directly instead of to the charities. That is the big one.
    Mr. Greenwood. Mrs. Steiner.
    Did you have something else you wanted to add, Mrs. 
McLaughlin?
    Mrs. McLaughlin. No. I just--about the 2-years-down-the-
road comment with the Red Cross reprogramming some of these 
funds, does that mean that I will wait 2 years to hear from the 
Red Cross again?
    Ms. Healy. I don't think so.
    Mr. Greenwood. Well, we are--unfortunately, we can't do 
this in an interrogatory way, but we will try and get your 
question answered for you. If you would just slide the 
microphone there to Mrs. Steiner.
    Mrs. Steiner. Similar concerns, the keeping of my home and 
the education of my children to currently----
    Mr. Greenwood. Is the microphone turned on there? Push the 
button. It is on. Okay.
    Mrs. Steiner. The same concerns, the keeping of the home 
and the education of my children. And, again, it would be 
similar, the $30,000 only goes so far.
    Mr. Greenwood. Okay. Thank you, Mrs. Steiner.
    Mr. Spitzer. Mr. Chairman, is it proper for me to make an 
observation with respect to an answer that Dr. Healy gave?
    Mr. Greenwood. Certainly, with----
    Mr. Spitzer. I am out of order on this. I suppose I am 
concerned by what I hear, which is that I see the Red Cross, 
which has raised hundreds of millions of dollars that was 
intended by the donating public to be used for the victims of 
September 11. I see those funds being sequestered into long-
term plans for an organization not being spent on victims.
    I hear words like continuity of operations, reserves, 
reprogramming, and we have two victims here at this table who 
haven't received the money they need. This is anathema to the--
what the American public expects. When people were writing 
their checks for $100, $200 or $10,000, and sending them in in 
response to the PSAs that the Red Cross was running, they 
believed victims were going to get that money. I speak now as a 
New Yorker, and I also speak for the victims in Pennsylvania, 
the victims in Virginia. They are supposed to get this money. 
This is not for continuity, and it is not for reprogramming. 
And this is an issue that demands our attention.
    Mr. Greenwood. My time has expired, but I will assure that 
you have time to respond to that comment. The Chair recognizes 
the gentleman from Florida, Mr. Deutsch.
    Mr. Deutsch. Thank you, Mr. Chairman. Mrs. McLaughlin and 
Mrs. Steiner, I assume at this point you are familiar with what 
Congress did in terms of setting up a fund that the taxpayers 
of America and all Americans will participate in. Have you 
thought through--are you going to participate in that fund, or 
have you thought what options you have personally in terms of 
the long-term options you have? If you both can respond just 
about the fund. Are you aware of it?
    Mrs. McLaughlin. Are you referring to the airline bailout?
    Mr. Deutsch. The Federal Government compensation fund that 
we have actually set up as a no-fault fund for victims of the 
September 11 disaster. Are you familiar with it?
    Mrs. McLaughlin. No.
    Mr. Deutsch. Mrs. Steiner?
    Mrs. Steiner. Me either.
    Mr. Deutsch. I can tell you a little bit about it. The 
Congress, in the aid package that we passed the week of 
September 11, set up a system which no one has applied for yet, 
but a no fault compensation fund where the American people--and 
it might end up being--the estimates will it will be about a 
$10 billion fund, where a victim family can apply on a no-fault 
basis without proving any fault of any party, get compensation 
effectively for the--what would normally be through a wrongful 
death action, and the American people would supply that, and I 
guess I am disappointed that neither one of you are aware of 
it. But that is the concept of a long-term solution. To Mr. 
Spitzer, I mean, obviously you are aware of it. I mean, is 
there some, you know, effort to let people know that the 
Federal Government has stepped up to the plate and said that--
as much again, the $1.2 million that was raised--this is 
directly for victims, would be the estimates are about $10 
billion.
    Mr. Spitzer. Congressman, you are absolutely correct. The 
largest fund will be the Federal claim fund that you create as 
part of the airline bailout package. I think the reason it may 
not have received as much attention yet is that the Department 
of Justice, the U.S. Department of Justice and Attorney General 
Ashcroft will have to within, I think, the next 45 days or so, 
now issue regulations, appoint a special master, and I hate to 
sound bureaucratic, but hopefully that process will be 
initiated within a 45-day timeframe, at which point every 
victim will, I presume, and of course your data base of victims 
will be useful to contact them, will be told of the 
availability of this application process, and there will be 
almost an unlimited reservoir of funds there for the benefit of 
victims. And I think you are right. There has not been 
sufficient attention focused on that very worthwhile fund that 
Congress created, and I applaud you for having done that.
    Mr. Deutsch. And, again, I really truly am disappointed 
that you are not aware of it, even with all the agencies 
talking to you, that you have--that, again, what is the concept 
of it is that, you know, obviously nothing that the Federal 
Government can do can ever replace your loss. I mean, by any 
stretch of any imagination, but I think collectively what 
Congress decided is that we all share directly in this loss, 
and as the American people, in a sense, we have said as the 
elected representatives of the American people, that we want to 
do that. So effectively, we have already appropriated that for 
the long-term solution, and the idea is literally not a year 
fix, not a 2-year fix, but really a fix that hopefully will put 
you at at least a financial situation to try to make you whole.
    That really is the concept of what the Federal Government 
is trying to do, and I know it is--I mean, hopefully this is--I 
mean, after you are on the panel, I mean, either through the 
Attorney General, through, you know, myself or your own Members 
of Congress, hopefully someone can explain specifically how 
that would work.
    Dr. Healy, I want to at least give you the opportunity to 
respond to what Mr. Spitzer said, and I share with him a real 
concern, because I don't believe anyone that wrote a check to 
the Red Cross, as important as frozen blood is, you know, in 
terms of the September 11 fund, I don't believe anyone who 
wrote a check expected that it would be used for frozen blood. 
And, you know, as good as what I describe the Federal 
Government, I think what is clear is that effort has been 
pointed out, is first of all, not everyone is going to choose 
to go that route for a variety of reasons, and there are many 
people that are just going to fall through all sorts of cracks.
    You know, how do you respond to him, particularly, and, 
again, I can--unfortunately, we might be faced with other 
disasters of extravagant, and hopefully we won't, but when they 
come, you know, we are going to--you know, whatever we--you 
know, hurricane just missed south Florida. That could have been 
another disaster. It was a category 4. Andrew was a category 4. 
I mean, eventually we know there will be other disasters, and 
when we go back to people and we ask them for support in those 
situations, how are you going to respond based upon what you 
testified to?
    Ms. Healy. Well, first, with the other disaster fund, for 
example, hurricanes, if we have money left over from one 
hurricane, like Hurricane Floyd, we leave it in that fund and 
we will use it for the next hurricane, and that is widely 
publicized. We say for this disaster and similar disasters. So 
in a way, this is a similar thing, except we are limiting it to 
this extraordinary situation, which is a new kind of war.
    With regard to whether--you know, I often think about World 
War II. It was World War II, and the assistance to those who 
died in World War II and the work that we did as American Red 
Cross, was it limited only to Pearl Harbor, or did we have an 
obligation to recognize that the event surrounding Pearl Harbor 
were part of our organization as an American Red Cross. 
Remember, we are an organization that is a social organization 
that has major responsibilities, internationally, with regard 
to blood services and blood readiness. We have obligations with 
regard to disaster relief and recovery on an ongoing basis, and 
in keeping with our general policies, if there were another 
disaster tomorrow and we have reserves in the Liberty Fund, we 
would offer the very same services, the same cash grant 
programs, the same mental and spiritual counseling, the same 
social services that we have offered in New Jersey--in 
Pennsylvania, in New York, and at the Pentagon. We would offer 
that to this group. We might need to raise more money, but we 
would have some reserves.
    With regard to reprogramming, I think it is important to 
say that we have listed, we have outlined the range of 
obligations the Red Cross has to this Nation, the first of 
which is the first $200 million or more that is dedicated 
solely, solely to the victims. We have outlined the range of 
services, which, by the way, also--which--and they are there. 
They are articulated. They are clear, but if we no longer 
needed it for those specific programs or there was a need--for 
example, scholarship programs for children of the victims, 
which is not a customary thing the Red Cross does, I would--I 
believe that in the wisdom of the board of Governors, they 
would see, if we were then at peace, that whatever money 
remains in there is put into programs that relate specifically 
to the Liberty Fund.
    We do not take money out of our disaster reserves for 
hurricanes and spend them on something that is not related to 
those disasters. We would not take money out of the Liberty 
Fund and spend it on any of the other programs--any other 
program unless it is already clearly articulated publicly in 
every way. I think the American Red Cross has, from the 
beginning, gotten out in every way it could and said, no, we 
are not the September 11 fund of the United Way, which has said 
repeatedly only for the victims and their families of these 
three attacks.
    Actually, no, I think it is just New York City. We did a 
lot of work at the Pentagon. I mean, we did a lot of work in 
Pennsylvania. You know, our enterprise, our organization, with 
its huge infrastructure, has obligations which go beyond what 
specifically happened at the World Trade Center. That doesn't 
mean that first and foremost, we aren't helping those people. 
In fact, I think the American Red Cross was the first to get 
out, for example, with the family grant program.
    We have been working tirelessly at Ground Zero with the 
rescue workers, as well as with the families, the compassion 
centers. So we are there. We are on sight, and we are also 
providing the grants. And I make one final comment, and that 
is, even our family grant program is designed in a 
quintessential American Red Cross way, namely, to do what we 
can do to get someone immediately back on their feet with 
dignity and to do it in those first several months before other 
agencies, other Federal agencies, life insurance, whatever, 
kicks in. After 3 or 4 months, other resources will come 
available.
    Where people are most vulnerable and where they should not 
be allowed to be beggars, where they should not have to go hat 
in hand to their next-door neighbor or go to their bank and 
say, you know, well, we are going to dump you if you don't pay 
your mortgage. We clearly develop that family grant program for 
that first 3 or 4 months, and in the list of things that we 
cover, by the way, without any receipts. That was supposed to 
be just on the good faith of the person who applied on this 
one-page sheet of paper. What is your rent? What is your 
mortgage? We covered it for 3 months. And then we sent a 
letter. We said, if you need more beyond this first 3 months, 
ask us. It is a grant program. It is tax free, and it is there 
without any strings attached, and it is there with almost no 
documentation except what our auditors required, which was 
Social Security numbers, addresses and, you know, very simple 
demographic information.
    We have been very excited by this. We have gotten fabulous, 
fabulous letters in response to the thousands of people we have 
helped already. I still cannot excuse the fact that Mrs. 
Steiner had such a difficult time, however.
    Mr. Greenwood. Thank you. The time of the gentleman has 
expired. The Chair recognizes the chairman of the full 
committee, Mr. Tauzin, to inquire.
    Chairman Tauzin. Thank you, Mr. Chairman. Mrs. McLaughlin, 
Mrs. Steiner, let me first express to you the enormous sorrow 
that we all feel for you and your families and the families of 
all the victims. I think we all became New Yorkers on September 
11, and Pennsylvanians and members of the Pentagon. I think 
that is why Americans responded so enormously. We felt, as 
Americans, a sense of--a belonging with you as you went through 
this. And I think this is sort of central to the inquiry we 
make today. What did Americans intend when they responded so 
generously to all of these requests for donations and these 
special organizations that were set up?
    Finding the donor's intent is not always easy, Mr. Spitzer, 
you know that, but it is important in this inquiry. And so I 
want to turn to you, Dr. Healy, for a brief set of questions.
    First of all, did you resign your position with the 
American Red Cross. Is that correct?
    Ms. Healy. That's correct.
    Chairman Tauzin. What date did you resign?
    Ms. Healy. Last week, I think last Thursday.
    Chairman Tauzin. And you have been replaced by Mr. Decker, 
is that correct.
    Ms. Healy. Uh-huh.
    Chairman Tauzin. At least temporarily.
    Ms. Healy. Yes, uh-huh.
    Chairman Tauzin. Now, part of the reasons you gave for 
resignation included, I understand, your decision to keep the 
Liberty Fund money separate from the organization's main relief 
fund, and that was a difference of opinion you had with other 
members of the board; is that correct?
    Ms. Healy. Well, initially, but they basically finally 
agreed with it. There were a few people who had some issues out 
in the chapters, but that has been resolved.
    Chairman Tauzin. But part of the reason you resigned was 
that you differed with the board on keeping this money separate 
for this disaster?
    Ms. Healy. I believe that the money should be kept secret--
kept--hardly secret, very public, but it has to be kept 
separate. It is easier to audit. It is easier to have public 
disclosure.
    Chairman Tauzin. And you cited this as one of the reasons 
for your resignation, a difference with the board on that 
point. Is that correct?
    Ms. Healy. There was a board issue about whether or not the 
creation of the separate fund would require a full vote of the 
board. There was some differences of opinion about it. The 
chairman of the board was completely supportive of the separate 
account. It was resolved, and on the last board meeting, it was 
adopted fully by the full board.
    Chairman Tauzin. The two announcements by the board, which 
I know we are going to get to in a separate panel, which I want 
to relate to and I want your thoughts on. The first is an 
announcement on October 31 that the Liberty Fund--let me read 
it. The American Red Cross has raised enough money to help 
victims of the terrorist attacks and will stop asking for 
donations, according to Mr. Decker. The Liberty Fund held $547 
million in pledges as of Monday, and Mr. Decker, the chair's 
temporary leader, said it was known from the start that the 
fund was for a specific event, the September 11 attacks, and 
would eventually be closed.
    Do you agree with those statements, that the fund was for a 
specific event, would eventually be closed, and that, in fact, 
the Red Cross had enough money in this account on October 31 
that it should stop raising money for that account?
    Ms. Healy. All I can comment on is that the board and 
management were in complete lockstep on the specific uses of 
this fund, that the fund should be held separate, and with 
regard to when it should be closed, you know, that is another 
decision. But I do want to stress something, that in the first 
24 to 48 hours of this horrible attack on this country, the 
largest check that came in was for $3 million for the strategic 
blood reserve.
    Chairman Tauzin. But Dr. Healy, I don't want to--I really 
want to get to--I mean, I have limited time. The second 
announcement I want to refer to is October 29 in which the 
American Red Cross announced that only a portion of the funds, 
only a portion of the funds of that $547 million, approximately 
$320 million, would in fact be used for disaster related to the 
September 11 attack. That part of the money would actually be 
used for other activities, including blood reserve; a 
telecommunications upgrade, et cetera.
    Now, those two announcements seem to be in diametric 
opposition to one another. On the one hand, the Red Cross is 
announcing that only three-fifths of this fund is going to be 
used for these families, as I think Americans generally 
intended when they saw a special fund created for September 11. 
Only three-fifths would be used for that--for the families. The 
rest would be used for other purposes.
    Ms. Healy. Well----
    Chairman Tauzin. But wait. And then not 2 days later, the 
Red Cross announces that the fund has all the money it needs 
for the--to help these families in this disaster and that it no 
longer will accept money into this account unless somebody 
specifically asks that it be going into this account. Don't you 
find--don't you find that awfully strange, that if only three-
fifths of the money is going to be used for these families and 
these families are telling us they are not getting the help 
that was intended for them, that the Red Cross would announce 
that it is got all the money that it needs for this account and 
it will collect no more money for it, but by the way, we are 
going to use part of it for other purposes. Isn't that rather 
strange?
    Ms. Healy. Well, what I can tell you is from the very 
beginning, we put it on our Web site--in fact, I have included 
with my testimony the list of the priorities that are critical 
to Red Cross----
    Chairman Tauzin. I know that. I live in hurricane areas. I 
know there are other priorities.
    Ms. Healy. No. No. These all had to do----
    Chairman Tauzin. I know all the other priorities. What I am 
concerned about, and I think the representative of the New York 
Attorney General's office is equally concerned, is that if the 
American public responded so generously for funds created for 
this specific event, to have two-thirds of that money siphoned 
off for other purposes around then to announce within 2 days 
that the fund basically is going to be closed and any other 
money that is going to come in is going to go into general 
purposes now, because there is enough raised for the families.
    Ms. Healy. I do not know about that final announcement, but 
what must be stressed.
    Chairman Tauzin. Something is wrong.
    Ms. Healy. There is a judgment that is made about how 
America must respond to the events of September 11. The 
American Red Cross, from the very beginning, let that be known, 
in PSA announcement. It was for the threats that we are facing, 
including the uncertainty----
    Chairman Tauzin. Dr. Healy, if the Red Cross had announced 
that it wanted Americans to donate for this and other terrorist 
events and future events----
    Ms. Healy. That is what we have announced repeatedly.
    Chairman Tauzin. If the Red Cross announced that that is 
what it wanted, I am sure the American Red Cross would respond. 
We trust the Red Cross. We all do. We donate to it all the 
time. Our Congressional families were lined up, members, their 
staffs, their wives and their husbands, to donate blood and to 
help out, across America. That is not at issue here. What is at 
issue here is that a special fund was established for these 
families----
    Ms. Healy. No. It was established for----
    Chairman Tauzin. It was especially funded for this event, 
for September 11, and it is being closed now because we are 
told enough money has been raised in it, but we are also being 
told parenthetically, by the way, we are going to give two-
thirds of it away to other important Red Cross needs. And at 
the same time, we hear from families here that their needs are 
not being addressed. Now,----
    Ms. Healy. The American----
    Chairman Tauzin. There is a disconnect, Ms. Healy.
    Ms. Healy. But please let me try and clarify it.
    Chairman Tauzin. I know you are not with the Red Cross, and 
we have got other Red Cross members who are going to testify a 
little later on, and they are going to have to respond to these 
questions, but I wanted to raise them while you are here. Let 
me say, to your benefit, thank you for insisting that the funds 
be kept separately. Thank you for resigning if you had a 
difference with the board over that point. But I really wonder 
what the board is going to tell us when they come up here on 
the next panel as to why these decisions have been made to 
close this fund and at the same time spend a large part of this 
fund on purposes other than the September 11 event.
    Ms. Healy. But I have to--I do have to get this very 
clearly stated for the record, and that is, if you look even at 
some of the documents that I have attached to my testimony, the 
American Red Cross immediately saw that for the American Red 
Cross to respond to this new kind of war, for us to respond to 
the events of September 11 and the aftermath, whether it be 
anthrax, whether it be a nuclear hit, whether it be a chem/bio 
attack, to respond to that, we absolutely had to make sure that 
all of our lines of service were active. We activated 
internationally. There were numerous international people who 
were involved in these attacks, and we had to work with our 
international colleagues abroad. We absolutely have to think 
about our military. We have major roles with the military. 
Within days we were mobilizing troops. This is the aftermath of 
September 11, and we said specifically and repeatedly, it is 
for the events of September 11 and its aftermath, and related 
to terrorist attacks on this country----
    Chairman Tauzin. But why would you close the fund----
    Ms. Healy. I didn't make the----
    Chairman Tauzin. Right. Let me make the question, put it on 
the record. If the fund was really about September 11 and all 
the aftermath, which we don't even know yet what the aftermath 
looks like.
    Ms. Healy. Sadly, right.
    Chairman Tauzin. We know some of it. We know the anthrax 
attacks. We know the possibility every week we are being told 
that these people want to try another event as big or bigger 
than September 11. Why on earth, if that is the fact, why would 
the fund be closed?
    Ms. Healy. Well, first, it is a fact, and I think I have 
documentation that I can provide as much as you want. This is 
an investigative committee. We would be pleased to provide any 
information that shows from the very beginning the specific 
things we outlined. By the way, blood is essential. So is bone 
marrow, frozen bone marrow. This will be a crisis in this 
Nation if we are suddenly faced with a terrorist attack that 
provides--that we have to provide 100,000 units of blood to. If 
we do not have that blood, we will shut down American medicine 
overnight, people who need blood for cancer treatment, for 
anemias, for ruptured spleens on highways. We cannot afford----
    Chairman Tauzin. My time has expired, Dr. Healy. I would 
just ask this question, because I agree with you. If all of 
that is true, why would you shut down the fund?
    Thank you, Mr. Chairman.
    Mr. Greenwood. The Chair thanks the gentleman. The 
gentleman's time has expired. And the Chair recognizes the 
gentleman from Michigan Mr. Stupak.
    Mr. Stupak. Thank you, Mr. Chairman.
    Attorney General Spitzer, you outline a number of things 
that New York does for charities, like they have to register 
and have to have financial reports and things like that. Are 
there any time limits when they have to distribute funds to get 
them out there? What I am hearing from the families today is 
they are waiting and waiting and waiting.
    Mr. Spitzer. There is not a statutory deadline by which 
funds received must be distributed, but we have in our general 
supervisory authority the capacity--if we see that funds are 
not being used for an appropriate purpose, the capacity to step 
in and get appropriate judicial relief. If an entity were 
merely letting funds sit in a bank account without being 
distributed at all, we, of course, would take appropriate 
action. There is not a requisite percentage each year which 
must be allocated.
    Mr. Stupak. Is there entitlement before your State would 
take action?
    Mr. Spitzer. There is not a defined moment in which there 
is a trigger, but we are obviously--we have, to give you an 
order of magnitude, 40,000 separate charitable entities that 
register with us, and so we maintain a level of scrutiny that 
is appropriate.
    Mr. Stupak. You indicated that since September 11, you have 
been urging them to a single application. What kind of response 
have you received from that idea?
    Mr. Spitzer. There is interest, but it has not yet 
happened. And I think it would be--as we have heard today from 
these victims, it would certainly alleviate much of the 
extraneous paperwork. There are legitimate reasons articulated 
by charities, different needs, different inquiries that make it 
not as simple a task as one might presume. Having said that, 
the concept is right. Many colleges have a common application 
form. There are many organizations in the world that have 
managed to develop a common simple process by which people can 
apply, make their information available, and it's something in 
this day and age that we can and should do.
    Mr. Stupak. Dr. Healy, if I may--and I hate to keep going 
over the same old area, but the reserve fund, when you 
testified that some would be held in reserve, and it may be 2 
years, I think everybody, at least on this side of the aisle, 
wrote that down and said--I mentioned my constituents drove 19 
hours to make sure they got their checks to the American Red 
Cross. They expected that check to be used now, not 2 years 
from now. How do you answer those people that gave to Liberty 
Fund and thinking now or hearing now for the first time like we 
have that is being held in reserve and may be used for other 
purposes.
    Ms. Healy. Well, first I think that when a charity goes out 
and in this case an organization like the Red Cross, which is a 
huge service organization, goes out and asks the public for 
funds, the most important thing in the world to do is to try 
and communicate what you're asking funds for. In our case, we 
needed help in three areas, and we shouldn't ignore the other 
two. We went out right away and said, we need blood.
    Mr. Stupak. Which you got, and now you have too much.
    Ms. Healy. We didn't have too much. We made a decision to 
drive our inventories up to wartime level.
    Mr. Stupak. Let's keep going.
    Ms. Healy. Blood, volunteers and money to do our services. 
We laid out our services, which were for the victims----
    Mr. Stupak. For the victims.
    Ms. Healy. We did not say that. What we said is for the 
events of September 11 and their aftermath. We have worked for 
over a year and a half on a weapons of mass destruction 
program, but we have to prepare for that.
    Mr. Stupak. Dr. Healy, you didn't get money from people in 
case something in the future may happen.
    Ms. Healy. Yes, we did, for preparedness. We got money.
    Mr. Stupak. Did you solicit--when my constituents came 
here--and I am sure it is like everybody else here--we didn't 
come with the idea and give you checks and say, oh, this is for 
the future in case there is anthrax. We came on the heels of 
September 11 to make sure the money got to the people where it 
was needed, not for something that may happen like anthrax. Or 
you mentioned a nuclear weapon and mentioned all kinds of 
things in your testimony. That is not what the people opened 
their hearts and their wallets for. It's for the families, and 
they opened it for now. If you want something for in the 
future, now that things have settled down--if you thought, 
we'll do it on the heels of September 11 and open up the gates 
and put up for everything we ever needed, then I think you took 
advantage of a very tragic situation. That is the way we see it 
up here--at least I see it.
    Ms. Healy. But we communicated from the beginning. I 
remember hearing the reports on the September 11 Fund in New 
York that said only to the victims and their families, and that 
is not what we ever communicated. Now maybe there was a lot of 
noise out there that implied to the contrary, but we 
communicated in virtually every way we possibly could. I think 
I probably spoke numerous times on TV, on radio, saying that 
these are the lines of service that have been activated. We 
must raise money for them.
    Mr. Stupak. Even in your testimony today, you said that the 
American Red Cross is there to provide that bridge for 3 to 4 
months before life insurance and everything else.
    Ms. Healy. And we did that.
    Mr. Stupak. Right. You did that. But then why isn't all the 
money there for the people who really need it in the first 3 to 
4 months?
    Ms. Healy. You certainly could argue that the entire 
billion dollars was only for 5,000 victims, and everyone should 
get $200,000, and it adds up. When the Red Cross went out to 
solicit contributions, we did it very specifically for these 
events and their aftermath. We specifically repeatedly 
communicated that this was also about preparing for terrorism.
    Mr. Greenwood. The time of the gentleman has expired.
    Ms. Healy. We have to continue to get that message out. I 
can tell you that anybody who said this----
    Mr. Stupak. I don't disagree that when you went out and 
solicited money--when the Red Cross actually went out and made 
a personal appeal--and you said you got one check for $3 
million, that was probably a personal appeal--if you really did 
personal appeal, I agree you probably said, we need it for 
this, this, this and whatever else comes in the future. But the 
people who drove like from my district 19 hours and all the 
people who sent in the $5, the $500, the 50 bucks, whatever 
they could afford, it wasn't for all these things in the 
future, but for these families, and that's where it should be, 
all of it; not reserve, not future, all of it.
    Ms. Healy. But actually the math adds up pretty well back 
at the envelope, because basically we have solicitations of 
major corporate donors where we talked about the range of 
services always. We have several discretionary grants for 
over--one for $15 million. We also on our Website listed the 
whole range--and I think we have gotten $60 or $70 million on 
the Website where when it pops up, you see what we are spending 
those donations on. We also send these directives out to all of 
our chapters across the country. They knew exactly what we were 
