Jump to content
VA Disability Community via Hadit.com

VA Disability Claims Articles

Ask Your VA Claims Question | Current Forum Posts Search | Rules | View All Forums
VA Disability Articles | Chats and Other Events | Donate | Blogs | New Users

  • hohomepage-banner-2024-2.png

  • 27-year-anniversary-leaderboard.png

    advice-disclaimer.jpg

  • donate-be-a-hero.png

  • 0

Probe Finds Army Charity Hoards Millions

Rate this question


allan

Question

  • HadIt.com Elder

Probe finds Army charity hoards millions

Posted on February 22, 2009 by GM

Military's biggest charity is stockpiling cash, rather than using it for aid

FORT BLISS, Texas - As soldiers stream home from Iraq and Afghanistan, the biggest charity inside the U.S. military has been stockpiling tens of millions of dollars meant to help put returning fighters back on their feet, an Associated Press investigation shows.

Between 2003 and 2007 — as many military families dealt with long war deployments and increased numbers of home foreclosures — Army Emergency Relief grew into a $345 million behemoth. During those years, the charity packed away $117 million into its own reserves while spending just $64 million on direct aid, according to an AP analysis of its tax records.

Tax-exempt and legally separate from the military, AER projects a facade of independence but really operates under close Army control. The massive nonprofit — funded predominantly by troops — allows superiors to squeeze soldiers for contributions; forces struggling soldiers to repay loans — sometimes delaying transfers and promotions; and too often violates its own rules by rewarding donors, such as giving free passes from physical training.

Founded in 1942, AER eases cash emergencies of active-duty soldiers and retirees and provides college scholarships for their families. Its emergency aid covers mortgage payments and food, car repairs, medical bills, travel to family funerals, and the like.

Army charity lent out emergency aid

Instead of giving money away, though, the Army charity lent out 91 percent of its emergency aid during the period 2003-2007. For accounting purposes, the loans, dispensed interest-free, are counted as expenses only when they are not paid back.

During that same five-year period, the smaller Navy and Air Force charities both put far more of their own resources into aid than reserves. The Air Force charity kept $24 million in reserves while dispensing $56 million in total aid, which includes grants, scholarships and loans not repaid. The Navy charity put $32 million into reserves and gave out $49 million in total aid.

AER executives defend their operation, insisting they need to keep sizable reserves to be ready for future catastrophes.

"Look at the stock market," said retired Col. Dennis Spiegel, AER's deputy director for administration. Without the large reserve, he added, "We'd be in very serious trouble."

But smaller civilian charities for service members and veterans say they are swamped by the desperate needs of recent years, with requests far outstripping ability to respond.

While independent on paper, Army Emergency Relief is housed, staffed and controlled by the U.S. Army.

That's not illegal per se. Eric Smith, a spokesman for the Internal Revenue Service, said the agency can't offer an opinion on a particular charity's activities. But Marcus Owens, former head of IRS charity oversight, said charities like AER can legally partner closely with a government agency.

However, he said, problems sometimes arise when their missions diverge. "There's a bit of a tension when a government organization is operating closely with a charity," he said.

Some reserves are prudent

Most charity watchdogs view 1-to-3 years of reserves as prudent, with more than that considered hoarding. Yet the American Institute of Philanthropy says AER holds enough reserves to last about 12 years at its current level of aid.

Daniel Borochoff, president of the American Institute of Philanthropy, said that AER collects money "very efficiently. What the shame is, is they're not doing more with it."

National administrators say they've tried to loosen the purse strings. The most recent yearly figures do show a tilt by AER toward increased giving.

Still, Borochoff's organization, which grades charities, gives the Army charity an "F" because of the hoarding.

The AP findings include:

# Superior officers come calling when AER loans aren't repaid on time. Soldiers can be fined or demoted for missing loan payments. They must clear their loans before transferring or leaving the service.

# Promotions can be delayed or canceled if loans are not repaid.

# Despite strict rules against coercion, the Army uses pushy tactics to extract supposedly voluntary contributions, with superiors using language like: "How much can we count on from you?"