raising money for, and they are outlined in the attachment to 
the testimony, which includes first and foremost the victims.
    Mr. Stupak. The chairman has told me my time has expired. I 
would just say that even on our Website, we listed the Liberty 
Fund so people could donate, and it was for the victims. We 
didn't intend for all the rest of these, so if Members of 
Congress got it wrong----
    Ms. Healy. But a lot went to the victims.
    Mr. Greenwood. The time of the gentleman has expired.
    The Chair recognizes the gentleman from New Hampshire Mr. 
Bass for 5 minutes to inquire.
    Mr. Bass. Thank you very much, Mr. Chairman.
    Dr. Healy, you are tenacious in your spin, but the reality 
of it is, and you get the message clearly from this committee, 
is that the Red Cross raised a huge amount of money as a result 
of the events of September 11. And I read between the lines it 
was really not $500 million, it is close to a billion actually. 
But you used, just a second ago you said, a total of a billion 
dollars. I don't know what that refers to, but in this Liberty 
Fund alone, you raised over $500 million. We have the 
discrepancies in statements made by Red Cross officials over 
time.
    The answer to Mrs. McLaughlin's question is that she is 
going to wait 2 years. The board of directors is going to 
reprogram the money that is going to go to something else. It 
may go, it may not. But the fact is, sad to say, that according 
to your own testimony, about $200 million of the $500 million 
is going to go to the victims and the victims' issues, and the 
rest of it is going to go somewhere else. And I don't care what 
it says on the back of an envelope or in a PSA and so forth. 
You know that if you asked Americans where they thought the 
money was going when it was going to the Liberty Fund, they 
thought it was going to the victims of the disaster.
    The implication that we are never going to be able to raise 
another dime in the future for any other disaster, military or 
otherwise, and this is all the Red Cross is ever going to see, 
and the Americans' charity is now at an end I think is really 
just plain spin. I respect what you did by resigning last week, 
but the fact is this is a good example of this and perhaps 
other organizations are trying to work their way out of a very 
embarrassing situation. And I dearly hope that the board of the 
Red Cross will reconsider its decision to divert at least the 
intent--and I think it was a very specific intent--of Americans 
to support the victims, people like Mrs. McLaughlin and Mrs. 
Steiner who are facing day-to-day tragedies in their own lives, 
to use the money for things other than telecommunications and 
frozen blood.
    You have an item today on your Website that says you are 
going to use $1.7 million of the Liberty Fund for 
telecommunications upgrade, and I would ask Mrs. McLaughlin--
I'm not going to ask you to answer this--whether or not you 
think that is critical to your lives or any other people who 
are involved in this thing.
    It is frustrating, Dr. Healy. And we are going to get more 
specific information from witnesses who follow you, but I think 
that the Red Cross and other charities are going to have over 
the coming months a lot of explaining to do because we have 
raised unprecedented amounts of money in this country to help 
the victims, and it is incumbent on us, our subcommittee, as 
oversighter of this to make sure this money goes to those 
people. I am sorry that it is hard to understand the 
technicalities of your argument, but the reality of it is if 
you give it the elephant foot test, Americans thought they were 
helping people like Mrs. Steiner and Mrs. McLaughlin, and only 
a small amount of those funds have gone for that purpose. And I 
yield back to you, Mr. Chairman.
    Mr. Greenwood. The Chair recognizes the gentlelady from 
Colorado for 5 minutes to inquire.
    Ms. DeGette. Thank you, Mr. Chairman.
    First of all, I would like to say to Mrs. McLaughlin and 
Mrs. Steiner, I also will never be able to fully know what you 
are going through, but I want to emphasize that as an American 
and also as a mother, and I want to say on behalf of everybody 
up here and every single Member of Congress, that as 
representatives of your government, I want to apologize that 
many of you have been reduced to going around acting like 
beggars in the last few months instead of having to spend that 
time with your family, and if there is anything we can do to 
work with both private charitable agencies and government, we 
will do that.
    And I have a lot of questions, and the Chair tries to limit 
me in particular to 5 minutes, so I will--if we have some time 
at the end, sir, I will be happy to let you answer. But I did 
want to let the two of you know we all feel that way.
    And I want to ask you, Mr. Spitzer, you talked about 
coordinating between these various charitable agencies, and 
you're right. It is not an appropriate government function so 
often. But I'm wondering if that our experience after the 
Oklahoma City tragedy has taught us how we could expedite this 
coordination. You said there was some coordination, and how far 
are we along toward being able to do that?
    Mr. Spitzer. The first answer is yes, we learned a great 
deal in Oklahoma City, and we have used that model for--to 
learn those lessons and have tried to apply it in New York 
City, Pennsylvania and Virginia as well. We are not far enough 
along. We have, as I said in my opening statement, encountered 
some early resistance from the charities. I think we have 
overcome that, and we are continuing to do everything we can 
do. The charities most recently have been very cooperative and 
sitting down together as recently as yesterday to work on the 
details, but we cannot move quickly enough.
    Ms. DeGette. Do you have some sense of how quickly this 
will be done so these humiliations aren't visited upon the 
victims?
    Mr. Spitzer. I would certainly hope, given the involvement 
of IBM, KPMG, I would say 2 to 3 weeks we would hope to have a 
template that is up and running. Again, it is contingent, 
though, on getting the data and the cooperation of the 
charities, and we expect it. They are there, and they 
understand.
    Ms. DeGette. Thanks.
    In a glancing nod to the title of this hearing, protecting 
against fraud, waste and abuse, have we seen very many 
examples, if any, of fraud, waste and abuse in all of these 
charities?
    Mr. Spitzer. The answer is we have seen some, but very few. 
The affirmative story of the generosity of the American spirit 
so far outweighs the few instances of fraud, although we are 
prosecuting them vigorously. There are few so far.
    Ms. DeGette. Dr. Healy, I also appreciate you coming today, 
and I want to ask you a couple of questions following up on 
some of the others that were asked. You testified that you were 
able to give Mrs. McLaughlin close to $30,000, and just this 
morning, you were able to give Mrs. Steiner a fairly 
substantial amount, at least to get her through. Can you please 
tell me the numerical number of families who you have given 
over $25,000 to as of this date?
    Ms. Healy. I do not have that specific number. We can 
provide it for you.
    Ms. DeGette. Do you have any ballpark estimate?
    Ms. Healy. I think the average number of the grants is in 
the range of slightly under $20,000.
    Ms. DeGette. How many of those have you given to date?
    Ms. Healy. The overall number is in excess of 2,500. And by 
the way, we expected 5,000 people to come forward, and we 
have--even had full-page ads saying, please come forward. Have 
your neighbor help you fill out the form.
    Ms. DeGette. It is your testimony today that what happened 
to Mrs. Steiner would be an anomaly?
    Ms. Healy. I certainly hope so. We have had problems with 
the disaster operations center. We are upgrading it.
    Ms. DeGette. Mr. Chairman, if I could ask unanimous consent 
to have Dr. Healy supplement her testimony to give us the 
exact--obviously, because of confidentiality, I don't want to 
know the names of the folks--but the exact numerical amounts of 
money and who they've gone to?
    Ms. Healy. Pleased to do that.
    Ms. DeGette. What timeframe could you do that?
    Ms. Healy. We could probably do that within 24 hours.
    Ms. DeGette. Mr. Chairman, if I could ask unanimous consent 
to have that supplemented.
    Mr. Greenwood. Unanimous consent is not required. The lady 
of Colorado has made a request. Dr. Healy has agreed to 
supplement that.
    Ms. DeGette. I would like to follow up on one last thing. 
Of the funds in the set-aside fund that you talked about, how 
many of them--what is the amount that was solicited by the Red 
Cross, and what is the amount that was unsolicited by the Red 
Cross?
    Ms. Healy. I think that the American Red Cross goes out on 
a general appeal. We have PSAs----
    Ms. DeGette. I don't need that kind of answer. Do you have 
a numerical number? Of the $1.2 billion raised since September 
11, some of it is in this Liberty Fund, right?
    Ms. Healy. No. The American Red Cross has raised with 
pledges about $550 million.
    Ms. DeGette. How much of it is in this fund?
    Ms. Healy. All of it.
    Ms. DeGette. You raised $550 million for that fund. And how 
much, as best as you can ascertain, were solicited and how much 
of it was sent in by people like Congressman Stupak's 
constituents and mine and everybody else?
    Ms. Healy. You mean a spontaneous donation? I think we can 
get you that number based on the size of the contribution. I 
would say probably at least $100 million are from larger 
donors. About $70 or $80 million in that range came in from the 
Internet.
    Ms. DeGette. Do you use the size of donation to determine 
whether it was solicited or unsolicited?
    Ms. Healy. No. No. All of it is solicited----
    Ms. DeGette. Oh, so your view is all of the money that came 
to the Red Cross was solicited, and therefore----
    Ms. Healy. Maybe the way to say this is that when an event 
occurs, when a major disaster occurs--do you know that during 
World War II, we had billions of dollars coming in. The public 
knows the Red Cross. They know we are there for blood.
    Ms. DeGette. You've given this answer. We're pretty clear 
on that. But what I am saying is that what you are hearing from 
the Members of Congress here--in fact, USA Today quoted a Red 
Cross volunteer from Ohio who said, my mother and my little 
sister donated money, and it was intended to go to the New York 
disaster relief fund. And people I know, they thought that that 
money was going to Mrs. McLaughlin and Mrs. Steiner and people 
who worked in Windows on the World as busboys and everybody 
else. They didn't think it was going to the telephone system. 
My question is----
    Ms. Healy. You must allow me to clarify the telephone 
systems. Only ones that relate to reaching our victims. We had 
to have 1-800 lines to get out and call people.
    Ms. DeGette. I am not arguing that you need to upgrade your 
telephone systems.
    Ms. Healy. Please don't say that. We are not upgrading our 
telephone systems.
    Ms. DeGette. If you will just allow me. If you can answer 
my question, it would be helpful. How much of the money--and 
maybe you will have to supplement your answer--is from 
unsolicited donations, and how much is from solicited 
donations? How much was just from school kids who sent in their 
money to help the families? And how much of it was it from 
people who said the Red Cross has a variety of needs, telephone 
service to get out to victims, blood marrow, blood, all these 
things that are important and we don't disagree with? Do you 
know that?
    Ms. Healy. I don't know if we can get you that information.
    Ms. DeGette. Thank you. That's all I need.
    Mr. Greenwood. Thank the gentlelady from Colorado and 
recognize for 5 minutes the gentleman from Kentucky Mr. 
Whitfield.
    Mr. Whitfield. Thank you, Mr. Chairman.
    Ms. Healy, I will go over this once more, but there is a 
total in the Liberty Fund that was contributed to the Liberty 
Fund of $550 million; is that correct?
    Ms. Healy. That is in the range of pledges. I think the 
actual cash is around--well, a lot of it has been expended. I 
think $150 million has been expended in that range. So that has 
already gone out the door, with $50 million of that going 
directly to the family grant program and fairly expensive 
activities at the Ground Zero operations. Remember, we are in 
Pennsylvania. We are at the Pentagon. We are helping in a 
broader range of services. I'm a New Yorker. It wasn't just New 
York.
    Mr. Whitfield. But $50 million went to family grants, and 
$100 million went directly to sites to help in various ways.
    Ms. Healy. It may be less than that, but I can get you the 
specific numbers. But it's in that general range.
    Mr. Whitfield. And how was it determined the size of the 
family grant?
    Ms. Healy. What we did is--and I must say it was done at a 
very difficult time. It was actually Cantor Fitzgerald who came 
in to see us and said, we are desperate and have people who 
have lost their breadwinner. Eighty percent of the people who 
died in this event were men in their late 30's who had wives 
who weren't working, had young families. A large number of them 
lost their breadwinner. They had a cash-flow shortfall.
    We have never really done what we did with this family 
grant program. Normally in a hurricane or another typical 
natural disaster, people's homes get destroyed, but their 
economic well-being is intact, their breadwinners. Here their 
homes are fine, but they lost their breadwinner, and we 
determined immediately how can these people grieve and mourn if 
they are worried about paying their rent, paying their 
mortgage, paying college tuitions.
    We actually started at the top of the World Trade Center 
and worked down in a very proactive way to contact these 
companies and say, help us get in touch with people who have 
lost--who are facing these cash-flow problems, who have this 
need. We filled out a very simple form that said, No. 1, how 
many people are in your family; No. 2, what is your rent or 
mortgage; No. 3, what are your funeral expenses. We paid up to 
$10,000 if they weren't otherwise covered. And No. 4, what 
other cash-flow needs do you have now? And those have been in 
the category of credit card payments and tuition, in some cases 
medical bills. We added all that up. We did not ask for 
receipts. We wanted to turn it around in 1 to 2 days, and we 
looked at that number and we wrote them a check. We capped it 
at $30--only because we didn't know if we could possibly raise 
enough money to meet that. At this point, we have $50 million 
cash on hand.
    It was actually kind of a big commitment that we made 
because we knew we would probably--if we did it for one person, 
we would do it for everybody, that it would possibly be $100 
million. So we bit the bullet, we went ahead and made a 
commitment to the program and made a commitment to everyone. We 
aggressively went out, as I said, spoke to the employees. When 
there weren't employers that we could work with, we then went 
and opened the compassion center. People had the forms. We 
would do it over the telephone. We had full-page ads asking 
people to help other people, a neighbor, whomever, to come in 
if they lost someone. There were a lot of people who weren't 
even associated with companies.
    Mr. Whitfield. The $550 million pledge, generally what 
percent of the pledge amount do you receive?
    Ms. Healy. Of roughly 500? Roughly 500 has been received. 
About $60 million or $50 million is still pledged. And most of 
that money, by the way, comes in as a general contribution to 
this disaster. It does not come in to say for the victims. 
Whenever it says for the victims, it goes right into the for 
the victims fund, which is very big, $200 million.
    Mr. Whitfield. This is for Mrs. Steiner and Mrs. 
McLaughlin. If you--from your personal experiences, if you were 
meeting with the board of, say, the Red Cross or the United Way 
or the Salvation Army or any of these charitable groups, what 
recommendation would you make to them that would make it easier 
for you?
    Mrs. Steiner. Perhaps I would say if people donated 
specifically for the event, and I know the magnitude of 
disbursing the funds is great, perhaps a down payment toward 
their livelihood or to substitute their financial obligations 
that their husbands can no longer provide would be a good 
start. And then as they work out the details, they could get 
back to the victims with additional money.
    Mr. Whitfield. Do you feel that the 27,000 is an adequate 
amount or----
    Mrs. Steiner. That is something I just received this 
afternoon, so I haven't really considered it into----
    Mr. Whitfield. In your perspective, it was not timely. You 
went through a lot. Just the time that it took for you to 
receive that money was a real problem.
    Mrs. Steiner. Yes.
    Mrs. McLaughlin. My experience was a little different. And 
like Dr. Healy said, I did indeed receive a large check from 
the Red Cross very, very quickly. And it was a very easy 
process; probably the easiest of all the charities, in fact the 
easiest of all the charities. However, I call back every 3 days 
to see if they've lifted the cap. I understand the purpose of 
the cap initially for fund-raising concerns, but it is has been 
almost 2 months. The money has been raised, but the cap has not 
been lifted.
    Mr. Whitfield. Which cap are you referring to?
    Mrs. McLaughlin. The cap of $30,000 for this family grant 
program that the Red Cross pretty generally capped at $30,000. 
So while the letter that arrived with the check stated that we 
could come back if we needed more, that hasn't been my 
experience.
    Mr. Baldi. Can I say--add something for Mrs. Steiner? When 
I got involved in this, and when she contacted me, I want you 
to know the first thing she said to me was she was concerned 
about her expenses. And I frankly was overwhelmed because I 
thought there would be no problem for her expenses, because my 
perception, as was everybody else in my office, as I think many 
people, is that all these victims are taken care of. So it 
wasn't until I uncovered the information that I showed you 
earlier in terms of how little or relatively little she had 
received up until this afternoon, I was stunned to see what 
wasn't out there when I heard constantly the money that was 
being raised, the hundreds of thousand dollars.
    So I would add something to the board, which is as follows: 
I think there is a public perception that everyone is taken 
care of. Under the wisdom of the organizations, those people 
are not taken care of in a larger scope--and I am not saying if 
it's right or wrong, because other people can make that 
decision--then I think that the world ought to be--they ought 
to know that your friends and neighbors who you think have now 
been covered by all of this money aren't.
    And I think that there is a cruel injustice that is going 
on. In Mrs. Steiner's situation, she got creditors to delay 
payments, but there is going to be a time when she's going to 
have to make payments to them, and they are going to be 
substantial.
    Mr. Whitfield. Your point is that out of a $550 million 
pledge, that Mrs. Steiner, as an example, between September 11 
and today, prior to today, had received about maybe $1,600.
    Mr. Baldi. Right. But in addition, you haven't considered 
the United Way. You can keep talking about the Red Cross. The 
United Way funds, as far as I know, are in the same category. 
And I don't know what's happened at the United Way fund. And 
these people also have no sense of what to expect. I mean, the 
other problem they have, if someone could sit down with them 
and say, look, just so you can make your planning, I know 
you're hearing that we have collected $500,000, but you should 
understand you are only going to get about $20,000, or you are 
going to probably get X amount, something so they can make 
plans. So these two people can say to their family, look, this 
is what we can expect to see over the next 6 months, over the 
next year.
    That's what they need is information. So I would suggest 
that is what needs to come out to them. Thank you.
    Mr. Whitfield. Thank you.
    Mr. Greenwood. The time of the gentleman from Kentucky has 
expired, and the gentleman from Massachusetts Mr. Markey is 
recognized for 5 minutes to inquire.
    Mr. Markey. Thank you, Mr. Chairman, very much.
    Dr. Healy, first of all, I would like to say that if 
reports are true that because of your advocacy that the 
Israelis should have been able to use the Star of David as part 
of their Red Cross symbol as opposed to the cross or the 
Crescent and any way any of your board members were angered by 
your efforts to accomplish that goal so that Israel could use 
the Star of David, then those people should be ashamed of 
themselves. And if in any way they used this incident as a way 
of punishing you from trying to protect Israel in its ability 
to maintain its own identity, then it is truly a disgraceful 
event in the history of the Red Cross, because I believe that 
you and Mr. Spitzer should have been able to find some way of 
reconciling, along with everyone else here, the differences, 
rather than having your board escalate this to a point where 
you are not going to be there.
    And I think that that is something that is going to be a 
great loss to the country, because you are a great Public 
Health Service doctor, which is what we need in this position 
at this time, a Public Health Service doctor, because 
obviously, you were interested in trying to extend the 
parameter of protections. I think that the other people here 
led by the attorney general of New York, who is a personal 
friend of mine, were trying to protect other legitimate 
interests as well--very legitimate interests, and I think it is 
a sad day when we reach a point like this where we are having a 
hearing on a subject like this, because I think that everyone 
at the table is as well-intentioned and sincere as Americans 
can be in a time of war. There are different perspectives 
people are taking as to how we should respond to that war in 
this particular area, and I think that is very honorable, but I 
think that it really is--and again, I go back to this first 
point, because reports are quite extensive about the extent to 
which many of your board members opposed your efforts to ensure 
that Israel have that ability to use the Star of David.
    And so I guess, Mr. Chairman, the only thing I wanted to 
say--and I come here with your permission because I am not a 
member of this subcommittee--that I respect Dr. Healy and 
Attorney General Spitzer, both in ways that reflect the 
seriousness of the subject that is being discussed. And I think 
that a little more time should have been given, to be honest 
with you, by the Red Cross board so that efforts could have 
been attempted, which would have precluded the necessity of us 
having this hearing. And that is ultimately what I think the 
attorney general was trying to accomplish. And I think 
ultimately Dr. Healy would have been in that position as well.
    And so that's all I really wanted to say. So I thank all of 
you for everything that all of you are doing with millions of 
people in trying to deal with this state of war that we're in, 
and hopefully all other institutions can learn from what 
happened here so that we try to resolve conflicts in a peaceful 
way.
    Ms. Healy. Mr. Markey, could I make a comment? I couldn't 
agree with you more when you say this is a war. What happened 
on September 11 was the first attack in this war--the first 
battle of this war. We have not won this war, and we are facing 
some public health crises because every American is now 
vulnerable. They are vulnerable emotionally, and they are 
vulnerable physically. They are vulnerable--if there is an 
attack tomorrow, we must be prepared.
    The American Red Cross has played a vital role in 
preparedness as well as a response to disaster. It has played a 
vital role in the first battle of the war and in the last 
battle of a war. And the American Red Cross has a role which is 
separate and distinct from United Way or some of the other 
charities. Our role is to operate on our multiple lines of 
service to help the victims of today and yesterday, but to 
prepare for those Americans out there across this country who 
are facing vulnerabilities because we are indeed at war.
    To that extent, the Liberty Fund is a war fund. It has 
evolved into a war fund. We must have blood readiness. We must 
have the ability to help our troops if we go into a ground war. 
We must have the ability to be there for the victims of 
tomorrow, not just the victims of yesterday.
    Mr. Markey. Let me ask you, Doctor, do you believe that 
given more time that you would have reconciled the differences 
with the other parties at the table today?
    Ms. Healy. Oh, absolutely, because we all have the same 
humanitarian purpose, Mr. Markey. With regard to Mr. Spitzer, 
we were just trying to resolve the issue of getting waivers. 
You can't break confidentiality. It's like a patient and a 
doctor. If the victim will grant a waiver of confidentiality to 
the Red Cross, we will share those names in a data base. They 
have to say we can. That is a standing policy. We are evolving 
to a resolution there, and I am very happy about that.
    With regard to the issue of whether or not blood is part of 
our response to this horrible, horrible war we are in and 
frozen blood, which is a unique approach to dealing with the 
terrible blood shortages that we have faced and that we would 
face in a WMD attack, we would face a shortage. There would be 
Americans out there who could not get blood if we don't respond 
now.
    Mr. Markey. I would like to ask my friend, the attorney 
general, whether or not he believes that if the Red Cross board 
had given Dr. Healy more time, that a reconciliation of 
positions would have been or could have been reached.
    Mr. Spitzer. Let me challenge the premise of the question 
is that there was a reconciliation between us individually that 
was needed. I think Dr. Healy and I always got along very well. 
I think I would say that there was policy dispute, and I have 
said this publicly before, and I don't mind saying it again.
    I traveled down to the Red Cross offices and had a meeting 
with the then general counsel of the Red Cross and Dr. Healy to 
try to prevail upon them to adopt the notion of a data base, 
which at first Dr. Healy rejected with some rather vehement 
statements and said, we will not do this. I thought at the end 
of that meeting that we had an understanding that the Red Cross 
would proceed with something that I thought was vital and 
continues to be vital for the fair, equitable and rapid 
distribution of the proceeds. Subsequent thereto, Dr. Healy 
again made comments outright rejecting her willingness to 
participate in this.
    So this is not between Dr. Healy and me individually. I 
think that there was a disagreement which Dr. Healy--Dr. Healy 
felt deeply, and I respect her view. I disagree with her about 
the viability of the Red Cross's participation, but there is 
now an agreement between the Red Cross and my office and the 
other charities, and we are going forward.
    So I think that whether it was an individual disagreement 
or not is irrelevant to the victims sitting here who need 
funds. What we need to do is get together and get this data 
base going, and we are doing it with the Red Cross. And so we 
are doing that, and I look forward to working with them.
    Mr. Greenwood. The time of the gentleman has expired.
    Bit of housekeeping before we dismiss and thank this first 
panel. Dr. Healy, could you provide some additional information 
to the committee; to wit, we would like copies of transcripts 
from radio and television and newspaper advertising, copies of 
that that your Red Cross used to solicit funds; any press 
releases that you used for the express purpose of soliciting 
funds; and the application forms that you used for the victims. 
And also, if you could provide us a breakdown from the Red 
Cross Website. There are a number of categories, immediate 
disaster relief, family gift program, international family 
assistance, immediate blood readiness and strategic blood 
reserve, Armed Forces service, community outreach, direct 
support costs. If you could give us an additional breakdown or 
description of what is meant by each of those subcategories, 
that would be helpful to us in our deliberations as well.
    [The material is retained in subcommittee files.]
    Mr. Greenwood. Without objection, the statement of the 
gentleman from Florida Mr. Bilirakis will be included in the 
record.
    Let me thank the panel for your patience and for your 
testimony and your help today, particularly again to Mrs. 
Steiner and Mrs. McLaughlin for the courage that you have shown 
to be with us. I hope that you have confidence that your time 
with us will help the other 5,000 families that have suffered 
as you have.
    And thank you, Mr. Baldi, for joining Mrs. Steiner.
    Attorney General Spitzer, thank you for your leadership in 
this regard and for being with us.
    And Dr. Healy, thank you for fielding all of the hardest 
questions today and for being buffeted by members of the 
committee. I hope that we are not guilty of the admonition 
against making sure that no good deed goes unpunished. And 
indeed the Red Cross has served this country mightily for 
decades, one of our finest American institutions, and let us 
chalk up whatever differences there may be within and without 
the Red Cross to the extraordinary nature of these 
circumstances and go forward together still respecting to the 
highest degree the work of the American Red Cross.
    Thank you to the panel. You are excused.
    And we will now call the second panel to come forward. And 
allow me to introduce the second panel. Mr. Bob Bender, the 
Executive Director of the American Red Cross in Greater New 
York; Mr. Michael Farley, the Vice President, Chapter Fund-
Raising, of the American Red Cross; Mr. Chris Amundsen, 
President and CEO interim of the United Way of America; Mrs. 
Joyce Bove, Vice President for Grants and Special Projects, 
September 11 Fund New York; and Mr. Vincent Bollon, Secretary-
Treasurer of the International Association of Fire Fighters.
    If you, lady and gentlemen, would take your seats at the 
witness table, we will proceed. I thank you for your presence 
and the testimony you are about to give. Each of you, I am 
sure, are aware and made aware that this is an investigative 
hearing, and it is the practice of this subcommittee to receive 
testimony from witnesses under oath. Do any of you object to 
testifying under oath?
    Seeing no such objection, pursuant to the rules of the 
House and pursuant to the rules of this committee, you are 
entitled as a witness before this subcommittee to be 
represented by an attorney. Do any of you wish to be 
represented by an attorney?
    Seeing no affirmative answers, I would ask you to rise and 
raise your right hand so I may swear you in.
    [Witnesses sworn.]
    Mr. Greenwood. You are now under oath, and we will begin 
with Mr. Bender. Thank you, sir, for being with us, and we look 
forward to your testimony, and you are recognized for 5 minutes 
for that purpose.

 TESTIMONY OF ROBERT BENDER, JR., EXECUTIVE DIRECTOR, AMERICAN 
RED CROSS IN GREATER NEW YORK; MICHAEL FARLEY, VICE PRESIDENT, 
   CHAPTER FUNDRAISING, AMERICAN RED CROSS; CHRIS AMUNDSEN, 
  PRESIDENT AND CEO, INTERIM, UNITED WAY OF AMERICA; JOYCE M. 
BOVE, VICE PRESIDENT FOR GRANTS AND SPECIAL PROJECTS, SEPTEMBER 
   11 FUND NEW YORK COMMUNITY TRUST; AND VINCENT J. BOLLON, 
GENERAL SECRETARY-TREASURER, INTERNATIONAL ASSOCIATION OF FIRE 
                            FIGHTERS

    Mr. Bender. Thank you very much. Just to talk a little 
about what the Red Cross is doing at this point in time, we 
have registered and have cases on 25,000 families. That means 
that we have talked to 25,000 families. We provided assistance 
in most cases when assistance was needed. We spent in the 
neighborhood of $120 million in direct assistance to families 
in 8 weeks. We have reached out to families in a variety of 
different ways, including trying to contact them if we can get 
names; trying to go to buildings.
    I should explain that there are three types of basic 
assistance that the Red Cross is providing: one to families 
that have either experienced loss or serious injury; a second 
to the residents, the people who are affected in the immediate 
area of the World Trade Centers because they resided there; and 
a third group were some folks who were economically impacted in 
the immediate World Trade Center area because of employment 
disruptions. And we have tried to be helpful in all three 
cases.
    The family grant program, which was explained earlier by 
Dr. Healy, was for the families who experienced loss or serious 
injury. That program was originally a stated need program, and 
it was for 3 months in a variety of categories. I should say 
that the program has been announced to be extended, and it is 
going to go on for any number of months, certainly the first 
year and maybe much longer than that as needs develop in the 
family. And in each of these cases, we really work with the 
family. We begin providing immediate assistance, and most of 
that is done on a stated-need basis. And then beyond that, we 
begin to work with families, talk with families, trying to 
identify with them their needs, and will, in fact, attempt to 
either provide those needs or try to link them up with other 
organizations that are, in fact, performing services that we 
are not.
    We have also had over 120,000 mental health contacts with 
people. The contact is not a casual contact. It is at least a 
15-minute interview with people, our conversation with people 
with a describable outcome. These are people who are both the 
rescuers, the families. We have worked with the rescuers and 
established centers for them so they can find comfort and can 
find peace during a very turbulent time and a very traumatized 
time for them.
    So there's a variety of things that we are doing for the 
rescuers and families out of this horrible tragedy in New York 
and in the other parts of the terrorist act, and we are doing 
those, and it's real, and we were there. We were there within 
20 minutes after the first plane hit. We had staff and 
volunteers at the World Trade Center. We had staff and 
volunteers run away from the World Trade Center when the 
collapses began. We lost some equipment, damaged some equipment 
as those buildings collapsed. The Red Cross has been there 
right from the very first. We will continue to be there. Our 
commitment is to be there as long as we need to. We're still 
working with families in Oklahoma City. We expect we will be 
working with families for years into the future.
    And I should say, we do not know all the needs of families. 
We are trying to identify those. We don't all need--actually 
recognize all the needs we are going to have in the community 
for mental health and so forth. There is a lot of work trying 
to figure that out, trying to talk to people, trying to 
interview people, trying to prepare the community for what it 
faces. But we do not know the full need, the full parameters of 
need, and that is something we are really investigating.
    One other point, the coordination. Attorney General Spitzer 
indicated that we are working together. We are an organization 
coordinating. We are working with any number of agencies in the 
community to coordinate. We are working with the attorney 
general's office, and there is going to be an establishment of 
a data base that provides benefits and understanding about 
benefits.
    There is confusion about where to get benefits. The 
nonprofits in the community are well aware of that and are 
really trying to find ways to simplify the process to make the 
process known to people, to find easy ways to access the 
process. And we haven't been very successful in that effort, 
but we are continuing.
    So coordination is beginning to occur. Coordination of 
benefits is beginning to occur as well as coordination of 
activity. There are conversations going on to try to simplify 
the process because we are well aware of that. And for all of 
us involved in the relief effort, it is not an absolutely 
perfect effort, and that when mistakes are made, and when we 
find we made an error about a family, about a case, we try to 
go back and try to rectify that area as quickly as possible 
because we have an enormous system that we put into New York 
City in the first month, 2,000 people, actually 2,500 people 
from across the country. We have about 28,000 volunteers now 
working in the system. And when you have that many people 
focusing on relief, there are going to be differences. The 
system is not going to be perfect. We try to resolve that as 
best we can.
    I think that, in fact, the Red Cross, has, in fact, done 
its job, and it is going to continue to do its job for years in 
the future on this event.
    [The prepared statement of Robert Bender, Jr. follows:]

 Prepared Statement of Robert Bender, Jr., Executive Officer, Greater 
     New York Chapter and Michael Farley, Vice President, Chapter 
                    Fundraising, American Red Cross

                              INTRODUCTION

    Within moments of the first plane tearing into the World Trade 
Center on that terrible morning of September 11th, 2001, the tragic 
events that transformed this nation also began the largest disaster 
response in the history of the American Red Cross--our nation's oldest, 
most experienced and most trusted humanitarian organization. A 
terrorist event is unlike any other disaster and requires the American 
Red Cross to be prepared to serve the American people in accordance 
with our Congressional Charter.
    The American Red Cross, along with each of us here today, could not 
possibly have anticipated the scope of such an event nor have been 
fully prepared for the impact this would have on the lives and families 
of those affected. As we always do, the Red Cross immediately began 
providing emergency relief and emotional support to a nation stunned by 
the brutality of an unprecedented attack on American soil. We, like all 
other first responders, were overwhelmed in those first chaotic and 
uncertain hours following the attack. By 10 a.m. there were hundreds 
and thousands missing at ground zero in New York, at the Pentagon and 
at the Pennsylvania crash site. All of American was on edge. Rumors 
flew. No one knew what would happen next. At the World Trade Center, 
there was Red Cross staff unaccounted for, we were without phones, and 
our emergency response vehicles couldn't get to the site.
    Chartered by Congress in 1905 to maintain a system of national and 
international relief, it is the mission of the American Red Cross to 
help people prevent, prepare for and respond to emergencies. The Red 
Cross is an essential partner with federal response agencies during 
disasters through its lead role for mass care under the Federal 
Response Plan. Our primary focus is on the human needs of those 
affected, and we respond to both the physical and emotional devastation 
experienced by people during and after a disaster. Our duty yesterday, 
today and tomorrow is to serve humanity with dignity, valor, and 
compassion.

        IMMEDIATE RESPONSE TO THE EVENTS OF SEPTEMBER 11TH, 2001

    The New York Times on October 21st described part of the scene 
immediately following the attack on the World Trade Center: ``. . . The 
survivors, blanketed in the gray mist of urban disaster, headed north 
and east. The attack's human spores bearing their stories, their fear, 
throughout the city.'' In the initial hours and days, we took the steps 
necessary to establish order out of chaos and support those whose world 
had just been torn apart--those in New York walking out of the gray 
dust to nowhere, those at the Pentagon fleeing from the intense heat 
and flames, and those families urgently wanting to hear about loved 
ones whose planes never arrrived. First at the scene in some 67,000 
disasters each year, the Red Cross goes to where the people are (be it 
at bus stops, subway stations, the East-West highway in New York City, 
the Pentagon parking lots or a pasture in Pennsylvania. Thousands of 
times over, in New York, Washington and Pennsylvania, we met the needs 
of those affected with a compassionate presence. This presence was 
possible because the Red Cross has build a nationwide network of 
chapters that we can draw from, we are staffed with dedicated 
employees, and rely on a vast ``Army of Mercy'' in the words of FDR--
our millions of volunteers.
    We do not wait for people to come to us, but reach out to find 
those in need. Our immediate disaster response efforts have served 
25,000 families by providing direct assistance for food, shelter, and 
clothing. For example, in apartment buildings surrounding the World 
Trade Center, we found elderly people afraid to venture beyond their 
rooms. Many were absent their health care assistants. Red Cross workers 
filled prescriptions and made sure that their daily needs were met. 
Since the attack, we have provided more than 9 million meals (100,000 
meals a day--to families and rescue workers. We found firemen, police, 
emergency medical crews and responders of all sorts who needed water, 
shelter, a change of clothes, a place to rest, or a place that could 
provide silence and solace.
    Our Air Incident Response Teams, always on immediate alert, were 
dispatched to each departure site and every scheduled arrival site for 
the four flights hijacked that day. We also provided teams to the 
United Airlines' Headquarters in San Francisco and American Airlines' 
Headquarters in Dallas. Mental health, grief counseling and spiritual 
support and other referrals were extended in each location. Dozens of 
Red Cross chapters nationwide mobilized to help travelers stranded at 
airports across the country. It truly has been a tragedy that has 
reached across America.
    In a time of tremendous uncertainty, we ensured that blood would be 
available wherever needed. We mobilized our national blood system to 
preposition stocks around the New York metropolitan area, to meet a 
need, which unfortunately never came. But we had to be ready. And we 
were.

              OUTPOURING OF SUPPORT BY THE AMERICAN PEOPLE

    As always in the face of tragedy, the American spirit is 
indestructible. Just as this heinous act was unprecedented in its 
destruction, the response from the people of America is inspiring--
people waiting hours in long lines to donate blood, flooding phone 
lines to volunteer their time in any way that was needed, and 
personally delivering financial contributions. There was a need for 
people to connect with other people and to do something, anything, to 
help. We have been deeply honored by the examples of selflessness: 
American Airlines flight crews giving blood in honor of their 
colleagues who perished, school children taking collections and 
organizing car washes, coins collected in bags, and volunteers coming 
to our door by the thousands. Even Congress set new records for blood 
donations two days after the attacks.
    The generous financial and in-kind assistance that the American Red 
Cross has received from individuals, companies, foundations is 
unprecedented. This is being handled with utmost openness, 
accountability and integrity. Therefore, we established the Liberty 
Disaster Relief Fund, a separate, segregated account that was created 
to hold and disburse funds related to the September 11th attacks, its 
aftermath, and other terrorist events. This fund is structured to 
ensure that every dollar raised will go to help people who are and will 
be affected by acts of terrorism as well as to ensure the Red Cross 
will help people whenever and wherever terrorism strikes. We believe 
the establishment of this account is the best way to assure absolute 
transparency, clear accountability and demonstrate our commitment to 
donor intent.
    The tremendous outpouring of support by the American people has 
enabled the Red Cross to fulfill its mission following these attacks. 
In just 7 short weeks, the Red Cross has received pledges and 
contributions totaling $564 million. To date $154 million has been 
spent or committed, $120 million for direct assistance to 25,000 
families in the form of cash and vouchered assistance to cover their 
emergency needs including food, clothing and temporary shelter. While 
we have a balance of funds uncommitted at this date, we will hold aside 
these contributions to be made available for emerging needs. We have 
adapted quickly to the level of support and generosity demonstrated by 
the American people. To have responsibly disbursed $120 million to 
25,000 families in less than 7 weeks is extraordinary and is 
unprecedented in the nonprofit world.
    Included in these figures is assistance provided under a new 
initiative for families who lost loved ones on September 11th. For 
families who lost breadwinners, a family gift program has been 
established to cover 3 months of financial needs--rent, mortgages, 
childcare, and food. To date, Red Cross has spent or committed $47.9 
million to more than 2,300 families who have been helped through the 
receipt of emergency gift checks. We will continue to work with these 
families beyond the initial period to evaluate how else we might 
support them in the months ahead.
    All of America is grieving. The wife of a Red Cross employee in 
Washington, D.C. is constantly haunted by visions of her husband being 
killed in an attack on the nation's capital. The father of a nine-year-
old in Memphis, Tennessee wonders how he can stop the nightmares of his 
child who dreams about planes crashing into buildings. For these people 
and others, we have had close to 135,000 mental health and grief 
counseling contacts.
    All of our financial assistance is being provided in the most 
expeditious way possible. A simple one-page gift form is the only 
paperwork required, which is processed promptly with checks issued 
overnight. The forms can be done by fax, phone or electronically, and 
are available through the Family Assistance Center and at other family 
assistance sites in New York City, or any one of our 1,000 chapters 
located in communities nationwide.
    We do not wait for families to contact us for this assistance. We 
have implemented an aggressive outreach program. Early in October, we 
placed advertisements in major newspapers appealing to families to come 
forward and receive assistance. We've also contacted employers of the 
World Trade Center, floor by floor, to reach out to their employees, 
searched hospital lists and the list of confirmed deceased. Forty Red 
Cross employees and volunteers are dedicating their days to calling and 
contacting families who might qualify for cash or other assistance. All 
told, we've contacted about 3,300 families, and the number grows daily.
    Because this tragic event also injured and killed foreign 
nationals, the Red Cross has extended its reach to families across the 
globe through our International Family Assistance program. To date, we 
have opened more than 169 cases involving the families of foreign 
nationals. The Red Cross international aid package includes: financial 
assistance for travel to and from the United States, lodging, meals, 
local transportation, crisis counseling, advocacy and referral with U. 
S. agencies, repatriation of remains, funeral expenses, tracing 
services, and information about embassies and consulates. We are being 
assisted by our partner Red Cross and Red Crescent societies the world 
over.

               FINANCIAL STEWARDSHIP AND CHARITABLE FRAUD

    The American people have rushed to support our efforts with an 
unprecedented surge of generosity. In response, the Red Cross has put 
in place stringent accounting measures at both the National 
Headquarters and throughout our chapters to ensure stewardship of these 
funds. Our internal audit staff and KPMG, our external auditors, began 
reviewing and testing control processes and procedures for donations 
and disbursements the week following the terrorist attack. That testing 
continues. National Headquarters has instructed the corporate external 
auditor, KPMG, to begin fiscal year 2002 audit testing of contributions 
immediately, and have directed chapters to require the same of their 
auditors and independent CPAs.
    Federal statutes prohibit the use of the American Red Cross name 
and emblem by commercial concerns and unauthorized solicitations (Title 
18 USC Sec. 706) and provide for fines and imprisonment (Title 18 USC 
Sec. 917). In order to ensure that all donations are collected on 
behalf of the Red Cross is received and properly acknowledged for tax 
purposes, we have established formal agreements with groups and 
businesses that have helped to raise funds. A third-party group can 
conduct a fundraiser provided their local Red Cross chapter approves it 
and a signed letter of agreement has been received.
    This committee has provided leadership in the area of protecting 
charitable organizations from fraudulent use of the Internet and other 
media in soliciting funds. We applaud your efforts to prevent such 
activity. As one of the country's largest non-profit organizations, we 
have effective firewalls and tight security protocols in place to 
detect and trace these activities. On September 14, the Red Cross sent 
an e-mail message to 30,000 previous online donors. This message 
included a URL link to an official, secure online donation site. The 
American Red Cross and its online partners (aol.com, yahoo.com, 
paypal.com, libertyunites.com, and wellsfargo.com) accept credit card 
information only through a secure portal on a Web site, not through an 
e-mail message. When Internet scams have been detected, we have worked 
closely with the Federal Trade Commission and the Department of 
Justice, and taken aggressive steps taken to shut them down.
    Symantec, an information technology security firm, retained by Red 
Cross notified us on October 17, 2001, about the Septer.Trojan computer 
virus for potential credit card donors. The virus came in the form of 
an executable file attached to an e-mail message that appears to come 
from the American Red Cross, United Way and the September 11th Fund. 
The American Red Cross Office of General Counsel contacted law 
enforcement authorities immediately about this fraudulent act.

                     COORDINATION OF RELIEF EFFORTS

    We typically lead and champion cooperation with other relief 
agencies to insure we don't duplicate efforts and to protect against 
any gaps in services. The Red Cross leadership and the Attorney General 
of New York, Eliot Spitzer, have been engaged in a constructive 
dialogue on a means of improving access to the vast disaster relief 
resources now marshaled to help the victims of the September 11th 
attacks. We are hopeful that a system will be established to enable 
disaster relief recipients to maximize the relief resources available 
to them.

                             THE ROAD AHEAD

    The American Red Cross will be with the survivors and families 
affected by this tragedy for as long as it takes. Our decades of 
experience with disaster victims tell us that assistance will be needed 
for years to come. We need to ensure that the resources entrusted to us 
by the American people will be available to meet these future needs.
    Family Assistance Centers were established for the loved ones of 
those lost in the World Trade Center and the Pentagon. The Center is 
still operating at full strength in New York City. A one-stop relief 
center, families can avail themselves of the full breadth of Red Cross 
services in an environment where confidentiality, dignity and 
compassion are the hallmark attributes. We are committed to this 
outreach, and will work with those affected for years after this event.
    In other ways, our work has just begun. The site of the World Trade 
Center, now called ``The Pile'', is emblematic of the work ahead and 
the human needs we will serve. There, work that is physically arduous, 
always dangerous and emotionally draining will continue for another 9 
to12 months. Construction workers, firemen, police, and emergency 
medical technicians are not forgotten. We are operating special respite 
centers on-site. It is a place away from the noise and the dirt, where 
workers can come to find food, shelter, a change of clothes, a place to 
sleep, or to read a card written with special care from a child. This 
is a place to refresh the body and the spirit in order to go back, once 
again, to their work. This is another example of a new service for us, 
a service we adapted to the needs of those involved in this disaster.
    We now find ourselves in the grip of a biological attack. We are 
assisting the families of those directly affected from anthrax 
exposure. We have offered immediate financial assistance through our 
Family Gift Program, and we are contacting 16 victims who are or have 
been hospitalized for anthrax. Further, because the current attack has 
understandably created public anxiety, we are reaching out to 
communities with public awareness and education materials. We will 
continue to develop these materials to address the community education 
requirements regarding biological and chemical agents.