# The Army sometimes offers rewards for contributions, though incentives are banned by program rules. It sometimes excuses contributors from physical training — another clear violation.

# AER screens every request for aid, peering into the personal finances of its troops, essentially making the Army a soldier's boss and loan officer.

"If I ask a private for something ... chances are everyone's going to do it. Why? Because I'm a lieutenant," says Iraq war veteran Tom Tarantino, otherwise an AER backer. "It can almost be construed as mandatory."

Neither the Army nor Sgt. Major of the Army Kenneth Preston, an AER board member, responded to repeated requests for comment on the military's relationship with AER.

AER pays just 21 staffers, all working at its headquarters at Army Human Resources Command in Alexandria, Va. AER's other 300 or so employees at 90 Army sites worldwide are civilians paid by the Army. Also, the Army gives AER office space for free.

AER's treasurer, Ret. Col. Andrew Cohen, acknowledged in an interview that "the Army runs the program in the field." Army officers dominate its corporate board too.

Officers must recommend soldiers for aid

Charities linked to other services operate along more traditional nonprofit lines. The Air Force Aid Society sprinkles its board with members from outside the military to foster broad views. The Navy-Marine Corps Relief Society pays 225 employees and, instead of relying on Navy personnel for other chores, deploys a corps of about 3,400 volunteers, including some from outside the military.

Army regulations say AER "is, in effect, the U.S. Army's own emergency financial assistance organization." Under Army regulations, officers must recommend whether their soldiers deserve aid. Company commanders and first sergeants can approve up to $1,000 in loans on their own say-so. Officers also are charged with making sure their troops repay AER loans.

"If you have an outstanding bill, you're warned about paying that off just to finish your tour of duty ... because it will be brought to your leadership and it will be dealt with," says Jon Nakaishi, of Tracy, Calif., an Army National Guard veteran of the Iraq war who took out a $900 AER loan to help feed his wife and children between paychecks.

In his case, he was sent home with an injury and never fully repaid his loan.

The Army also exercises its leverage in raising contributions from soldiers. It reaches out only to troops and veterans in annual campaigns organized by Army personnel.

For those on active duty, AER organizes appeals along the chain of command. Low-ranking personnel are typically solicited by a superior who knows them personally.

Spiegel, the AER administrator, said he's unaware of specific violations but added: "I spent 29 years in the Army, I know how ... first sergeants operate. Some of them do strong-arm."

Many violations uncovered

Army regulations ban base passes, training holidays, relief from guard duty, award plaques and "all other incentives or rewards" for contributions to AER. But the AP uncovered evidence of many violations.

Before leaving active duty in 2006, Philip Aubart, who then went to Reserve Officer Training Corps at Dartmouth College, admits he gave to AER partly to be excused from push-ups, sit-ups and running the next day. For those who didn't contribute the minimum monthly allotment, the calisthenics became, in effect, a punishment.

"That enticed lots and lots of guys to give," he noted. He says he gave in two annual campaigns and was allowed to skip physical training the following days.

Others spoke of prizes like pizza parties and honorary flags given to top cooperating units.

Make no mistake: AER, a normally uncontroversial fixture of Army life, has helped millions of soldiers and families. Last year alone, AER handed out about $5.5 million in emergency grants, $65 million in loans, and $12 million in scholarships. Despite the extra demands for soldiers busy fighting two wars, AER's management says it hasn't felt a need to boost giving in recent years.

But the AP encountered considerable criticism about AER's hoarding of its treasure chest.

Jack Tilley, a retired sergeant major of the Army on AER's board from 2000 to 2004, said he was surprised by AP's findings, especially during wartime.

"I think they could give more. In fact, that's why that's there," said Tilley, who co-founded another charity that helps families of Mideast war veterans, the American Freedom Foundation.

Accumulates stocks and bonds with its wealth

What does AER do with its retained wealth? Mostly, it accumulates stocks and bonds.

AER ended 2007 with a $296 million portfolio; last year's tanking market cut that to $214 million, by the estimate of its treasurer.