                               CONCLUSION

    The American Red Cross today is helping tens of thousands of people 
affected by acts of terrorism in the United States. We were among the 
first on the scene and we will be helping people for as long as it 
takes. The clear focus of our Liberty Disaster Relief Fund is to ensure 
that every dollar raised will go to help people who are and will be 
affected by acts of terrorism as well as to ensure the Red Cross will 
help people whenever and wherever terrorism strikes. We thank you 
Chairman Greenwood and Representative Deutsch for holding this timely 
and important hearing.

    Mr. Greenwood. Thank you, Mr. Bender, for your testimony.
    Mr. Farley, you are recognized for 5 minutes for your 
testimony.

                   TESTIMONY OF MICHAEL FARLEY

    Mr. Farley. Thank you, Mr. Chairman. We have submitted a 
formal written statement, and hearing the questions of the 
committee, I have taken copious notes, and what I would like to 
do is perhaps paraphrase my formal statement, but just make a 
few comments and then address some questions that had been 
raised during the first panel.
    And I would like to start by saying first and foremost how 
overwhelming this entire experience has been for this country 
and the American Red Cross: 4 airline disasters; 5,000 people 
missing; mobilization of 44,000 disaster workers, 43,000 of 
them trained volunteers; raising of $564 million; an incredible 
outpouring of public support. This was an overwhelming 
experience for us. We had the discipline of years of disaster 
relief experience, but even with that, we were learning in the 
moment and on the fly, because every element of our system was 
tested and stretched to be responsive to the community.
    And I guess I would like to share with you four commitments 
that drive our staff and our board at the American Red Cross 
that are really the foundations of how we proceed in doing our 
work and showing the trust--executing the trust that you, the 
American public, has placed in us, which is an enormous 
responsibility.
    The first commitment is that we first and foremost are 
committed to meet the needs of the victims of this tragedy. 
That is why we are here. That is what we do. We are very proud 
of the fact that in 7 weeks' time, we have directed over $120 
million in direct cash assistance in a variety of forms to over 
25,000 families. That is an incredibly challenging task to do 
responsibly, to be flexible and yet to be consistent. But that 
is our first commitment, to be there for the victims of this 
tragedy.
    And in addition to that, because of the very nature of this 
tragedy, we know that the needs of these victims will emerge 
for years to come. In Oklahoma City we have the experience of 
seeing that today there are still 30 to 40 families that 
continue to need assistance. It's the very nature of being a 
victim of disaster, and all the more so with terrorism, the 
elements and psychology of post-traumatic stress play out for 
years to come.
    We were among the first agencies on the ground when the 
tragedy occurred. We will be among the very last until all the 
needs of those victims are met to the best that we understand 
them in the years ahead. And we have a responsibility to store 
the resources we've been given, to direct them to those needs 
of the victims as we understand them in the years ahead.
    The second commitment is one of full disclosure. We want to 
preserve the trust of the American public and the work of the 
Red Cross, because without that, we can't do our work in 
disaster response. And it was for that reason that the Liberty 
Fund was created through the direction of Dr. Healy and 
endorsed by the board of the American Red Cross. There was 
never a question as to whether or not these funds should be 
segregated and treated differently than other kinds of disaster 
relief funds. The issues that were debated internally were how 
exactly do we do that, what procedures do we undertake to make 
that work. And in order for us to make true to our commitment 
to full disclosure and to be good stewards of the outpouring of 
American support, we engaged an external third-party auditor, 
KPMG, to work with us to develop the guidelines not only for 
the fund, but also how the execution of the disaster response 
effort is being played out in the field among our 1,050 
chapters across the country to assist them, to make sure that 
their procedures are in place and consistent with what we need 
to do.
    There were questions about donor intent, and those are good 
questions and important ones because it's something that we 
value very highly. If a donor has come to the Red Cross and 
said, I want to restrict my gift to the New York City World 
Trade Center relief operation, that designation is honored. If 
a donor comes to us and says, I want my gift to be directed 
toward the development of a blood reserve because I understand 
how critically short the supply is of blood, and not knowing 
where this tragedy is going to lead us, I think that is an 
important part of what we do, and you, Red Cross, can direct 
our funds to toward that end. There are other designations in 
play. All of those designations are honored by the American Red 
Cross when we understand specifically what they are. And for 
those cases when the American public, in hearing our ads asking 
for support, gives us a contribution online or hands a check to 
a disaster response worker, and it's turned into a center, then 
we believe that there is a general understanding that is to 
support the overall work of the Red Cross, which is first and 
foremost directing support to victims, but also supporting 
those ancillary activities that make victim assistance possible 
in the first place.
    Like transporting our volunteers to Ground Zero and like 
preparing a communications system that allows the victims to 
call us and ask, ``Where do I go to get assistance?'' so we are 
committed to full disclosure for what we are doing.
    The third commitment is that we are totally committed to 
collaboration. Bob Bender and Attorney General Spitzer have 
been working together with our national leadership to look at 
ways in which we could collaborate with other responding 
agencies, and the reason for that is we need to make sure that 
there is a safety net of healing in place to catch all the 
needs of the victims, and one agency alone is not sufficient to 
meet those needs. But together we can do, I think, a terrific 
job in responding to the direct needs of those victims. So we 
have a commitment to collaborate with our responding agencies 
to ensure that the information is there about the services 
available, as well as how the funds are being used and where 
the clients are so that we can best connect services to 
clients.
    There are a lot of details that go with that, but I think 
one of the lessons of this tragedy is that we need to play 
together in a way like we have not done before, because the 
entire situation of terrorism has changed the way we live and 
the way we work together.
    And the fourth commitment is finally to evaluate the uses 
and purposes of the Liberty Fund so that we ensure that the 
donor intent is honored and that we are able to respond to the 
needs of the victims of this tragedy and to other situations 
which emerge from it so that we can make sure we are directing 
those funds in the best way possible.
    That commitment to evaluate what we do will be undertaken 
by our board. Those are policy issues. There are also activity 
that needs to be done in light of the donor intent, as we 
understand it, for the use of those funds. So those are some--
four ideas, commitments that we have, and I would like, I 
think, at this point to open--or pass on my time to the next 
presenter.
    Mr. Greenwood. Thank you, Mr. Farley. Mr. Amundsen, we 
thank you for your testimony. You are recognized for 5 minutes.

                   TESTIMONY OF CHRIS AMUNDSEN

    Mr. Amundsen. Thank you. Good afternoon. Thank you for this 
opportunity to discuss how United Ways across the country have 
responded to the September 11 tragedy. United Way of America is 
a national service and training center for the 1,400-member 
United Way system. Each United Way is independent, separately 
incorporated and governed by local volunteers. United Way of 
America's role is to equip United Ways as well as their 
corporate and philanthropic partners with the tools they need 
to make immeasurable impact in the communities that they serve.
    In 2000, United Ways collectively raised nearly $4 billion 
to address the local needs of communities. But United Way is 
much more than a fund-raiser. Listening to the diverse voices 
in their communities, local United Ways are identifying the 
most urgent needs and focusing their efforts on priority 
issues. These issues vary from community to community, but 
United Ways across the country are working to strengthen and 
support families, help children to succeed, build vital and 
safe neighborhoods and promote self-sufficiencies.
    This work is at the heart of the United Way mission. 
Communities across the country have instituted programs to 
address the immediate needs and to combat the ripple effect of 
the September 11 attacks. As you will hear, the September 11 
Fund, a crisis response effort established by the United Way of 
New York City and the New York Community Trust, is currently 
making allocations to agencies, providing direct financial 
assistance, emergency services, counseling and other critical 
community supports.
    On September 11, United Way of America received its first 
corporate gift to the response to this tragedy from the 
Williams Company of Tulsa, Oklahoma. Later that day this gift 
became the first corporate support of the September 11 Fund. We 
received many other generous gifts, as did local United Ways in 
support of the fund.
    Next, the United Way of America convened a group of crisis 
veterans from local United Ways that have dealt with terrorist 
situations such as Oklahoma City, natural disasters like 
Hurricane Andrew in Miami and other traumatic events, such as 
the Columbine shootings in Colorado. This group and their 
lessons learned were made available for Ground Zero, United 
Ways and others to advise them on how to deal with this crisis.
    Other vital programs have been launched in communities 
country-wide. Right here in Washington, the United Way of the 
National Capitol Area has brought together a volunteer 
governance committee to oversee the disbursement of funds that 
have been raised to benefit those affected by the attack on the 
Pentagon. In addition, our hometown United Way is helping to 
coordinate health and human service agencies responding to the 
crisis and linking victims to those agencies so their immediate 
and long-term recovery needs will be met.
    Included in my written testimony is the United Way in 
Service to the Nation report.
    In the wake of the September 11 tragedy, United Ways across 
the country have been doing what they do best, mobilizing their 
community to deal with their most urgent needs. Both United Way 
donors, contributors are being--donor contributions, excuse me, 
are being put to use, helping children cope with loss and 
fears, readying families facing military deployment, promoting 
tolerance and assisting families affected by the layoffs and 
the economic impact of the tragedy.
    Let me give you a few examples. Dealing with the stress and 
grief associated with the tragedy of unprecedented magnitude 
can be a tremendous burden. We all know that a crisis like this 
is especially hard on our children. Many United Ways have 
brought their efforts to bear on this area of concern by 
communicating with children through the support of counseling 
and other services directed at children.
    United Way in Detroit, Michigan, convened a meeting of more 
than a hundred children from United Way agencies, players from 
the Detroit Lions football team, and various social workers and 
counselors to discuss the events of September 11.
    Many employees, especially in the airline industry and 
tourism industry, were laid off as a result of this economic 
downturn. United Ways, especially those in high tourism areas, 
are acting quickly to deal with these particular needs. The 
United Way in Orlando, Florida is leading an effort with local 
foundations to provide immediate financial assistance to 
workers in the tourism and travel industries who have lost 
their jobs or are experiencing reduced incomes. They will also 
develop long-term plans for a community safety net for times of 
crisis.
    Looking ahead, United Way Board of Governors is in the 
process of developing a national response committee which will, 
among other things, develop a national crisis response plan for 
the United Way system that will ensure a swift, coordinated and 
effective response to any future major national crisis.
    The events of September 11 will have a lasting effect on 
people and communities across the country. Beyond the lives and 
the buildings shattered by the attack, the images of 
devastation that we have witnessed as a Nation will forever 
tarnish our sense of security.
    United Way is a living, breathing part of the communities 
directly impacted by the terrorist attacks. Long after the 
rescue teams have disbursed, the United Way will be there to 
heal lives, families and communities.
    Thank you.
    [The prepared statement of Chris Amundsen follows:]

Prepared Statement of Chris Amundsen, Interim President and CEO, United 
                             Way of America

    Good afternoon. Mr. Chairman, Mr. Ranking Member, members of the 
Subcommittee, thank you for this opportunity to discuss how United Ways 
across the country have responded to the September 11th tragedy.

                         UNITED WAY OF AMERICA

    I am the Interim President and CEO of United Way of America. United 
Way of America is the national service and training center for the 
1,400 member strong United Way system. Each United Way is independent, 
separately incorporated, and governed by local volunteers. United Way 
of America's role is to equip United Ways--as well as their corporate 
and philanthropic partners--with the tools that they need to make a 
measurable impact in the communities they serve.
    United Ways collectively raised nearly $4 billion in last year's 
campaign. But United Way is more than a fundraiser.
    Listening to diverse voices in their communities, local United Ways 
are identifying the most urgent of needs and focusing their efforts on 
priority issues. These issues vary from community to community, but 
United Ways across the country are working to strengthen and support 
families, help children and youth succeed, build vital and safe 
neighborhoods, and promote self-sufficiency. This work is at the heart 
of the United Way mission.

             UNITED WAY SYSTEM RESPONDS TO RECENT TRAGEDIES

    Communities across the country have instituted programs to combat 
the ``ripple effect'' of the September 11th attacks. As you have heard/
will hear the September 11th Fund, a crisis response effort established 
by the United Way of New York City and The New York Community Trust, is 
currently making allocations to agencies providing direct financial 
assistance, emergency services, counseling and other critical community 
supports. On September 11th United Way of America received its first 
corporate gift in response to this tragedy from Williams. Later that 
day, this gift became the first corporate support of the September 11th 
Fund. We received many other generous gifts, as did Local United Ways, 
in support of The Fund.
    Next, United Way of America convened a group of crisis veterans 
from local United Ways that have dealt with terrorist situations, such 
as Oklahoma City, natural disasters like Hurricane Andrew in Miami, and 
other traumatic events, such as the Columbine shootings. This group, 
and their lessons learned, were made available for the ground zero 
United Ways and others to advise them on how to deal with the crisis.
    Other vital programs have been launched in communities countrywide. 
Right here in Washington, the United Way of the National Capital Area 
has brought together a volunteer governance committee to oversee the 
disbursement of funds that have been raised to benefit those affected 
by the attack on the Pentagon. In addition, our hometown United Way is 
helping to coordinate health and human service agencies responding to 
the crisis, and linking victims to those agencies so their immediate 
and long-term recovery needs will be met.
    Included in my written testimony is the ``United Way in Service to 
the Nation'' report. In the wake of the September 11th tragedy, United 
Ways across the country have been doing what they do best--mobilizing 
their communities to deal with their most urgent needs. Local United 
Way donor contributions are being put to use helping children cope with 
loss and fears, readying families facing military deployment, promoting 
tolerance and assisting families affected by the layoffs and the 
economic impact.
    Let me give you a few examples. Dealing with the stress and grief 
associated with a tragedy of unprecedented magnitude can be a 
tremendous burden. We all know that a crisis like this can be 
especially hard on our children. Many United Ways have brought their 
efforts to bear on this area of concern by communicating with children 
through the support of counseling and other services directed at 
children.

 The United Way in Detroit, Michigan convened a meeting with 
        more than 100 children from United Way agencies, players from 
        the Detroit Lions football team and various social workers and 
        counselors to discuss September 11th.
    Many employees, especially in the airline and tourism industries, 
were laid off as a result of the current economic downturn. United 
Ways, especially those in high tourism areas, are acting quickly to 
deal with these particular needs.

 The United Way in Orlando, Florida is leading an effort with 
        local foundations to provide immediate financial assistance to 
        workers in the tourism and travel industries who have lost 
        their jobs or are experiencing reduced income. They will also 
        develop long-term plans for a community safety net for times of 
        crisis.
    Looking ahead, United Way of America's Board of Governors is in the 
process of developing a national response committee which will, among 
other things, develop a national crisis response plan for the United 
Way system that will ensure a swift, coordinated and effective response 
to any future major national crisis.
    The events of September 11th will have a lasting effect on people 
and communities across the country. Beyond the lives and buildings 
shattered by the attack, the images of devastation that we witnessed as 
a nation will forever tarnish our sense of security. United Way is a 
living, breathing part of the communities directly impacted by the 
terrorist attacks. Long after the rescue teams have dispersed, United 
Way will be there to heal lives, families and communities.
    Thank you for your time.

    Mr. Bass [presiding]. The Chair recognizes Joyce--is it 
Bove?
    Ms. Bove. Bove.
    Mr. Bass. You are recognized for 5 minutes.

                   TESTIMONY OF JOYCE M. BOVE

    Ms. Bove. Thank you. My name is Joyce Bove, and I am Vice 
President of the New York Community Trust, which together with 
the United Way of New York City, created the September 11 Fund 
to meet the immediate and longer term needs of victims, 
families and communities affected by the events of September 
11. I have submitted formal written testimony, and at this 
point I am just going to summarize three main points.
    First, the September 11 Fund began immediately. In its 
first 8 weeks, it reviewed and awarded 80 grants totaling $47 
million to meet a range of emergency needs through established 
relief and other nonprofit agencies. As a result, more than 
15,000 checks have been written, most on the spot, to 
individual victims and families for rent, mortgage payments, 
utilities, tuition and other cash needs. More than 4,600 people 
have received crisis counseling. More than 2,000 adults and 
children, including 700 rescue workers, have received disaster 
mental health services. More than 1,000 people who have lost 
their jobs have met with career advisers. More than 500 
children were counseled in bereavement groups. Replacement 
ambulances and training were provided. Funeral expenses, not 
covered elsewhere, have been met.
    In order to make sure people knew what is available to 
them, toll free hotlines were established, and a comprehensive 
resource referral guide was created for individuals, families, 
businesses and agencies seeking information and assistance on 
disaster relief. It is used at the Family Assistance Center and 
throughout the city and is available online as well.
    Second, to address longer term needs, the efforts of the 
September 11 Fund must be coordinated with other funders and 
service providers. Even though $300 million seems like a great 
deal of money and is a great deal of money, it is far from 
enough to meet all the needs of all of the various victims of 
September 11. In order to make sure that no one is left behind, 
we are working and will continue to work closely with the many 
government and nonprofit organizations to understand the needs 
of the many different kinds of victims, to understand which 
institutions will provide help and to see where we must move in 
to fill the gaps.
    Third, every single dollar raised by the September 11 Fund 
goes directly to grants to meet the needs of victims, their 
families and affected communities. We have raised all of the 
fund's administrative costs separately. In addition, the fund 
relies heavily on the knowledge and expertise of the United Way 
and the New York Community Trust, as well as other experts on 
loan to us from foundations and businesses.
    So much more needs to be done, but we are proud of the work 
that we have done today and are working energetically with 
others to develop a fair and effective response to the 
September 11 tragedies. We know it is important that our 
program be accountable, both to the public and the millions of 
donors who have put their trust in us. We invite the committee 
and the public to follow the decisions we make and the results 
that they generate through our Web site, 
www.September11fund.org, where we post information regularly.
    In summary, the September 11 Fund is focusing on the needs 
of victims, their families and the affected communities by 
providing funds to experienced, front-line agencies for 
emergency needs. We will continue to support coordination 
efforts and are working hard with others to develop programs 
for longer term needs that are effective, fair and leave no one 
behind.
    Thank you.
    [The prepared statement of Joyce M. Bove follows:]

 Prepared Statement of Joyce M. Bove, VP, Programs & Projects, The New 
                          York Community Trust

    Mr. Chairman and Members of the Subcommittee: Good Afternoon. I am 
Joyce Bove, Vice President of the New York Community Trust, which with 
the United Way of New York City created the September 11th Fund. Thank 
you for holding this hearing on an issue that concerns us all: ensuring 
that we provide aid and support to the victims of September 11th, their 
families and affected communities. I would like to report on The Fund's 
activities to date and plans for the future.
    I will start by providing you with some background on who we are. 
The September 11th Fund was established by The United Way of New York 
City and the New York Community Trust to provide a way for millions to 
help meet the immediate and longer-term needs of victims, their 
families, and the communities affected by the terrorist attacks of 
September 11.
    Both of these organizations have a long history of helping people 
help others. They do so by finding, choosing and funding nonprofit 
organizations and agencies with the expertise and ability to provide 
whatever help is needed. Using the expertise and experience of both 
organizations, the September 11th Fund was able to move quickly, making 
over 80 emergency grants to meet the broad array of needs that have 
arisen and will continue to arise as a result of the tragedies of 
September 11th.
    The Fund began immediately to make grants that meet emergency 
needs. Thus far, we have made a total of $47 million in grants--
supporting agencies that provide cash assistance, legal counseling, 
grief therapy, job training and placement and other services for 
victims. We believe that we've made it possible for over 16,000 people 
to find and get the emergency help they need. However, the Fund must 
also help meet the longer-term needs of victims, their families and 
affected communities, and we are working with others to do just that. 
At the core, what every one of us wants is to help people and 
communities rebuild their lives.
    To date, more than a million people and many corporations and 
foundations have pledged a total of $337 million to the September 11th 
Fund 1. More than $250 million has already been collected. 
Administrative costs of the Fund have been raised separately by The New 
York Community Trust and The United Way of NYC--therefore 100% of 
donations to the September 11th Fund will go directly to grants to help 
victims, their families and affected communities.
---------------------------------------------------------------------------
    \1\ The Fund is made up of two funds--a general fund formed by the 
United Way and the New York Community Trust, and a fund from the 
national telethon, ``Tribute to Heroes'', that was broadcast on the 
major television networks. Both funds are intended to aid victims and 
their families; the general fund also is intended to support the 
communities affected by the September 11th attacks.
---------------------------------------------------------------------------
    There are three points about the work that we are doing that I 
would like to make:
    First, immediate needs are being met in the fastest way possible, 
by experienced disaster relief agencies. Since the first tragic days of 
the attack, the September 11th Fund has been providing emergency grants 
to organizations directly serving immediate needs of victims and their 
families. We have made it possible for thousands of people to receive 
cash support, legal advice, grief counseling and other emergency needs.
    Second, to address longer-term needs, the efforts of the September 
11th Fund must be coordinated with other funders and service providers. 
Even though $300 million is a great deal of money, it is far from 
enough to meet all the needs of all of the victims of September 11th. 
In order to make sure that no one is left behind, we are working and 
will continue to work closely with the many government and private 
organizations: to understand the needs of the many different kinds of 
victims, to understand which institutions will provide help, and to see 
where we must move to ``fill in the gaps''.
    Third, every dollar raised by The September 11th Fund goes directly 
to grants to meet the needs of victims, their families and affected 
communities. We have raised all of the Fund's administrative costs 
separately. In addition, the Fund relies heavily on the knowledge and 
expertise of the United Way & The New York Community Trust, as well as 
other experts on loan from foundations and businesses.
    Now, please allow me to detail the relief efforts of the September 
11th Fund to date.

                        MEETING EMERGENCY NEEDS

    On September 11th, the United Way of New York City and the New York 
Community Trust created The September 11th Fund as a joint response to 
the terrorist attacks on America.
    That very day, a web site was created to accept online donations 
and describe the Fund's purpose and goals. Over the next three days, 
the Fund organizers hosted a series of meetings with disaster relief 
and other nonprofit agencies to anticipate emergency needs and 
coordinate efforts. We received our first grant proposal on September 
19th (even before we had published a formal ``Notice of Available 
Funds''). On September 22, eleven days after the tragedies occurred, 
Safe Horizon began distributing checks to victims using funding from 
The September 11th Fund.
    In its first eight weeks, The September 11th Fund has reviewed and 
awarded 80 grants totaling $47 million to meet a range of emergency 
needs through established relief agencies. As a result:

 more than 15,000 checks have been written--most on the spot--
        to individual victims and families for rent, mortgage payments, 
        utilities, tuition and other cash needs
 more than 4,600 people have received crisis counseling
 more than 2,000 adults and children, including 700 rescue 
        workers, have received disaster mental health services
 more than 1,000 people who have lost their jobs have met with 
        career advisors
 more than 500 children were counseled in bereavement groups
 replacement ambulances and training were provided
 funeral expenses that were not covered elsewhere have been met
    In order to make sure people know what is available to them:

 toll-free hotlines were established and
 a comprehensive resource referral guide was created for 
        individuals, families, businesses and agencies seeking 
        information and assistance on disaster relief. It is used at 
        the Family Assistance Center and throughout the city and is 
        available on line, as well.
    As with all established grant-making institutions, grant recipients 
must provide regular reports on the use of their funds, the results of 
their services, and financial accounting of their expenditures.
    And while our staff--composed of individuals from the United Way of 
New York City and the New York Community Trust, as well as the Ford 
Foundation and others--responds to hundreds of proposals and meets with 
countless service providers and government agencies, we are 
simultaneously assessing longer-term needs.

                       MEETING LONGER-TERM NEEDS

    Which brings me to my second point: longer-term assistance must be 
coordinated in order to determine fairly and accurately the needs of 
victims, their families and communities, and available sources of 
support.
    To coordinate assistance efforts, The September 11th Fund was among 
the first supporters of a central database that would both make it 
easier for those in need to apply for assistance, and for charitable 
organizations to assess those needs and limit the duplication of 
efforts. Because we are mindful of the privacy rights of individuals, 
we are working closely with New York State Attorney General Eliot 
Spitzer and the front line providers of support to victims, the Red 
Cross, Safe Horizon, the Salvation Army, and others.
    Even without a database, there is a remarkable amount of 
coordination taking place. Government agencies from the Federal, State 
and City work every day with the front line charities, such as the Red 
Cross, Safe Horizon and Salvation Army. They meet frequently to 
coordinate their programs and unplug bottlenecks. As an organization 
that helps fund these efforts, we are encouraging even greater 
coordination.
    One of our major tasks in developing a program is to understand the 
range of people and institutions affected by this tragedy and their 
needs. None would argue that the family of someone who died, or someone 
who was severely injured shouldn't receive aid, but many of our donors 
also recognize the needs of those who lost their jobs, who lost their 
homes, or who have been traumatized as a result of helping out at 
Ground Zero or the Pentagon. Others have pointed out that September 
11th also destroyed the homes of hundreds of nonprofits and small 
businesses.
    Many of the needs of these victims can and will be provided for by 
others--by government programs or special purpose charities. 
Nonetheless, a traditional role for philanthropy is to help those who 
``fall through the cracks''. For example, what about the second 
families of victims who are not eligible for government aid? And 
elderly parents who are not technically dependents, but who were 
receiving help with rent or mortgage payments? Should we not make sure 
that all victims receive help?
    Equally important, we must recognize that victims have a range of 
needs. Clearly financial security is important, but so, too, is 
counseling and grief therapy, legal and financial advice, and help with 
new jobs and restored homes.
    Some of these needs may not be apparent for quite some time. It may 
be months, sometimes even years, before a family realizes that they 
need counseling. We need to ensure that we provide adequate resources 
for these needs as they arise.
    We are already beginning the work necessary to develop this long-
term program. We have already established a Board of Directors, drawing 
from the United Way, the New York Community Trust, the entertainment 
industry and others from business and civic life. That Board is chaired 
by Franklin Thomas, former president of the Ford Foundation. We have 
hired a small staff, and will continue to rely on the expertise of some 
of the best grantmakers in the country from the New York Community 
Trust, United Way, the Ford Foundation and others.
    Over the next weeks and months we will make critical decisions 
about funding priorities, analyze the needs of those who are affected 
by the September 11th tragedy, and seek to meet those needs that are 
not being met by others. We will do so, as with the emergency grant 
program, by providing grants to organizations with the expertise and 
ability to do so, as quickly, efficiently, and fairly as possible.
    Since developing this program necessarily involves working with 
government agencies and other charities, and since some of these have 
not yet decided how they can and will help, the process will take some 
time. This is another reason we consider it so important to meet the 
emergency needs immediately. Our emergency grants are helping do so.
    Now, for my third and final point.
    The September 11th Fund is a lean organization that relies heavily 
on resources donated by The United Way of New York City, the New York 
Community Trust, and others. None of our administration costs come out 
of The Fund. Instead, several foundations contributed funds 
specifically for this purpose. The September 11th Fund currently 
operates with a (tireless) staff of four. Thanks to the experts at the 
NY Community Trust, the United Way of New York City and others who are 
donating their time and expertise, grants that normally would take 4-6 
months for approvals are being researched and awarded much more 
quickly, sometimes within one week. This is only possible because these 
staff members have years of experience in the nonprofit community, 
specifically funding emergency assistance and community needs.
    Our distinguished board chairman, Franklin Thomas, and our board of 
directors, made up of leaders from the philanthropic, business and 
social service communities, are also contributing their time, as well 
as resources from their institutions.
    We are proud of the work that we have done to date, and are working 
energetically with others to develop a fair and effective response to 
the September 11th tragedies. We know that it is important that our 
program be accountable, both to the public and the millions of donors 
who have put their trust in us. We invite the committee and the public 
to follow the decisions we make and the results that they generate 
through our web site, www.september11fund.org, where we post 
information regularly.
    In summary, the September 11th Fund is focusing on the needs of the 
victims, their families and the affected communities by providing funds 
to experienced front-line agencies for emergency needs. We will 
continue to support coordination efforts, and are working hard with 
others to develop programs for long-term needs that are effective, fair 
and leave no one behind.

    Mr. Greenwood. Thank you, Ms. Bove. Mr. Bollon, you are 
recognized for 5 minutes for your testimony. Thank you for 
being with us.

                 TESTIMONY OF VINCENT J. BOLLON

    Mr. Bollon. Mr. Chairman, thank you for the opportunity to 
appear before you--this subcommittee today. My name is Vincent 
Bollon, and I am General Secretary Treasury of the 
International Association of Fire Fighters, which represents 
more than 245,000 professional firefighters and paramedics who 
protect 80 percent of the Nation's population. I am also 
Secretary Treasurer and a director of the New York Firefighters 
9-11 Disaster Relief Fund.
    I have a deep personal interest in the subject of today's 
hearings, because I am and always will be a New York City 
firefighter. I have served as President of the Uniformed Fire 
Officers Association of New York City and the Secretary 
Treasurer of the Uniformed Fire Fighters Association of New 
York City. I was a member of the Fire Department Board of New 
York for 33 years.
    The second I saw the Twin Towers collapse, I knew I had a 
lot of personal friends lost. We know now that 344 firefighters 
and emergency medical service personnel died in the line of 
duty on September 11. To put things in perspective, the most 
firefighters ever lost due to one incident prior to September 
11 was 24.
    We lost so many members on September 11 because they 
continued to climb up the stairs to evacuate the World Trade 
Center, even after the second airplane struck. Their rescue 
efforts saved thousands of civilian lives. The tragedy will 
have an enormous financial impact on the fallen firefighters' 
families. Years after the memorial services are held, hundreds 
of mortgages will still have to be paid, hundreds of dependents 
will still need to be fed and clothed, and hundreds of children 
will still need to be educated.
    The IFF acted quickly to respond to these needs. Working 
with the executive board of our two New York affiliates, we 
immediately established the New York Firefighters 9-11 Disaster 
Relief Fund as a nonprofit charitable corporation. The purpose 
of this fund is to provide humanitarian aid to the families of 
firefighters and emergency medical service personnel who died 
in connection with the destruction of the World Trade Center. 
It is authorized to receive and distribute funds to provide 
financial aid to the families in meeting their living expenses. 
These funds will go directly to the families.
    The fund has abided by the highest ethical and legal 
standards governing charitable fund administration. The fund's 
board of directors decided that the fund would not lend its 
name to any solicitation activity that even hinted at 
commercial exploitation of the fund's name, and we have 
employed no professional fund-raisers. When we learned that the 
fund was included on several prominent Internet Web sites, we 
carefully reviewed the laws of all 50 States to determine our 
obligation under each State's charitable solicitation laws, and 
we have applied to register the fund in each of the States that 
required a charitable solicitation registration.
    We also established contact with the New York Attorney 
General's office regarding its efforts to both track down 
fraudulent fund-raising efforts and to coordinate charitable 
assistance relief for the September 11 victims.
    As of this morning, the New York Firefighter 9-11 Disaster 
Relief Fund has raised approximately $63 million. We have made 
two distributions of $10,000 a piece to each of the 344 
families, amounting to nearly $7 million, to help meet the 
immediate financial needs. We made the first of these two 
distributions more than a month ago. The fund's board of 
directors is now developing the criteria to ensure that the 
families' humanitarian needs will be met in a manner consistent 
with our fiduciary duties and applicable law, including the 
Internal Revenue Code.
    We also have been extremely careful to ensure that the 
money donated to the firefighters' families was not wasted on 
unreasonable administrative expenses. I am proud to report to 
this subcommittee that to date less than two-thirds of 1 
percent of the money donated to this fund has been committed to 
administrative costs, and as a 501(c)(3) organization and a 
registered charity, we will submit publicly available reports 
to the Internal Revenue Service and the States detailing the 
amounts we have raised and paid out.
    We also continue to work on a daily basis to ensure that no 
one is using our good name of our fund or logo of the IFF to 
defraud the public. For instance, we recently shut down one 
fund-raiser who was soliciting funds over the Internet in the 
name of our fund into an account that had no connection with 
our fund. As the fund, we strive to meet the humanitarian needs 
of the families of our fallen firefighters with minimal 
administration cost and in a straightforward and honest manner. 
No firefighter should have to think about who will take care of 
his family when he is entering a burning building to save your 
life.
    I would be happy to entertain any questions from the 
members of the subcommittee. Thank you.
    [The prepared statement of Vincent J. Bollon follows:]

Prepared Statement of Vincent J. Bollon, General Secretary-Treasurer of 
the International Association of Fire Fighters and Secretary-Treasurer 
         of the New York Firefighters 9-11 Disaster Relief Fund

    Mr. Chairman, I thank you for the opportunity to appear before this 
subcommittee today.
    My name is Vincent J. Bollon. I am the General Secretary-Treasurer 
for the International Association of Fire Fighters (the ``IAFF''), 
which represents more than 245,000 professional fire fighters and 
paramedics who protect 80 percent of our nation's population. I am also 
Secretary-Treasurer and a director for the New York Firefighters 9-11 
Disaster Relief Fund, which was established by the IAFF to provide 
humanitarian assistance to the families of fire fighters and emergency 
medical services personnel who died in connection with the destruction 
of the World Trade Center on September 11, 2001.
    I have a deep personal interest in the subject of today's hearings, 
because I am, and always will be, a New York City fire fighter. Prior 
to serving as General Secretary-Treasurer for the IAFF, I was President 
of the Uniformed Fire Officers Association of New York City. I have 
also served as an officer for the New York City Uniformed Fire Fighters 
Association, and I was a member of the Fire Department of New York for 
33 years.
    The second I saw the Twin Towers collapse, I knew I had lost 
personal friends. We know now that 344 fire fighters and emergency 
medical service personnel died in the line of duty on September 11. To 
put things in perspective, the most fire fighters ever lost due to one 
incident prior to September 11 was twenty-four, during an incident that 
occurred more than 100 years ago. We lost so many of our members on 
September 11 because they continued to enter the World Trade Center and 
climb the stairs as they were trained to do even after the second 
airplane struck. The number of fire fighter casualties was made even 
worse because fire fighters both coming off their shifts and coming on 
their shifts responded to the alarms. I am both proud and humbled to 
tell you that their rescue efforts saved thousands of civilian lives.
    For our New York fire fighters, it is still September 11. I cannot 
find the words to describe the impact that this event has had on the 
surviving members of our two New York locals and the hundreds of widows 
and fatherless children that our fallen heroes have left behind.
    But I can describe the enormous financial impact that this horrible 
tragedy will have on the fallen fire fighters' families. Years after 
the memorial services are held, hundreds of mortgages will still have 
to be paid, hundreds of dependents will still need to be fed and 
clothed, and hundreds of children will still need to be educated. And 
this only begins to describe part of the financial needs that will 
arise in the future for the families of the fallen fire fighters.
    The IAFF has always played a role in assisting the families of fire 
fighters who are lost in the line of duty. The sheer enormity of the 
events of September 11, however, called for something more than our 
traditional response. As early as the afternoon of September 11, when 
we began to receive inquiries from around the world about how to assist 
the fire fighter victims of this tragedy, it became apparent that we 
would play a major role in managing this assistance. We decided that, 
above all, we owed it to the memory of our fallen fire fighters to do 
it right.
    In conjunction with the Executive Boards of our two New York 
affiliates, we immediately established the New York Firefighters 9-11 
Disaster Relief Fund. The purpose of this Fund is to provide 
humanitarian aid to the families of fire fighters and emergency medical 
services personnel who died in connection with the destruction of the 
World Trade Center. It is authorized to receive and distribute funds to 
provide financial aid to the families of the fallen fire fighters in 
meeting their living expenses, including food, housing, clothing, 
medical care, education of children, transportation and other similar 
expenses. These funds will go directly to the families of the fallen 
fire fighters.
    Working with the assistance of top-notch legal counsel from a 
prominent Washington DC law firm, who donated their services on a pro-
bono basis to establish the Fund, we organized the Fund as a non-profit 
charitable corporation to be governed by a six-person Board of 
Directors. We were granted tax-exempt status under section 501(c)(3) of 
the Internal Revenue Code on September 26, 2001, a remarkably short 
period of time.
    From the beginning, the Fund has abided by the highest ethical and 
legal standards governing charitable fund administration. I will give 
you a few examples. Out of respect for the New York fire fighters, the 
Fund's Board of Directors immediately decided that the Fund would not 
lend its name to any solicitation activity that even hinted at 
commercial exploitation of the Fund's name, and we have decided to 
employ no professional fund-raisers. As a testament to the care with 
which we set up the Fund, we were pleased to learn that it was included 
on several prominent internet web-sites devoted to channeling financial 
assistance for September 11 victims to credible charity funds. As soon 
we learned of our Fund's inclusion on these sites, we carefully 
reviewed the laws of all fifty states to determine our obligations 
under each state's charitable solicitation laws,and we have applied to 
register the Fund in each of the states that requires charitable 
solicitation registration. We also established contact with the New 
York Attorney General's Office regarding its efforts to both track down 
fraudulent fund raising efforts and to coordinate charitable assistance 
relief for the September 11 victims.
    All of our hard work has paid off. As of this morning, the New York 
Firefighters 9-11 Disaster Relief Fund has raised $63 million. We have 
been extremely sensitive to the need to distribute this money as soon 
as possible to the families on whose behalf these funds were donated. 
In fact, we have already made two distributions of $10,000 apiece to 
each of the 344 families (amounting to nearly $7 million) to help meet 
their immediate financial needs. We made the first of these two 
distributions more than a month ago. While the Fund continues to 
receive money, the Fund's Board of Directors is now developing criteria 
to govern how the balance of this money will be disbursed to ensure 
that the families' humanitarian needs will be met in a manner 
consistent with our fiduciary duty and applicable law, including the 
Internal Revenue Code.
    We have also been extremely careful to ensure that the money 
donated to the fire fighters' families is not wasted on unreasonable 
administrative expenses. I am proud to report to this subcommittee 
that, to date, less than two-thirds of one-percent of the money donated 
to this Fund has been committed to administrative costs. We have been 
able to keep this percentage low because so many people--both within 
and outside of the IAFF--have donated so much of their time and hard 
work to ensuring the integrity of this Fund. And as a 501(c)(3) 
organization and a registered charity, we will submit publicly 
available reports to the Internal Revenue Service and the states 
detailing the amounts we have raised and paid out.
    We also continue to work on a daily basis to ensure that no person 
or party is using the good name of our Fund, or the logo of the IAFF, 
to defraud the public in the name of our fallen New York fire fighters. 
For instance, we recently shut down one fund-raiser who was soliciting 
funds over the Internet in the name of our Fund into an account that 
had no connection with our Fund. Relying upon the constant vigilance of 
our Board of Directors, our 245,000 IAFF members, and the state 
attorneys general offices, we will continue to make every effort to 
ensure that no money is fraudulently raised in the name of our Fund.
    My testimony here today provides only a glimpse into the efforts 
that have been taken by the International Association of Fire Fighters 
to address the events of September 11. Like so many other 
organizations, the IAFF has worked tirelessly to respond to this 
horrible tragedy. As a result of the careful and meticulous efforts of 
everyone involved, the New York Firefighters 9-11 Disaster Relief Fund 
will strive to meet the humanitarian needs of the families of our 
fallen fire fighters with minimal administrative costs and in a 
straightforward and honest manner. No fire fighter should have to think 
about who will take care of his family when he is entering a burning 
building to save your life. I will be happy to entertain any questions 
from members of the subcommittee.

    Mr. Greenwood. Thank you, Mr. Bollon. Thank you very much 
for being with us and for your testimony.
    Let me address a question to Mr. Amundsen and Ms. Bove--and 
it is the same kind of question that I addressed to Dr. Healy 
of the Red Cross. That is this: Can you assure us and the 
American people that every penny of the $337 million raised so 
far for the United Way September 11 Fund is in fact going to go 
to the purposes for which they assumed when they wrote those 
checks and put those dollars into pails, and that is to help 
heal the wounds of the families who were devastated on 
September 11?
    Ms. Bove. First of all----
    Mr. Greenwood. If you would pull that silver microphone, 
particularly, is the one that is amplifying your voice.
    Ms. Bove. $337 million has been pledged. Only $250 million 
has been collected so far. But the September 11 Fund is 
committed that every single dollar, every single penny is going 
to go to the needs that were described, which is meeting the 
needs of victims, families and communities affected by 
September 11.
    Mr. Greenwood. Now, how will you coordinate that? You were 
here when we had the two other witnesses here. They received 
some funds. Tell us how you are going to coordinate the $250 
million or $337 million if you meet--if all of your pledges 
come in. How will you--in distributing those funds to families, 
what will you take into consideration? Will you take into 
consideration what they have received from the Red Cross? Will 
you take into consideration what they may have received from 
the Firefighters Fund, from the dozens of other organizations 
that are out there, from insurance, from their Federal program? 
How will you coordinate what you are doing, if you would intend 
to, and determine on a family by-family basis how many of these 
dollars will go to specific families?
    Ms. Bove. That is something that the board that was just 
formed is considering how we are going to be doing that. From 
the first day, we have been meeting, though, on a very regular 
basis with representatives from the Red Cross, from Safe 
Horizon, from Salvation Army, from the various government 
agencies. From day one we have supported Eliot Spitzer's 
efforts to figure out a way to coordinate it. We actually 
helped find the volunteers who were putting together the 
computer program to come up with the consolidated data base. So 
we very much are supporting it.
    I can't tell you exactly now how we are going to do it, 
because there are some shifting sands. We are still finding 
out, first of all, not only what all the funds out there are, 
but we are also beginning to find out what all the needs are. 
One of the----
    Mr. Greenwood. Do you have the personnel, sufficient 
personnel to review all of these claims?
    Ms. Bove. We are not reviewing claims of individual 
families. We are a foundation. The United Way makes grants also 
to nonprofit entities. So we work through established nonprofit 
entities that have both the personnel and the expertise to do 
this kind of review. I am not going to become----
    Mr. Greenwood. What I understand in some instances 
individual families, at least my constituent Russa Steiner, 
received an actual check from the United Way, and the testimony 
from her attorney was that the way they understood this was 
unusual. The United Way serves United Way organizations that 
provides services. The United Way has not historically provided 
cash payments to individuals. Is it--do you expect that this 
$250 million, $337 million, that some of that money will go to 
families in the direct--in the form of cash payments, or will 
it only go to agencies who provide services to those families?
    Ms. Bove. Well, it will go to agencies that provide cash 
payments, as well as services to families. We have worked 
primarily through an organization called Safe Horizon, which 
was formerly Victim Services, which administers funds for crime 
victims, and they have cut 15,000 checks to family, families of 
victims, and they are families who are defined much in the way 
that my colleague defined them, people who have lost--family 
members who have lost lives of a breadwinner, people who have 
lost jobs, people who have been displaced from----
    Mr. Greenwood. Do you know what the range in those checks 
is?
    Ms. Bove. The average has been about $900 to $1,000, and 
they can come back every 2 weeks up to $10,000. This was 
considered a very short-term step, and we are now figuring out 
what the longer term steps need to be, factoring in what are 
the various other funds going to be providing and also 
factoring in when regulations come out for the settlement that 
we talked about earlier, the million dollars. We also want to 
make sure--one possible program which isn't cash assistance 
that might be very helpful that we are thinking about is some 
form of case management program so that every family may have 
an advocate to help them, not just today and this week but over 
time, negotiate some of the various assistance.
    Mental health needs, we have established--we are funding a 
program that is going to help children who have lost their 
primary caretaker, who lost their primary parent in the 
disaster. So there are a whole range of needs that we are going 
to be trying to figure out, in addition to cash to families.
    Mr. Greenwood. Okay. My time has expired. The Chair 
recognizes the gentleman from Michigan, Mr. Stupak, for 5 
minutes to inquire.
    Mr. Stupak. Thank you, Mr. Chairman. Mr. Farley, you had 
indicated that you had those four commitments there that the 
American Red Cross follows. One of them you said that the 
donor, when they send money, they have to restrict it. Right?
    Mr. Farley. I am sorry?
    Mr. Stupak. That a donor when they send money through Red 
Cross, they have to restrict it; otherwise, it goes in the 
general----
    Mr. Farley. If the donor restricts their contribution for 
particular purpose, then we honor that designation, but when we 
initiate a fund-raising initiative and make a case as to what 
the funds are being used--what the need is, the funds that we 
received, we presume that because the donor has responded to 
that without condition, it would be used for that purpose.
    Mr. Stupak. Did you in any of your advertising on the heels 
of September 11 tell donors that they should restrict their 
funds if they did not want--if they want it to go just to 
victims or if you want it to go to the anthrax scare or nuclear 
scare or telephones, whatever it might be?
    Mr. Farley. No, we did not.
    Mr. Stupak. So how would a donor know that?
    Mr. Farley. The donor would only know what we have stated 
publicly about what the uses of--or contributions would be 
extended to, and we--of course at that point, you know, we 
didn't really know where this was going. We wanted to obviously 
respond to the victims, but we wanted to do whatever we needed 
to do to be there in the event that, you know, more incidents 
ensued. So I think the presumption was in receipt of a gift 
from a donor based on an appeal, be it through a PSA or 
whatever, when we said to support the victims of this terrorist 
attack and other emerging needs, or however that was framed, 
that when we received a gift, that we presume that that was the 
purpose for which it was given, and it was a signal to us that 
it should be expended in that manner. At the same----
    Mr. Stupak. I think in your testimony you said $120 million 
has gone out. So there is probably about $400 million still 
sitting there?
    Mr. Farley. There is about--we have expended about $155 
million. Of that, $120 million of it has gone to direct victim 
assistance of one kind or another. We have identified a total 
of about $300 million in needs that we anticipate to come into 
play in response to this disaster. So that leaves a balance of, 
say, $264 million.
    Mr. Stupak. What is the $300 million anticipated?
    Mr. Farley. That is for increased disbursements of funds to 
victims. It is for the cost----
    Mr. Stupak. How much of that 300 is for increase for 
victims?
    Mr. Farley. How much of that is for----
    Mr. Stupak. Victims, yeah. Is it in your testimony? I 
didn't see it there.
    Mr. Farley. The anticipated amount for the immediate relief 
we think would be about $209, $210 million for direct victim 
assistance.
    Mr. Stupak. Of that $300, two-thirds will go----
    Mr. Farley. Correct.
    Mr. Stupak. And what about the roughly $110 something 
million left? What would the other go for?
    Mr. Farley. The other would be used for developing the 
support for the military personnel. We have a Congressional 
obligation to provide emergency service communications to our 
military families. Now, with mobilization into a war, we have 
an increased responsibility with that, with the mobilization of 
our service personnel. We have anticipated services from our 
chapters to provide mental health counseling and information on 
issues such as anthrax, and we also have direct costs 
associated with the provision of those services that provide 
the 1-800 numbers for victims to call in to find out what 
agencies they could connect to, and if there is any relocation 
or reunification of families of victims, those are included in 
that.
    Mr. Stupak. A suggestion, if your fourth commitment is to 
make sure that you honor the intent of the donor, I suggest you 
make it very clear in your advertisement what you are going to 
use the money for. If people after they are watching this 
hearing, if they realize that there is about $540 million that 
was sent in and only $120 million has been put out in direct 
aid, people will be shaking their heads saying, boy, how do we 
get a refund. That is why--anyways.
    Mr. Farley. I think if--Congressman Stupak, if we were to 
ask a donor, is it appropriate for us when we have learned that 
there has been an anthrax attack to provide information to 
communities about that, or if we are asked should we provide 
particular kinds of support for response personnel, first 
responders, which all leads toward support of victim recovery, 
I think the logic of that would be, yes, that would be an 
appropriate use.
    Mr. Stupak. Well, I am not too sure of that.
    Mr. Farley. Okay.
    Mr. Stupak. I am sure they probably asked for some time 
lines. This is a war? You know, Congress made it very clear 
this was not a war. This was an authorization of a use of 
force, because if we use the term ``war,'' and one reason why 
we did not want to do a declaration of war, then all the life 
insurance policies would not have to be paid if that is a 
declaration of war. So to help protect those victims, we did 
not want to do that. So it brings me a little concern when you 
keep saying war.
    Mr. Farley. Congressman, one point, if I might----
    Mr. Stupak. I will let you go as long as you want, as long 
as the chairman----
    Mr. Farley. Let me make two points. First of all, I was the 
individual greeted by your constituents.
    Mr. Stupak. I have a glossy of you.
    Mr. Farley. And you can see I have changed greatly since 
that moment of several weeks ago. I would like to say, though, 
that of the balance of those funds, the $264 million that we 
have not accounted for in terms of expending where that would 
be expended, I want to point out that that is--those are 
resources that we anticipate a portion of which will be needed 
for direct victim support in the weeks and years ahead because 
of our experience with other tragedies, and we think it 
incumbent on the Red Cross to ensure that we have the capacity 
to respond to those needs years later as a result of this 
tragedy. So in part, those funds will be used for that purpose.
    Mr. Stupak. Well, you saw the reaction, they didn't see it 
that way.
    Mr. Greenwood. The Chair recognizes the chairman of the 
full committee, Mr. Tauzin, for 5 minutes.
    Chairman Tauzin. Thank you, Mr. Chairman. Let me follow up 
on Mr. Stupak's line of questioning, gentlemen, and I want to 
read you two statements you made about Liberty Fund and ask you 
if you don't think they send a very different message. The 
statement in your testimony today is that ``Therefore, we 
established the Liberty Disaster Relief Fund, a separate and 
segregated account. It was created to hold and disburse funds 
related to the September 11 attacks, its aftermath and other 
terrorist events.'' That is your statement today.
    Now, I want to read you the definition of the Liberty Fund 
found on the Internet when it was announced, and here is the 
paragraph. ``For this reason, we have created a special fund, 
the Liberty Disaster Fund. This is a designated disaster relief 
fund separate and distinct from the Domestic Disaster Relief 
Fund and the International Relief Fund. The Liberty Disaster 
Fund will support the immediate and emerging efforts of the 
American Red Cross to alleviate the human suffering brought on 
by the attacks of the September 11.''
    Is there a difference in those two statements?
    Mr. Farley. They would suggest that there is a need for 
further clarity, but I would say that if we were to ask that if 
the Liberty Fund were to be used to provide support for an 
integrated response to these kinds of activities, would it not 
meet the tests of common sense that 6 weeks, 6 months hence 
from now if we have another kind of an incident resulting from 
a terrorist act----
    Chairman Tauzin. Well----
    Mr. Farley. It would be prudent for us to use the funds in 
that manner.
    Chairman Tauzin. Then why didn't you announce on October 31 
that the American Red Cross had raised enough money to help the 
victims of the terrorist attacks and will stop asking for 
donations? Do you have some prior knowledge as to how many new 
terrorist attacks that there are going to be that you can 
announce this in advance?
    Mr. Farley. Obviously not.
    Chairman Tauzin. No, you don't. You see, here is the 
problem in communication. The problem in communication that Mr. 
Stupak pointed out is that when you created the fund, you very 
clearly talked about an event, the September 11 event is the 
genesis for this fund and the need for Americans to respond as 
generously as it had to the victims of this disaster of 
September 11 in these three cities. The fact that you say you 
have enough money in the fund now to take care of these 
victims, that you no longer collect money into this fund seems 
to bolster that position that it was strictly for these victims 
and, therefore, the fund is adequate now and you can move on to 
some other important Red Cross initiatives. But then we learn 
that you really are putting some of this money into other Red 
Cross initiatives, telecommunications upgrades, blood bank, 
anthrax, mental health response. I mean, no one is going to 
quarrel with you that these are important human needs that the 
Red Cross traditionally responds to. The concern is for the 
families who are obviously victimized on September 11, that 
America responded generously to the tune of $540 million for 
them, and now it is going for other important Red Cross needs 
for, perhaps, other people, other victims or other important 
strategic or logistical needs of the Red Cross.
    When the Better Business Bureau did a survey to see what 
people's intent were when they gave, the surveys came back that 
the vast majority of people donating expect the money to be 
used for the current tragedy, the current problem, not to be 
put in reserve accounts for future problems, and that unless 
you very clearly specify that you are going to put some of the 
donations into reserve accounts, that Americans expect you to 
use it for those victims, the present victims, the ones we know 
about, the ones we saw and see every day as we look at this 
tragedy of September 11 and its aftermath, the victims we saw 
here today at this table.
    There is a disconnect here, and I know I sounded hard a 
while ago, but I think the representatives of the New York 
Attorney General's office sounded equally hard about this. If 
there is an expectation that you created by not being too 
specific, by saying this was a September 11 event fund, that 
this money should go to these victims, and you now say that you 
want to use it for other purposes, you have created a 
disconnect. And I think that is damaging to the good faith that 
exists between the incredible giving heart of America and 
agencies such as yours that do so much good in using that money 
to help victims. And I think there is some damage done here, 
and I hope you would help repair it in some way.
    Mr. Farley. Congressman, we will pay close attention to our 
messaging on this, and I think you raised a good point. 
Obviously if we solicit funds with the public understanding one 
thing and then in fact we do something else, it is against the 
public trust for what we have initiated. But I would like to 
clarify a couple items about timing and messaging, if you will.
    The original announcement of the American Red Cross about 
how the funds would be used was developed in a September 20 
communication that was sent out to all of Red Cross units and 
put on our Web site, and in that document it talks about the 
uses and intents for the Liberty Fund. And while the media had 
reported on October 29 that only a portion of the funds would 
be designated this some way or another, in fact, on October 12 
we communicated again what the intent would be for the Liberty 
Fund. And I think it is important to think about the snapshot 
in time when that October 12 communication was sent. At that 
time we said--and you rightly pointed out, Congressman Tauzin, 
with the previous panel that we said we would need about $300 
million to meet--to respond to the needs that we see then. At 
that moment, we had raised about $375 million. So we thought at 
that point, not knowing where we were going with the nature of 
the event and how the public would respond to that in the weeks 
ahead, that that would be a prudent allocation to support the 
needs of the victims, with anticipating that events beyond, 
that there are going to be some needs for the future. So 
unfortunately the understanding apparently about what we were 
doing and what we intended to do with that fund may not have 
been as clear as it could have been. But the intent at the Red 
Cross and its messaging as early as September 20 clearly stated 
that the fund--the Liberty Fund, which was designated in a 
restricted account, would be used for those many purposes that 
you have cited.
    Chairman Tauzin. I just want to point out to you, you have 
two groups of people that I think ended up confused. The first 
was the donors who thought from your early message that all 
this money was going to go to the victims we saw on September 
11, and, second, the victims and their families. It was assumed 
that all this money was going to be raised to help them out, 
and now we learn that there are limits on the help that is 
coming, because the money may go to other purposes.
    Neither one of those results is very good. And despite all 
the great work you do and all the good you do, again, I would 
urge you to rethink, perhaps, how you handle this.
    Mr. Chairman, I know my time is up, but I think we ought to 
see the chart for what it is worth. It is a chart we have that 
indicates the organization, the amount raised and the amount 
disbursed to date, and it gives a quick snapshot of all the 
monies that are being raised by the major organizations, and 
the disbursements as of this date as we have them. I think it 
is fairly accurate. The staff has tried to be as up to date as 
they could with it, and it indicates obviously that all the 
organizations that are raising money for the victims of the 
September 11 event have some way to go before all those monies 
are properly disbursed.
    Recognizing all the logistical problems and all the 
difficulties in doing it, obviously, again, the enormous 
generous heart that America has shared with all of you who 
serve as intermediaries for the gifts, is anxious to see that 
the true beneficiaries of those gifts receive them at some 
point in the not too distant future.
    Thank you very much, Mr. Chairman.
    Mr. Greenwood. The Chair recognizes the gentleman from 
Florida, Mr. Deutsch, the ranking member, for 5 minutes.
    Mr. Deutsch. Thank you, Mr. Chairman. I would like to 
submit, of all things, a Sunday story from the New York Post, 
and the headline is Families Struggle to Get Funds. I mean, so 
very time appropriate. And I will read one short comment from 
Janet Collado: ``It's depressing. You start feeling that it's 
more of a handout,'' who's been trying to help her Spanish-
speaking sister-in-law.
    And so, Mr. Chairman, if we can just include that.
    Mr. Greenwood. Without objection, the New York Post article 
will be included in the record.
    [The article follows:]

                 [Sunday, November 4, 2001--Daily News]

                     Families Struggle to Get Funds

                          CHARITIES FACE WOES

                By Heidi Evans, Daily News Staff Writer

    Hubert Hinds has never asked for anything in his life.
    But now that his wife, Clara, a beloved seamstress at Windows on 
the World, has been buried, and with his savings virtually gone, the 
57-year-old Far Rockaway man is about to enter the black hole of 
philanthropy.
    When he steps into the white tent of the Family Assistance Center 
on the Hudson River and 55th St. tomorrow, Hinds will encounter a 
bewildering network with links to almost 200 charities and more than $1 
billion donated to help families hurt by the Sept. 11 attack.
    Hubert Hinds holds a picture of his wife, Clara, who was killed 
while working at Windows on the World. ``I was told there are lawyers 
down there to advise me on what can be done. I really don't know,'' 
said Hines. ``You hear all the stories.''
    Nearly two months after the attack, with money still pouring in to 
charities large and small, there is no simple way for victims' families 
to apply for the full range of benefits and services available to them.
    Relatives and friends of the grief-stricken go from one agency to 
another, sometimes spending morning and night at the pier or on the 
phone in an effort to get help. It is a bureaucratic nightmare for both 
the families and groups trying to do the right thing.
    ``It's a runaround. It's depressing. You start feeling that it's 
more of a handout,'' said Janet Collado, who has been trying to help 
her Spanish-speaking sister-in-law, Sandra Petrocino, get psychological 
and financial help as well as visas to allow her parents to come from 
the Dominican Republic to help take care of her and her two kids, 
Keyla, 10, and Alex, 5.
Central Register Eyed
    Petrocino's husband, Manuel, a kitchen worker at Windows on the 
World, died in the Sept. 11 attack.
    ``The one question I hear from a lot of families is: ``Where do I 
start? They always had that one person to lean on,'' said Collado.
    Sandra Petrocino, with children Alex and Kayla, mourn Manuel, also 
a Windows on the World employee.While steps are being taken to organize 
this unprecedented charitable effort, the undertaking is immense. On 
Friday, Attorney General Eliot Spitzer announced that a group of major 
technology and consulting firms agreed to set up a centralized registry 
to keep track of giving and reduce duplication of services and fraud. 
The agencies, including the Red Cross and The Twin Towers Fund, will 
share access to a single database.
    The idea is modeled on the one used in the aftermath of the 
Oklahoma City bombing in 1995, which kept tabs on each of the 168 
families, what they needed and what they had been given. Each family 
also was assigned a caseworker to check on them several times a year 
and be their advocate.
    But it will be at least another month before the database is up and 
working in New York, Spitzer said, leaving people to continue to go 
from place to place on their own.
    In the meantime, there is growing pressure from donors to make sure 
the extraordinary amount of money collected is going to the families of 
an estimated 5,000 victims.
`Huge Dilemma'
    ``The public needs to understand that we are creating something out 
of nothing,'' said David Campbell, a vice president at the Community 
Service Society of New York, which is counseling the families of 
restaurant workers killed in the attack.
    The 150-year-old society also is advising the trustees of the 
Windows of Hope Family Relief Fund, which already has collected more 
than $2.1 million to benefit the 250 food service workers killed in the 
attack, including those who worked at Windows on the World.
    ``You can't create an accountable system overnight. It's a huge 
dilemma,'' Campbell said. ``If you give it away too fast, you could 
give it to the wrong people. And if you delay, you run the risk of 
being seen as unresponsive. It's sort of a `lose-lose' situation.''
    For the families of the 73 people who worked at the Windows on the 
World restaurant on the 107th floor, where dishwashers made as little 
as $8 an hour, there are particular hardships, as well as for the 
groups that want to help them.
    Several of the kitchen workers were the sole source of support for 
their spouses, many of whom are undocumented. Many workers also left 
behind--and supported--children who live in other countries. These 
families are afraid to come forward, worried they will be hounded by 
immigration officials.
    ``It's a mess,'' said one charity official who asked not to be 
named.
More Than Just Money
    Helping victims of the World Trade Center attack is not just about 
handing out money, some disaster experts say. And big relief 
organizations such as the Red Cross--which has collected an astounding 
$547 million for the World Trade Center families--will need to adapt to 
the unique set of circumstances.
    Nancy Anthony, a key player in organizing the relief effort for 
Oklahoma City, said charitable groups will perform a greater service if 
they help people here plan for the next five years of their life, 
rather than getting them through just the next six months of paying 
bills.
    ``This is not like a flood or hurricane, where people need pots and 
pans and towels,'' said Anthony, referring to the typical Red Cross 
disaster. ``In New York, like we had in Oklahoma City, you have 
incredible emotional devastation. People are going to have long-term 
mental health issues.
    ``When you look back, you don't want to say you did a good job 
because you handed out the money; a bank could have done that. It's 
because you helped people restore their lives, helped them to be 
independent, to be survivors and to go forward with their lives.''

    Mr. Deutsch. You know, I just want to mention just a--in 
the previous panel, I talked about, you know, my experience in 
south Florida with Hurricane Andrew, and I want to speak 
specifically about the Red Cross, I mean American. Literally, 
it is one of these incidences that I will remember the rest of 
my life, that I went down to basically what was Ground Zero, a 
different Ground Zero at that time, the day after Hurricane 
Andrew. And if people remember that incident, President Bush 
came down, but he didn't go far enough, and the reality is that 
the Red Cross was there literally before the National Guard, I 
mean the day after Hurricane Andrew, and they were feeding 
people who didn't have food and didn't have water before there 
were any governmental entities there. I mean, I will remember 
it like it is today, and they had the trailer out, providing a 
service literally before the National Guard, and eventually, if 
we recall Hurricane Andrew, the Army ended up having to come 
down. The National Guard was not significant enough, and they 
actually called out the Army to provide housing and food and 
kitchen service during Hurricane Andrew.
    So I think that--you know, as one community who has 
benefited directly from the good works of the Red Cross, I 
think it is significant just to understand in a broad scale day 
in and day out, year in and year out the good works that the 
Red Cross has done.
    I want to ask, I guess, two really general questions and 
give everyone on the panel an opportunity to respond to this. 
One of the things I am concerned about is that the public may 
take away a wrong message from these hearings. Clearly, we 
don't want the public to think that most of these charities are 
operating inefficiently or are even engaging in wasteful 
activities. In fact, they are not. Therefore, I would like to 
ask you to tell me what you think the main message to the 
public should be regarding these charities. What is the message 
that should be coming from this hearing, in other words? I 
mean, for each of you if you want to respond to that, what 
would you hope that--I assume we are on C-SPAN, people are 
watching this, reporters who covered this hearing. What do you 
think the message should be of this hearing?
    Mr. Bender, if you want to take a shot.
    Mr. Bender. Sure. I think the message is that--two things. 
One is that the charities, the Red Cross and the other 
charities mentioned here and some that aren't mentioned here, 
are really on the ground doing a job, and it is an important 
job, and you just mentioned that, and I think that is an 
important message that the public understand and, second, that 
I think this whole issue of trust and restoring--having trust--
the public having trust in the institutions that in fact are 
trying to provide the relief is very, very important. And if we 
can build, and rebuild if we need to, that trust, I think that 
is absolutely essential for the success of our organization and 
the others that are really trying to perform the service.
    Mr. Amundsen. I think as we look at this tragedy, as far as 
from the United Way of America standpoint, this is representing 
all United Ways across the country. United Way and United Way 
organizations are on the ground in every community 
understanding the impact of this tragedy in all communities. We 
are working with the agencies to provide the services necessary 
to help people cope with the changing nature of the world, to 
address the needs of victims and families, some of that through 
the September 11 Fund, but even in their own local community 
with the ripple effect of the devastation that has happened in 
the tourism and the airline industries. We are there. We will 
be there 365 days a year to help address that issue in those 
local communities, and we do so in an effective way. And it is 
clearly determined by the needs of the community and the 
volunteers in the community to truly understand the needs so 
that the money goes directly to those needs and that the 
appropriate people are served.
    Mr. Deutsch. Thank you.
    Ms. Bove. I guess a message that I think is important to 
get out is that victims and families' emergency needs are being 
met and have been from the first weeks, that nonprofits have 
done quite a remarkable job of mobilizing quickly, and the 
point that some of you made earlier, with very, very little 
fraud and abuse. And I think that is an important message to 
get out. More than a million people donated to the September 11 
Fund, because the New York Community Trust and the United Way 
have decades of experience sorting out how do you identify 
unmet needs and apply the money effectively, and the message 
that needs to get out is that we will continue to use that 
expertise in a way to make sure that the funds entrusted to us 
are spent to meet not only the immediate emergency needs but 
the longer term needs that are left in our community.
    Mr. Bollon. Part of the discussion today of the percentage 
of money that has been raised, it is the greatest amount that 
was ever raised by this country, but we are not looking at also 
the percentage of people we lost. We lost more people here than 
we lost at Pearl Harbor. I lost 340 firefighters, 15 percent 
more than I ever lost before. The same way with the civilians 
and the police department and everybody else. We should have 
raised that much money, because of the incident.
    And I am a little confused. The chairman when he was asking 
his questions on the 5 minutes asked of Ms. Bove, was she going 
to take into consideration what was given to the firefighters 
when she is considering how much--how to disburse her money. 
What does that mean, that I am going to be penalized now 
because I did everything that this committee is looking for? We 
started the fund right away as a charitable fund, as a 
501(c)(3). We have filed for all the State associations. We got 
the first distribution right out there. And because we are 
doing everything right and held costs down to three-eights of 1 
percent, we may now be penalized and get less because we have 
given that money out to our people, if we have done that, and 
that is a little confusing. That sends the wrong message to me, 
I think, and maybe I misunderstood.
    Mr. Greenwood. The time of the gentleman has expired. If I 
can clarify, it was not--that was not an advocacy question on 
my part. I was not advocating that. I was just trying to 
determine the methodology of the various charitable 
organizations.
    Mr. Bass, do you wish to inquire?
    Mr. Bass. No, I don't, Mr. Chairman. I just wish to 
associate myself with the concerns of the distinguished 
chairman of the committee who asked questions a few minutes 
ago, and I will yield back.
    Mr. Greenwood. Mr. Whitfield, do you care to inquire? I 
think in the interest of time, we are trying to wind down, and 
we thank you for your patience. You have been here for 4 hours. 
We thank you for that. Thank you for your testimony, and we 
thank you for the extraordinary good work that you are doing on 
behalf of the American people, and we hope you will keep it up. 
Thank you again.
    We now call the third panel, consisting of Mr. J. Howard 
Beales, III. He is the Director of the Bureau of Consumer 
Protection for the Federal Trade Commission. And Mr. H. Art 
Taylor, President and CEO of the Better Business Bureau Wise 
Giving Alliance.
    Mr. Beales and Mr. Taylor, gentlemen, welcome, and let me 
thank you for your forbearance and apologize for the lateness 
of the hour and express the appreciation of the committee for 
your appearance before us.
    And Mr. Beales, if you will begin. You are recognized for 5 
minutes to provide your testimony.

    TESTIMONY OF J. HOWARD BEALES, III, DIRECTOR, BUREAU OF 
 CONSUMER PROTECTION, FEDERAL TRADE COMMISSION; AND HERMAN ART 
 TAYLOR, PRESIDENT AND CEO, BETTER BUSINESS BUREAU WISE GIVING 
                            ALLIANCE

    Mr. Beales. Thank you, Mr. Chairman.
    Mr. Greenwood. And if I may ask you to point that silver 
microphone right to you and have it as close to your mouth as 
you can get it, that is great.
    Mr. Beales. Thank you, Mr. Chairman, and members of the 
committee. I am Howard Beales, the Director of the Bureau of 
Consumer Protection of the Federal Trade Commission. I 
appreciate the opportunity to appear before you to testify on 
behalf of the Federal Trade Commission regarding fraudulent 
solicitations of charitable contributions. I would request that 
the Commission's entire written statement be included in the 
record of this hearing.
    Charitable organizations play an invaluable role in our 
society, providing help and assistance to millions of Americans 
in times of need, tragedy and disaster. In the wake of the 
September 11 terrorist attacks on the United States, charitable 
giving has provided the citizens of this country, both young 
and old, a unique, tangible opportunity to demonstrate both 
support for the victims of the attacks and the unity of the 
American people. Millions of Americans have responded with an 
outpouring of generosity. Unfortunately, consumer protection 
agencies are only too familiar with the risk of fraudulent 
fund-raising in the aftermath of such tragedies. This type of 
fraud is especially pernicious. It not only preys upon the 
donor, but ultimately injures many others by undermining the 
public's confidence in legitimate charitable fund-raising.
    The Federal Trade Commission, in cooperation with numerous 
other Federal, State and local consumer protection agencies, 
has pursued a three-part strategy to protect American consumers 
against fraud. First, we are monitoring developments closely 
and systematically to identify possible law violators and 
sharing intelligence with other law enforcers. Second, we are 
prepared to act quickly and effectively if violations are 
found. And third, we are educating consumers and businesses 
about how to spot potentially fraudulent solicitations.
    Immediately after September 11, the Commission began to 
monitor on a systematic basis consumer complaints, tips from 
other law enforcers and watchdog groups and media reports about 
possible charity fraud and related scams. A central part of the 
Commission's monitoring effort is Consumer Sentinel, a Web-
based consumer complaint data base and law enforcement 
investigative tool. To facilitate the complaints, the 
Commission maintains both a toll-free number, 1-877-FTC-HELP, 
and an electronic complaint form at www.ftc.gov. Consumer 
Sentinel also receives complaints from many public and private 
partners, including the 64 local offices of the Better Business 
Bureaus across the Nation, offices of numerous States Attorneys 
General, the National Consumers League and Project PhoneBusters 
in Canada. Between September 12, 2001 and October 25, Consumer 
Sentinel received 193 disaster-related complaints, only 24 
percent, or 46, of which related to charitable solicitations. 
We have followed up on every complaint, searching for likely 
scams and have worked with agents and investigators from a 
number of other agencies and organizations, including the 
Secret Service, FEMA, and the Red Cross in investigating those 
cases that looked genuinely problematic. We have found that to 
date the instances of fraud are few and far between, and we 
continue to monitor this situation as aggressively as any we 
have ever pursued.
    In addition to monitoring potential frauds, we have worked 
hard to educate consumers.
    On September 20, our Northeast regional office, which is 
located only six blocks from the World Trade Center, held a 
press conference in New York City, with city, State and Federal 
agencies and nonprofit organizations, to announce a coalition 
to protect New York consumers and provide essential information 
during this time of crisis. The Northeast region staff 
distributed a new consumer alert, ``Helping Victims of the 
Terrorist Attacks: Your Guide to Giving Wisely,'' which was 
also posted on the FTC Web site. In a little over a month, this 
publication has been accessed almost 10,000 times.
    The Commission has also developed a dedicated Web page 
where consumers and businesses can get more information about 
donating wisely and filing a complaint and a banner ad that 
promotes the site. In addition to our work on potential 
charitable giving frauds, we are also actively monitoring the 
Internet to detect a host of other potential September 11th-
related frauds, including items like home testing kits for 
anthrax, gas masks and antibiotics. As is the case with 
charitable fraud, deception in these areas poses substantial 
risk to consumers and will be a top priority for the Commission 
and other consumer protection agencies.
    In conclusion, I would say that so far, it appears that 
consumers have generally shown themselves to be both generous 
to real charities and aware of the potential for con artists 
posing as fund-raisers. To consumers I would say, continue to 
give wisely. If you see or suspect fraud or deception in this 
or any other area, please contact us at 1-877-FTC-HELP.
    In contrast, to con men or scam artists I would simply say 
don't go there. You will be detected, and there are an array of 
Federal, State and local law enforcement agencies anxious to 
take aggressive action against you.
    I would be pleased to answer your questions.
    [The prepared statement of J. Howard Beales III follows:]

    Prepared Statement of J. Howard Beales III, Director, Bureau of 
             Consumer Protection, Federal Trade Commission

    Mr. Chairman and members of the Committee, I am J. Howard Beales, 
III, the Director of the Bureau of Consumer Protection of the Federal 
Trade Commission. I appreciate this opportunity to appear before you 
today to testify on behalf of the Federal Trade Commission regarding 
fraudulent solicitations of charitable contributions, especially 
solicitations relating to the recent September 11th 
tragedies.1
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    \1\ The views expressed in the prepared statement represent the 
views of the Commission. My oral statement and responses to any 
questions you may have, however, are my own and do not necessarily 
reflect the views of the Commission or any individual Commissioner.
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                     I. INTRODUCTION AND BACKGROUND

    The Commission recognizes the important role that charitable 
organizations play in providing valuable services, a role that has 
become even more critical in the wake of the September 11th attacks. 
Solicitations for charitable organizations, and corresponding 
donations, have increased noticeably in recent weeks. So, too, have 
concerns about possibly fraudulent solicitation schemes seeking to 
exploit the overwhelming urge of the American public to aid victims of 
September's tragedies. The Commission has examined every complaint, 
inquiry, and press report raising any suggestion of such fraud. In 
addition, the Commission has surfed the Internet, reached out to other 
law enforcement agencies and watch-dog groups, and actively sought out 
potential fraudulent solicitors. To date, the findings of fraud are few 
and far between, and the Commission continues to monitor this situation 
as aggressively as any the Commission has ever pursued. Furthermore, 
the Commission has stepped-up efforts to educate consumers and 
businesses about how to spot potentially fraudulent solicitations.
    Unfortunately, but not surprisingly, the potential for fraudulent 
fundraising may escalate in the aftermath of national tragedies, 
natural disasters, local calamities, and the like. Fraudulent 
solicitors, who prey upon a donor's charitable instinct, may deceive a 
donor about who they are and what they do with the funds they raise. 
The scam artists ultimately derail donors' charitable intentions, 
undermine the public's confidence in legitimate charitable fundraising, 
and, in turn, injure those legitimate nonprofit organizations that 
compete for a depleted pool of charity dollars. The Commission, which 
is the federal government's principal consumer protection agency, 
shares the Committee's deep concern over possible deceptive or 
fraudulent charitable solicitations.
    Charitable organizations are closely regulated by the states. Most 
state governments implement detailed registration and reporting 
requirements that are crucial to the effective oversight of charities.
    Under the Federal Trade Commission Act (``FTC Act''), the agency's 
mandate is to take action against ``unfair or deceptive acts or 
practices'' that are ``in or affecting commerce.'' 2 The FTC 
Act also equips the FTC with a wide array of tools to enforce this 
mandate.3 But Sections 4 and 5 of the FTC Act provide the 
Commission with jurisdiction over corporations only if organized to 
carry on business for their own profit or that of their 
members.4 Over the years, federal courts have construed 
Section 4 to bar the Commission from suing any truly nonprofit 
organization under the FTC Act, thereby removing many charitable 
organizations from the FTC's scope of authority.5
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    \2\ 15 U.S.C. Sec. 45(a). The Commission also has responsibilities 
under more than 45 additional statutes, e.g., the Fair Credit Reporting 
Act, 15 U.S.C. Sec. Sec. 1681 et seq., which governs the privacy, 
fairness, and accuracy of certain sensitive consumer information; the 
Truth in Lending Act, 15 U.S.C. Sec. Sec. 1601 et seq., which mandates 
disclosures of credit terms; and the Fair Credit Billing Act, 15 U.S.C. 
Sec. Sec. 1666 et seq., which provides for the correction of billing 
errors on credit accounts. The Commission also enforces over 35 rules 
governing specific industries and practices, e.g., the Used Car Rule, 
16 C.F.R. Part 455, which requires used car dealers to disclose 
warranty terms via a window sticker; the Franchise Rule, 16 C.F.R. Part 
436, which requires the provision of information to prospective 
franchisees; and the Telemarketing Sales Rule, 16 C.F.R. Part 310, 
which defines and prohibits deceptive telemarketing practices and other 
abusive telemarketing practices.
    \3\ These include the authority to file civil actions in federal 
district court, as well as to bring administrative cease and desist 
actions, against those who engage in deceptive practices. The FTC Act 
also enables the Commission to obtain a full range of relief for 
injured consumers. Typically these civil actions seek preliminary and 
permanent injunctions to halt the targeted illegal activity, as well as 
redress for injured consumers.
    \4\ Section 5(a)(2) of the FTC Act states:
    The commission is hereby empowered and directed to prevent persons, 
partnerships, or corporations . . . from using unfair or deceptive acts 
or practices in or affecting commerce. 15 U.S.C. Sec. 45 (a) (2).
    Section 4 defines ``Corporation'' to include: any company, trust, 
so-called Massachusetts trust, or association, incorporated or 
unincorporated, which is organized to carry on business for its own 
profit or that of its members . . . 15 U.S.C. Sec. 44.
    \5\ See Community Blood Bank of Kansas City, Inc. v. FTC, 405 F.2d 
1011 (8th Cir. 1969).
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    However, the Commission does have jurisdiction over a nonprofit 
organization that is merely an instrumentality or a shell used to seek 
direct monetary gain, either for itself or for its members.6 
The Commission also has jurisdiction under the FTC Act over entities 
that are organized to carry on business for the profit of their 
members. These entities include for-profit telemarketers, sometimes 
referred to as ``telefunders,'' that contract with nonprofit 
organizations to perform the nonprofits' fundraising 
activities.7 The Commission has used this jurisdiction 
aggressively to attack instances of fraud.
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    \6\ Community Blood Bank, 405 F.2d at 1019; Ohio Christian College, 
80 F.T.C. 815 (1972).
    \7\ See FTC v. Saja, 1997-2 Trade Cas. (CCH) para. 71,952 (D. Ariz. 
1997). Cf. California Dental Ass'n v. FTC, 526 U.S. 756 (1999).
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    The recently-enacted USA PATRIOT ACT of 2001 provides the FTC with 
an additional tool to address charitable fraud.8 The USA 
PATRIOT law amends the statute authorizing the FTC's Telemarketing 
Sales Rule (``TSR'') to apply to certain telemarketing activities, 
including the solicitation of charitable contributions. The Commission 
is currently considering proposed amendments to the TSR that will 
implement this new authority.
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    \8\ USA PATRIOT Act, Pub. Law No. 107-56, Sec. Sec. 6102(a)(2), 
(3)(D), 6106(4), ____ Stat. ____ (2001).
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    In addition to the statutory limitations on Commission jurisdiction 
over some charities, there are also constitutional limitations. The 
Supreme Court has held that fundraising for charities is fully 
protected speech under the First Amendment and that state statutes may 
not require a charity to prove the reasonableness of using more than 35 
percent of its collected donations for fundraising 
expenses.9 Nor can state statutes require fundraisers to 
disclose the percentage of donations the fundraisers keep.10
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    \9\ Riley v. National Fed'n of the Blind of N. Carolina, 487 U.S. 
781 (1988).
    \10\ Riley, 487 U.S. at 800.
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    Against this background to the regulation of charities, the 
Commission now addresses your particular concern about fraudulent 
charitable solicitations, especially those relating to the tragedies of 
September 11th. The need--and challenge--for law enforcement here is 
three-fold: (1) to monitor developments closely and systematically so 
as to swiftly identify possible law violators, sharing that 
intelligence with other law enforcers; (2) to act quickly and 
effectively if someone violates the law; and (3) to educate consumers 
and businesses about how to spot potentially fraudulent solicitations, 
hopefully minimizing the extent to which deception of contributors will 
occur. As set forth below, on the heels of September 11th, the 
Commission set up a disaster scam project to accomplish these important 
tasks.

    II. THE COMMISSION'S EFFORTS TO IDENTIFY FRAUDULENT CHARITABLE 
             SOLICITATIONS AND OTHER DISASTER-RELATED SCAMS

    Immediately after September 11th, the Commission stepped-up its 
monitoring, on a systematic basis, of consumer complaints, tips from 
other law enforcers and watch-dog groups, and media reports about 
possible charity fraud and related scams. The Commission reviewed each 
one and continues to do so today. In addition, the Commission has 
surfed the Internet, reached out to other law enforcement agencies and 
watch-dog groups, and actively sought out potential fraudulent 
solicitors. There has been some media coverage warning that scam 
artists may try to take advantage of consumers' desire to help victims 
of the attacks. The Commission has not discovered any widespread 
problem but continues actively to monitor this area.

A. Consumer Sentinel
    A central part of the Commission's monitoring effort is Consumer 
Sentinel, a web-based consumer complaint database and law enforcement 
investigative tool that the Commission uses to identify targets for 
investigation.11 Consumer Sentinel receives complaints and 
inquiries about all sorts of transactions, including charitable 
solicitations. The complaints come into Consumer Sentinel from a 
variety of sources, including from the FTC's Consumer Response Center 
(``CRC''), which processes both telephone and mail inquiries and 
complaints.12 For those consumers who prefer the online 
environment, an electronic complaint form at www.ftc.gov, available 
since May 1998, permits consumers to channel information about 
potential scams directly to the CRC and the fraud database.
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    \11\ See www.consumer.gov/sentinel.
    \12\ The CRC now receives over 12,000 inquiries and complaints per 
week. They cover a broad spectrum--everything from complaints about 
get-rich-quick telemarketing scams and online auction fraud, to 
questions about consumer rights under various credit statutes and 
requests for educational materials. Counselors record complaint data, 
provide information to assist consumers in resolving their complaints, 
and answer their inquiries.
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    Consumer Sentinel also benefits from the contributions of many 
public and private partners. It receives data from other public and 
private consumer organizations, including 64 local offices of the 
Better Business Bureaus across the nation, offices of numerous state 
Attorney's General, the National Consumers League's National Fraud 
Information Center, and Project Phonebusters in Canada.
    The Commission provides secure access to this data over the 
Internet, free of charge, to over 300 U.S., Canadian, and Australian 
law enforcement organizations--including the Department of Justice, 
U.S. Attorneys' offices, the Federal Bureau of Investigation, the 
Securities and Exchange Commission, the Secret Service, the U.S. Postal 
Inspection Service, the Internal Revenue Service, the offices of all 50 
state Attorneys General, local sheriffs and prosecutors, the Royal 
Canadian Mounted Police, and the Australian Competition and Consumer 
Commission.
    Consumer Sentinel first went online in late 1997. Since then, the 
Commission has upgraded the capacity of the Consumer Sentinel database 
and enhanced the agency's complaint-handling systems by creating and 
staffing a new toll-free consumer helpline at 1-877-FTC-HELP, and 
adding several new functions to Consumer Sentinel. In 2000, Consumer 
Sentinel received over 100,000 consumer complaints. Currently the 
database holds over 300,000 consumer complaints.
    Significantly, the Consumer Sentinel database is fully searchable. 
This search feature enables users to search the entire database, using 
certain key words, to identify specific types of complaints or 
complaints against specific entities. For example, an investigator can 
search for the term ``disaster'' or ``September 11th'' and cull 
specific disaster-related complaints. The database also features a 
specific identification code that enables users to sort complaints 
specifically involving charitable solicitations.
    Since the September 11th events, the Commission has closely and 
systematically monitored disaster-related and charitable solicitation 
complaints in the Consumer Sentinel database and followed up on any 
potential leads. Between September 12, 2001, and October 25, 2001, 
Consumer Sentinel received 193 disaster-related complaints, 24 percent 
of which related to charitable solicitations. The vast majority of 
complaints has been from consumers alerting the Commission to potential 
scams, not complaining about being defrauded. The Commission has 
followed up on likely scams and has worked with agents and 
investigators from a number of other agencies and organizations, 
including the Secret Service, FEMA, and the Red Cross, in investigating 
those cases that look genuinely problematic.13
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    \13\ The number of complaints the Commission has received is lower 
than might be expected. This might be in part due to the fact that 
victims of fraudulent solicitations often do not know that they have 
been scammed and therefore do not file complaints. It might also be in 
part due to the Direct Marketing Association's request that its members 
that engage in charitable fundraising, and that solicit people and 
businesses with whom they do not have a previously existing customer 
relationship, cease outbound telemarketing fundraising through the end 
of September. The announcement about this directive can be found at: 
http://www.the-dma.org/cgi/dispannouncements?article=115.
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    In addition to monitoring Consumer Sentinel for complaints about 
fraudulent fundraising, the Commission has also monitored the database 
and actively surfed the Internet for other related consumer frauds. For 
example, the FTC has seen an increase in the number of entities 
marketing bioterrorism-related products. These include everything from 
dietary supplements sold as effective treatments against anthrax or 
small pox, and home testing kits for anthrax, to gas masks and water 
filters. The FTC, along with the FDA, EPA, and over thirty states, is 
making a concerted effort to search the Internet for deceptive claims 
about these products. Based on the results of this effort, the FTC will 
take follow-up law enforcement action as appropriate.

B. Information Exchanges with Watch-Dog Groups and Other Law Enforcers
    The Commission's efforts to track and analyze consumer complaints 
through Consumer Sentinel are complemented by a proactive program to 
uncover fraud and deception by partnering with other law enforcers as 
well as public- and private-sector charity watch-dog groups. For 
example, the Commission regularly participates in an e-mail discussion 
list that has over 100 subscribers from 40 states, consisting of 
government regulators and law enforcement officials involved in 
regulating charities and charitable fundraisers. Subscribers exchange 
daily messages about a variety of topics, including possible scams, 
registration requirements, and recent legal actions. The Commission 
also monitors other public Internet sources, including on-line 
discussions of charity issues.
    In addition, since September 11th, the Commission, spearheaded by 
its Northeast Regional Office, has reached out aggressively to others 
in the New York-area law enforcement community. Further, as discussed 
below, the Commission's Northeast Regional Office has launched a full-
scale consumer education campaign. Staff in the Northeast Regional 
Office has communicated regularly with a New York based consumer 
protection group that provides a venue for exchanging information about 
possible charity or other disaster-related scams. The ad hoc group also 
includes the New York City Department of Consumer Affairs, the Attorney 
General's Office in New York, and the New York State Consumer 
Protection Board. The Commission has also partnered with the Secret 
Service, FEMA, and the Red Cross to pursue possible fraudulent 
fundraisers.
    State charity officers are another invaluable source of 
information. After the September 11th attacks, Commission staff 
attended the annual Charitable Trusts Solicitations Seminar, sponsored 
by the National Association of Attorneys General and the National 
Association of State Charity Officials. The staff met with state 
officials, representatives of the Internal Revenue Service, charity and 
foundation officers, fundraising counsel, professional solicitors and 
private attorneys. Both in closed-door sessions with other law 
enforcement officers and in open sessions with representatives from the 
private nonprofit sector, Commission staff participated in informative 
discussions about possible fraudulent charitable fundraising, as well 
as recent law enforcement actions.

C. Other Investigative Tools
    In addition to Consumer Sentinel and exchanges with other law 
enforcers and watch dog groups, Commission staff is surveying media 
reports. The Commission has closely monitored reports about fraudulent 
solicitation, has followed up on possible scams, and has worked with 
other law enforcement agencies in investigating those that look 
genuinely problematic.
    The Commission's assortment of investigational tools has enabled it 
to develop robust experience bringing law enforcement actions against 
fraudulent fundraisers and other disaster-related scam artists. These 
law enforcement efforts are discussed below.

III. THE FTC'S LAW ENFORCEMENT ACTIVITIES AGAINST FRAUDULENT FOR-PROFIT 
              TELEFUNDERS AND OTHER DISASTER-RELATED SCAMS

    Acting within the parameters of its authority, the Commission has 
asserted a strong enforcement presence in the fraudulent fundraising 
arena. In the past decade, the Commission has filed over 25 cases in 
federal district courts challenging deceptive fundraising practices by 
for-profit solicitors. Many of these cases involved ``badge fraud,'' 
where a telemarketer poses as a law enforcement officer or an affiliate 
and typically claims that he is raising money to support law 
enforcement efforts in the donor's local area. In fact, the 
telemarketer is not a law enforcement officer or affiliate, and the 
money is not used to support local efforts, as promised.
    The Commission ultimately obtained injunctions stopping the 
deceptive fundraising and, in many cases, recovered monetary redress 
for consumers. The Commission has also obtained injunctions against 
these for-profit solicitors, which, among other things, have prohibited 
deceptive fundraising and other remedies.
    It is the Commission's experience that meaningful consumer 
protection also requires coordinated law enforcement with other state 
and federal agencies. The FTC has organized two ``sweeps'' of multi-
state, multi-agency law enforcement actions targeting fraudulent 
charitable solicitation. In 1997, the FTC announced Operation False 
Alarm, which targeted badge-related solicitation fraud. Federal and 
state officials brought 57 law enforcement or regulatory actions as 
part of this initiative. In 1998, the Commission announced Operation 
Missed Giving, which also targeted deceptive fundraising. In that 
sweep, federal and state officials brought 39 law enforcement and 
regulatory actions.
    In addition, the Commission has experience prosecuting other types 
of non-charity but nevertheless disaster-related scams. For example, 
the Commission is contacting marketers of home-testing kits for anthrax 
and demanding substantiation for their efficacy claims. Drawing on its 
past experience prosecuting marketers of ineffective at-home test kits 
for HIV, the Commission is able to identify possible law violators and 
quickly bring them into compliance with the law.
    The Commission intends to remain active in these areas in the 
future. However, the Commission recognizes that vigilant investigation 
and law enforcement activities alone cannot wipe out fundraising fraud. 
As set forth below, meaningful consumer protection also depends on 
education.

         IV. THE FTC'S CONSUMER AND BUSINESS EDUCATION EFFORTS

    The FTC's consumer and business education program communicates 
anti-fraud and educational messages to reach vast numbers of people in 
creative and novel ways quickly, simply and at low cost. In the wake of 
the September 11th terrorists attacks, the FTC has alerted consumers to 
potential charity frauds. As mentioned earlier, the Commission's 
Northeast Regional Office has been actively involved in the 
Commission's outreach to the New York area after September 11th. On 
September 20th, the Northeast Regional Office held a press conference 
in New York City with city, state and federal agencies and nonprofit 
organizations to announce a coalition to protect New York consumers and 
provide essential information during this time of crisis. The Northeast 
Region staff distributed a new Consumer Alert, ``Helping Victims of the 
Terrorist Attacks: Your Guide to Giving Wisely,'' which was posted to 
the FTC website, www.consumer.gov.
    In a little over a month, this single publication has been accessed 
more than 9,400 times. The Commission also developed a dedicated 
webpage, where consumers and businesses can obtain more information 
about donating wisely and filing a complaint, and a banner ad promoting 
the site.
    The FTC also released other consumer and business information 
related to the attacks. They include:

``Out of Work? How to Deal with Creditors,'' (e-mailed to more than 
        1,500 daily and weekly newspaper editors).
``Offers to Treat Biological Threats: What You Need to Know,'' produced 
        in cooperation with the Centers for Disease Control and 
        Prevention and the Food and Drug Administration. This Alert was 
        e-mailed to consumer and health editors at more than 17,000 
        radio and TV stations and daily newspapers nationwide.
``FTC Explains `Made in USA' Standard To Confirm Consumer Confidence'' 
        (more than 3,900 web hits to-date).
``Selling `American-Made' Products? What Businesses Need to Know About 
        Making Made in USA Claims'' (more than1,600 web hits to-date).
    It is worth noting that while the FTC Headquarters building was 
without mail service for nine days, the Commission used electronic mail 
to continue the agency's mission of getting practical, plain language 
information out to the American public.
    FTC staff also has been active in the Washington, D.C. area. At a 
town hall meeting focusing on the local impact of the September 11th 
events and the anthrax investigations, the FTC distributed more than 
1,000 related consumer publications to District residents. The meeting 
was hosted by Del. Eleanor Holmes Norton (D-D.C.) at the Washington 
Convention Center on October 29.

                             V. CONCLUSION

    Thus far, it appears that consumers have generally shown themselves 
to be both generous to legitimate charities and aware of the potential 
for con-artists posing as fundraisers. The press has been warning 
consumers to be wary of possible scam artists trying to take advantage 
of consumers' desire to help victims of the attacks. The Commission has 
found few such schemes. The Commission will continue to monitor 
developments closely, stands ready to take appropriate law enforcement 
action, and continues to educate consumers about how to avoid deceptive 
solicitations and to inform businesses how to comply with the laws.
    I would be pleased to answer any questions.

    Mr. Greenwood. Thank you, Mr. Beales, for your testimony.
    Mr. Taylor, you are recognized for 5 minutes for your 
testimony. Thank you for being with us, sir.

                 TESTIMONY OF HERMAN ART TAYLOR

    Mr. Taylor. Thank you, Mr. Chairman. The BBB Wise Giving 
Alliance is a nationally recognized monitoring organization 
that sets accountability standards for charities and other 
soliciting nonprofits. Often referred to as a charity watchdog, 
our core mission is to provide information to donors, to assist 
them in making knowledgeable choices about giving. We work with 
many audiences, including charities, governmental agencies, the 
media, corporate contribution departments and Better Business 
Bureaus. However, the donor is our primary constituent.
    We commissioned Princeton Research to interview donors to 
determine what their expectations were. On a range of charity 
issues, the first thing we found is that 86 percent of 
Americans gave to charities last year. Therefore, we found that 
giving to charities in this country is pretty much a universal 
experience. And as Congressman Whitfield noted earlier, 
Americans have very high expectations for ethics and 
accountability by the charities but are often frustrated at not 
being able to find the necessary information to make giving 
decisions.
    Most people, about 70 percent, said it is difficult to tell 
whether a charity soliciting their contribution is legitimate, 
and many, 72 percent, also say that it is difficult to choose 
between organizations that raise money for similar causes. 
Donors want to know most of all about charity finances but also 
want them to be clear about what they are soliciting for.
    Also as Congressman Tauzin noted earlier, people expect the 
money to be used for current purposes. Our survey found that 63 
percent of the public expects the money to be used for current 
needs rather than put into reserve.
    Very soon after September 11, we received reports of 
unsolicited e-mails and phone calls to consumers that sought 
donations for victims of terrorist attacks, including requests 
for the recipient's credit card numbers. We immediately issued 
a press release cautioning donors against fraudulent appeals 
that seek to use that national tragedy to take advantage of 
America's generosity. This alert provided a series of tips for 
donors to help them evaluate appeals. We were very happy that 
this release was widely used by the media, and the weekend 
after we issued the release, we got more than 17,000 hits on 
our Web site from people looking for those tips.
    The very first tip was to be wary of appeals that were long 
on emotion but were short on describing what a charity would 
actually do to address the needs of victims and their families. 
We also noted that charities should be willing to provide basic 
information that describes the charity's programs and finances. 
Even newly created groups should have some basic information 
that describes their program.
    In cooperation with the Better Business Bureau of 
Metropolitan New York, we will soon make available a special 
section of our Web site that will provide information on 
organizations soliciting for September relief programs, and we 
hope all the organizations will provide us the information.
    We are still receiving inquiries from potential donors 
asking specific questions about these charities, but we are 
also beginning to hear concerns from those who have already 
given and who feel their contributions may not be used as they 
expected. For example, a consumer recently wrote, if people 
knew what their money was really being used for, that it was 
not going to be used for the victims and their families, they 
probably would not have made the contribution.
    The American public has stepped up to the plate and has 
given in an unprecedented way. Now the challenge rests with the 
charitable sector to be equally forthcoming regarding the use 
of these donations. Broader accountability is called for. 
Collaboration is called for. How the recipient organizations 
handle this enormous resource and how they communicate what 
they are going to do with these funds will have a long-term 
effect on what donors do in the future. We have a number of 
recommendations which we have submitted for the record, and we 
would be glad of course to answer any questions about this 
event.
    [The prepared statement of Herman Art Taylor follows:]

 Prepared Statement of Herman Art Taylor, President and CEO, BBB Wise 
                            Giving Alliance.

    Good Afternoon: I am Art Taylor, president and CEO of the BBB Wise 
Giving Alliance. I appreciate the opportunity to appear before this 
subcommittee to report on our donor education programs and also to 
share with you some of our concerns arising from September 11 
solicitations and the use of 9-11 charity donations.
    The BBB Wise Giving Alliance is a nationally recognized monitoring 
organization that sets accountability standards for charities and other 
soliciting nonprofits. The Alliance is the organization resulting from 
the recent merger of the Council of Better Business Bureau's Foundation 
and its Philanthropic Advisory Service and the National Charities 
Information Bureau. Between the two organizations, we have over 100 
years of experience in reviewing and reporting on charities.
    Often referred to as a ``charity watchdog,'' our core mission is to 
provide information to donors to assist them in making knowledgeable 
choices about giving. We work with many audiences, including charities, 
governmental agencies, charity governing boards, the media, corporate 
contribution departments, Better Business Bureaus, and nonprofit 
umbrella organizations. However, the donor is our primary constituent 
and it is from the position of donor ``stand in'' that I make my 
remarks today.
    I can say four things about donors that are relevant to our 
discussion today. First of all, there are a lot of them. The Alliance 
recently commissioned Princeton Survey Research Associates to conduct a 
major study on donor expectations as part of the process to revise our 
charity accountability standards. Princeton Research interviewed 2000 
members of the general public on a range of charity accountability 
issues and found that 86% of Americans gave to charity last year. 
Charitable giving is almost a universal experience in this country.
    Second, as the survey found, Americans have very high expectations 
for ethics and accountability by charities, but are often frustrated at 
not being able to find the necessary information to make their 
decisions about giving. Most people (70%) said it is difficult to tell 
whether a charity soliciting their contributions is legitimate, and 
many (72%) also say it is difficult to choose between organizations 
that raise money for similar causes. Donors want to know most of all 
about charity finances, but also important to them are the clarity of a 
charity's advertising and promotion and the effectiveness of a 
charity's programs.
    We were not surprised at these findings. We talk to donors every 
day who are looking for information to make informed giving decisions. 
They want to give, but they want to make certain their gifts are well 
used and for the purposes given.
    As part of our basic service, the Alliance issues reports on 
individual national charities that include an evaluation of the charity 
in relation to the voluntary CBBB Standards for Charitable 
Solicitations. These standards address public accountability issues, 
financial activities such as how much the charity spends on its 
programs, accuracy of fund raising appeals, fund raising practices and 
also governance issues. We focus our reporting efforts on those 
charities that donors and potential donors are asking about, some of 
which are long established, others newly created. On average, about 75% 
of these national charities meet all of our standards, and about 25% 
don't meet one or more of our guidelines.
    The Alliance reports on individual charities are detailed, often 
covering several pages, and set out not only to reveal whether or not 
the organization meets our standards, but also information on program 
service activities, fund raising practices, charity governance, 
executive compensation, sources of funds, and how the organization 
spends its money. Our reports are available directly from our office in 
Arlington, Virginia, through all 129 local Better Business Bureaus in 
the United States and on our website www.give.org. We also issue a 
quarterly guide summarizing our evaluation findings and reporting on 
other topics of interest to donors.
    In addition, we issue special alerts and advisories on topics of 
concern to donors. These range from tips on police and firefighter 
appeals, to what you should know about car donations to precautionary 
advice in the face of disaster appeals.
    My third point concerns the impact of the Internet as a tool for 
charity solicitations and donations. Our survey research has shown that 
the Internet is used by the public more as a tool for gathering 
information about charities, than as a means to donate. While over half 
(56%) of regular online users are very likely to go to a charity's web 
site for financial information if they are considering making a 
charitable contribution, less than one in 10 (6%) of Americans report 
having ever made a charitable contribution of $10 or more online. Our 
survey also shows that the public is concerned about the privacy and 
security of their Internet charity contribution transactions. However, 
despite this, many more Americans contributed online for the first time 
in response to 9-11 relief efforts. If this increased Internet giving 
is to continue beyond the current crisis charities must address these 
concerns.
    My fourth point concerns the vulnerability of donors, particularly 
in the wake of disasters. Over the years, we have observed that shortly 
after every major disaster--flood, hurricane, or the Oklahoma City 
bombing--a flurry of fund raising appeals to help the victims begins. 
While most of these appeals are well intentioned and worthy of support, 
others are not. Americans are very generous and, unfortunately, there 
are those who are eager to take advantage of this generosity for their 
own gain.
    Very soon after the September 11th events, we received reports of 
unsolicited emails and phone calls to consumers that requested 
donations for the victims of the terrorist attack, including asking for 
the recipient's credit card numbers. We immediately issued a press 
release cautioning donors against fraudulent appeals that seek to use a 
national tragedy to take advantage of American generosity. This alert 
provided a series of tips for donors to help evaluate appeals. A copy 
is included with my testimony.
    The very first tip was to be wary of appeals that are long on 
emotion, but short on describing what the charity will do to address 
the needs of victims and their families. We also noted that charities 
should be willing to provide basic information that describes the 
charity's programs and finances. Even newly created organizations 
should have some basic information available.
    In cooperation with the Better Business Bureau of Metropolitan New 
York, we will soon make available a special section on our websites 
that will provide information on organizations that have been 
soliciting for September 11 relief programs. We have requested 
information from approximately 170 such organizations for this listing. 
Our objective here is to provide a central information resource to 
donors who are responding to appeals or who are looking to direct their 
support to specific types of assistance.
    We are still receiving inquires from potential donors asking about 
specific charities. But, we are also beginning to hear concerns from 
those who have already given and who feel their contributions may not 
be used as expected. For example a consumer recently wrote: ``We have 
donated $130 to the wtc disaster fund and my employer has graciously 
matched that amount. We have now found out that our money may be used 
for other things. We insist that our monies be used for what they were 
intended. We would like our funds to be placed in an account 
specifically used for the wtc disaster or be promptly returned so that 
we may give it to a charity that will adhere to our wishes.''
    Or another who said ``if people knew that this money was not really 
going to help victims' families with the things they really need, like 
with bills because of the loss of an income, they would in many cases 
never have given the money they did. People would be outraged to hear 
this.'' Another stated ``I am appalled.'' The messages are consistent--
``I gave to help the victims and now I am hearing that my donation will 
not be used as I intended.'' I believe this is only the beginning of 
these complaints.
    We are at a critical juncture here. The American public has stepped 
up to the plate and given in an unprecedented way. Donations total over 
a billion dollars and are growing. Now the challenge rests with the 
charitable sector to be equally forthcoming to the public regarding the 
use of these donations. Broad accountability is called for. How the 
recipient organizations handle the enormous resources they have been 
given and how well they communicate with the public about what they 
have done and plan to do in the future will have an impact on future 
charitable giving at all levels. There is a lot riding on this.
    On our website, we have posted a number of recommendations to 
charities that we believe will help achieve this accountability and can 
help assure donors that their confidence in giving is well placed. Our 
recommendations, among other things, include the need for all 
organizations to: plan for a full accounting of all funds raised and 
all expenditures by year's end, regardless of the size of the 
organization; provide for clear descriptions of the programs or 
services in all future fund raising appeals so that donors and 
potential donors will know the specific ways that their donations will 
provide assistance; and maintain strong internal controls on income and 
expenses. Finally, we recommend that charities establish a board-
approved plan for how contributions will be spent and a projected time 
line for these expenditures and revisit this plan as needs evolve.
    Again, I appreciate the opportunity to be with you today and look 
forward to answering any questions.

    Mr. Greenwood. Thank you, Mr. Taylor, for your testimony as 
well.
    Let me just warn everyone that the bell is going to ring in 
about 2 minutes, which will signify that we have a series of 
votes, and so you are going to get to go home for dinner early 
tonight. Let me ask a question that I think each of you might 
be able to respond, you, Mr. Beales, in terms of what the law 
says, to the extent that it does say anything; you, Mr. Taylor, 
in terms of what your organization recommends, and I know you 
have got a series of great recommendations. I have looked at 
the Better Business Bureau's Wise Giving Guide, Donor 
Expectations Defined, Giving in the Aftermath of September 11. 
It is a great document, and other documents as well.
    Yesterday I went into a department store and I bought this 
necktie that has flags on it, and I noticed on the table of 
neckties with flags on it, and almost every one of them had a 
tag attached to it that said a percentage of the profits or a 
percentage of the costs or a percentage of the proceeds from 
this purchase will go to a fund related to the events of 
September 11. I realize that I had no way of knowing what that 
percentage would be, and we already have seen, and I am sure we 
will continue to see, a plethora of products and maybe perhaps 
services, advertised in this way. Some of it will be very, very 
legitimate, and some of it will be a scam.
    Beginning with you, Mr. Beales, and then going to you, Mr. 
Taylor, A, what does the law say, if anything, about this, 
because 100 percent of the profits could mean that the company 
leadership takes a million dollars in salaries and then the 
profit is a couple dollars and that goes to a fund. What does 
the law say about how these representations are made, Mr. 
Beales, and Mr. Taylor, what should a smart shopper or smart 
contributor do to protect themselves to make sure that 
significant portions really get to the needy folks as opposed 
to just a come-on to sell product.
    Mr. Beales.
    Mr. Beales. Well, from our perspective, the question would 
be, is the original claim that they made a contribution 
deceptive? Is it likely to mislead consumers who are acting 
reasonably about something that is important? I think there is 
no question it is important, and so the question would be, did 
they actually give the money? And if they promised in your 
hypothetical 100 percent of profits and there were no profits 
and they didn't tell you that, then I think that would be a 
problem. That would be one that we would be very----
    Mr. Greenwood. Will the FTC--how do you regulate this? 
There will be thousands of products, if there aren't already, 
with labels and tags attached, making a claim that some portion 
of the proceeds go to the World Trade Center Fund or what have 
you. What does the FTC do in terms of looking into this? Is it 
on a complaint basis only?
    Mr. Beales. It is certainly not complaints only. On 
anything where we had some--where we had any indication, 
whether it was a complaint or maybe it is a complaint from one 
of the potential recipient organizations that they are not 
getting money from these groups, then we would ask to see what 
was the evidence that supported the original claim. We could do 
that for anybody and would if there was any indication at all 
that there might be a problem.
    Mr. Greenwood. Clearly, if the representation made is that 
a portion or a significant portion of the proceeds shall go to 
the victims, it is going to be very difficult, I would assume, 
to enforce any existing law, regulation, since these are such 
nebulous terms.
    Mr. Beales. Well, I think that we would interpret the 
proportion or the portion kind of claim as saying that it was 
some appreciable portion. If it is merely a trivial proportion, 
then I think that would be a claim that is deceptive.
    Mr. Greenwood. And they would violate which law?
    Mr. Beales. Section 5 of the Federal Trade Commission Act.
    Mr. Greenwood. Okay. Mr. Taylor, what would you recommend 
to shoppers such as myself purchasing neckties and other items 
in terms of really having the knowledge to back up the claim?
    Mr. Taylor. Congressman, I would first say, if you like the 
tie, buy it, but don't buy it because you think money is going 
to victims. It may in fact go to victims, but who knows. If you 
want to make a contribution, make a contribution directly to 
either the organization or to the fund that can serve the needs 
of the victim. We encourage all of our donors to ask questions, 
though. I think that is the most important thing you can do to 
protect yourself. If you want to know how much is going, ask. 
Get it in writing.
    Mr. Greenwood. Okay, thank you for your comments. The 
gentleman from Florida, Mr. Deutsch, is recognized for 5 
minutes.
    Mr. Deutsch. If either one of you can give us a sense of 
the allegations of fraud involving any of the charities that 
have been raising funds related to the September 11 offense? I 
mean, have you----
    Mr. Taylor. Yeah. What I can say is that we haven't 
uncovered any specific fraud, but early on, we did see some 
questionable solicitation practices. We noticed that there was 
a lot of solicitation going on in the street door to door, 
phone calls, asking for credit cards and spam e-mails and 
things of that nature, but we haven't uncovered any specific 
fraud at this point. But we do have our bureaus on alert to 
receive any complaint that they might uncover.
    Mr. Deutsch. Mr. Beales.
    Mr. Beales. We have not seen instances of what we would 
call fraud. We have seen some potential problems that were very 
quickly fixed or very quickly ceased, but we have not seen any 
indication in any of the complaints we've pursued of something 
we've called fraud. And we have been looking very actively 
following up every complaint we get about fund-raising matters.
    Mr. Deutsch. Both of you sat through the several hours of 
hearings that we have had, so you heard a lot of discussion 
about the Red Cross and its solicitation and its use of funds 
related to its Liberty. How would you describe that? Do you 
have any issues that you would raise with the Red Cross in 
terms of how the solicitations occurred? Would you advise them 
in any direct or indirect way? Was it a good way--in the 
hindsight of, you know, time, would you recommend that they 
have done it differently?
    Mr. Taylor. I think that the challenge before us today is 
to get an organization like the Red Cross to appreciate that 
people see their money going directly to victims, and they do 
not see their money being used for longer-term-type needs. As 
our survey points out, most people expect the money to go for 
current needs, and this notion that money is going to be put in 
a reserve will be very troubling for donors.
    Mr. Deutsch. Mr. Beales?
    Mr. Beales. Well, I think our advice to anyone would be the 
same, is really be clear about what it is you're asking and 
what it is you are going to use the money for, and be as clear 
as possible so the consumers will understand and can decide 
whether that's something they want to contribute their money to 
or not.
    Mr. Deutsch. And again, you gave us sort of a political 
answer, which is fine. I just want to press you a little bit. 
Based upon what you know what occurred, would you critique what 
they did in the hindsight of time that--was it correct, or was 
it incorrect? Would you advise them to do it differently in the 
future?
    Mr. Beales. We have not looked closely. We do not have 
jurisdiction because the Red Cross is not for profit. We have 
not looked closely at the advertising or the claims. And 
without doing that, I don't think I could offer an opinion.
    Mr. Deutsch. The last question that I would have is related 
to and for either one of the other panels. We didn't have a 
chance to talk about it. There's this whole issue that is 
coming up as it relates to Congress in terms of the victims' 
compensation fund and the issue that charitable contributions 
could be considered an offset of that fund. Do either one of 
you have an opinion of whether or not that would be an 
appropriate offset or not in terms of the victims' compensation 
fund?
    Mr. Taylor. Well, I think it would have been ideal if the 
American public's contributions toward the relief effort would 
have been put to immediate needs, which is what they expected, 
and then the fund which the Congress is hoping to set up would 
be used to take care of the more long-term needs that are still 
being uncovered. I think part of the problem that we're 
hearing--that we've heard today is that the charities are 
trying to figure out what longer-term needs are, and the public 
really expected them to deal with the immediate needs.
    Mr. Deutsch. Mr. Beales?
    Mr. Beales. I'm glad that we don't have jurisdiction in 
this area and you have to wrestle with this difficult problem.
    Mr. Deutsch. I yield back.
    Mr. Greenwood. Thank the gentleman.
    The gentleman from New Hampshire is recognized for 5 
minutes to inquire.
    Mr. Bass. Thank you, Mr. Chairman.
    Mr. Beales, if I could read from your testimony here as a 
preface to my question, you state on page 3, and I quote, 
charitable organizations are closely regulated by the States. 
Most State governments implement detailed registration 
reporting requirements that are crucially effective oversight 
of charities. Under the Federal Trade Commission Act, the 
Agency's mandated to take action against, quote, unfair or 
deceptive acts or practices that are, quote, in or affecting 
commerce. The FTC also equips the FTC with a wide array of 
tools to enforce the mandate, but section 4 and 5 of the FTC 
Act provide the Commission with jurisdiction over corporations 
only if organized to carry on business for their own profit or 
for that of their members. Over the years the Federal courts 
have construed section 4 to bar the Commission from suing any 
truly nonprofit organization under the FTC Act, thereby 
removing many charitable organizations from the FTC's scope of 
authority.
    You've heard we've had some interesting discussion here 
today. In light of that, do you think the FTC needs additional 
authority to protect consumers from false and misleading 
practices involving charities?
    Mr. Beales. The USA PATRIOT Act gave us additional 
authority under the Telemarketing Sales Act because it extended 
that act to cover charitable solicitations. We are in the 
process of exploring the changes in our telemarketing sales 
rule that we should make in order to implement that statute, 
but there clearly is an expansion of our jurisdiction that 
resulted from that act.
    The second point I'd make is in the cases we've seen of 
charitable fraud, it has not been particularly difficult to 
argue that the fund-raiser really was for profit and/or that 
the charity was essentially a front and to pierce that front, 
to argue that this really was for someone's profit. And we have 
been successful with making that argument in the courts. So for 
the kinds of things that I think are the problems for the 
fraudulent solicitations, I think we have enough authority in 
order to accomplish that mission.
    Mr. Bass. Let me just expand on that a little bit further. 
Suppose a nonprofit or a charitable organization says that they 
are raising money for one purpose and then uses it for another. 
That would not come under the jurisdiction of the FTC. But if 
that were a for-profit corporation, you'd be able to sue them. 
Do you think you should have the ability to do the same thing 
that you do for for-profit corporations for not-for-profit 
corporations?
    Mr. Beales. Well, I think when you get into legitimate not-
for-profit organizations, the first amendment issues involved 
in a hypothetical like that get very much more difficult. It's 
not being done to raise--it's not being done for anybody's 
profit. It's being done in pursuit of a cause as the members--
as the members of that organization see that cause. I mean, the 
Supreme Court has said you can't require disclosure of the 
fraction of money that goes to fund-raising. I think requiring 
more information about the specific uses would raise very 
similar difficulties under the first amendment.
    Mr. Bass. Thank you, Mr. Chairman.
    Mr. Greenwood. The Chair thanks the gentleman.
    The gentleman from Kentucky is recognized for 5 minutes.
    Mr. Whitfield. I just have a few brief questions. I wanted 
to ask Mr. Taylor, the Better Business Bureau Wise Giving 
Alliance, is that a part of the Better Business Bureau?
    Mr. Taylor. We are an affiliated organization of the Better 
Business Bureau, but we are a separate (c)(3) charitable 
organization ourselves.
    Mr. Whitfield. So you are affiliated, but a separate 
organization run independently?
    Mr. Taylor. Yes.
    Mr. Whitfield. And your mission or purpose is primarily to 
focus on charitable organizations and whether or not they meet 
certain standards; is that correct?
    Mr. Taylor. That's correct. We set standards for charities, 
and we evaluate them when we're asked to to see if those 
organizations meet our standards. And our--what we see our role 
is is a stand-in for the donor essentially. We want to give the 
donor a voice with the charitable organization.
    Mr. Whitfield. Not having had the opportunity to look at 
this, but this is your donor expectations defined, and they 
have a list of charities, and some of them have met standards, 
and they have a check by their names. Others have not, and they 
would list like standards not met, A1, B1, B2. I guess that 
refers to some standard that your organization has developed.
    Mr. Taylor. That's right. In the back of our guide there is 
a listing of all of our standards. So they are referenced by 
alphabet, and you can tell whether that standard is met or not.
    Mr. Whitfield. How is your organization financed?
    Mr. Taylor. We are financed, like most charities, with 
individual contributions and foundation gifts and other sorts 
of charity.
    Mr. Whitfield. I think you do a good job. I yield back my 
time.
    Mr. Greenwood. I thank the gentleman for yielding.
    Thank you, Mr. Beales, thank you, Mr. Taylor, for your 
testimony and for your forbearance through our 4\1/4\ hour 
schedule. This hearing is now adjourned.
    [Whereupon, at 6:45 p.m., the subcommittee was adjourned.]
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