Sylvia Kidd, an AER board member in the 1990s, says she feels that the charity does much good work but guards its relief funds too jealously. "You hear things, and you think, "`They got all this money, and they should certainly be able to take care of this,'" she said. She now works for a smaller independent charity, the Association of the United States Army, providing emergency aid to some military families that AER won't help.

Though AER keeps a $25 million line of bank credit to respond to a world economic crisis, its board has decided to lop off a third of its scholarship money this year. "We're not happy about it," Spiegel says.

http://www.veteranstoday.com/modules.php?name=News&file=article&sid=4936

Link to comment
Share on other sites

  • Answers 19
  • Created
  • Last Reply

Top Posters For This Question

Top Posters For This Question

Recommended Posts

I'm going to be blunt...sorry in advance if I step on toes. Hope your wearing your steel toe boots.

Why are some folks whining about accountability? What is wrong with holding folks responsible for paying back a loan? It's not a grant program...it's a loan.

Of course there are repercussions in the military for not meeting your financial obligations...this should be no surprise to anyone...hell, it's a problem in the military if you get a speeding ticket on base!! These are the standards.

I was one of those supervisors some of you on here might hate. I had an airman who worked for me that couldn't meet his financial obligations. He was very young, single and just couldn't manage money. I sent him to classes, I helped him with his bills...did everything possible...but he was irresponsible. So I after several LORs and finally with an Article 15...he magically learned how to manage his money. He probably could do it all along...in his case he was making bad choices. Was I a hard-ass? Some may think so, I don't. He turned out to be a great NCO.

Accountability.

Link to comment
Share on other sites

  • HadIt.com Elder

On Korea we had all of them lined up at payday AER, Red Cross, The Orphan Society the division adopted because most of the kids were GI/Korean you lost 20-30 bucks before you ever left the messhall on payday and the 1SG would point out if you missed a table

Link to comment
Share on other sites

Purple, I agree with you. It is there to be used and paid back. And the guy who couldn't handle himself, NJP him... damn straight.

But to force service members to contribute to ANY charity and then hang "punishment" over them if they don't give, well that is just wrong.

One of the issues I have at work as a firefighter that relates to my SC conditions is "personnal servitude". It was stricktly forbidden in the military. In the city I work for it is EXPECTED. You (a firefighter) WILL get up and clean the table for a chief officer, you WILL get up and get them coffee..... etc. Stuff that in the military is not only wrong, but goes against every leadership principle taught.

Not one time did a SNCO or Officer I served under stand up for the troops in situations like donating money, but at least they did when it REALLY mattered.

The United Way was founded in my city by George Eastman (founder of Kodak) and the 500 members of the Fire Dept. contributed more in total every year than ALL other city employees combined. When a new chief came in and started harrassing members guess what happened..... everyone stopped contributing THROUGH the Fire Dept and did it on their own. Same amount of money given, but we members weren't going to let some bigshot who didn't care about us stand up there and hand over a huge check like he had personnally raised that money.

Take the military out of the process. Let them refer members to Relief groups, but to actually approve or disaaprove is stupid. Nobody in the chain of command has a say in car loans, only in disciplining members who fail to pay them back (upholding the UCMJ as they should).

As for paying back the money.... I knew a LOT of young families in the Marines that received food stamps cause the pay was S***. Nobody in the chain of command cared about that.

And just for info, I spent the last 2 1/2 years of my 6 years as an NCO at my MOS school and saw just how uneducated new Marines were in finances...... I also saw just how incompetant many NCO's were with theirs.... but nobody every threatened the NCO's. Somehow the NCO's loans were wiped off the books, but the Pvt's., PFC's, and LCpl's were held to a different standard...... so long as they had money for a haircut every week that was all they "needed" since they lived in barracks and could eat in the chow hall.

Sorry... this is a REALLY touchy subject with me......

Link to comment
Share on other sites

I'm going to be blunt...sorry in advance if I step on toes. Hope your wearing your steel toe boots.

Why are some folks whining about accountability? What is wrong with holding folks responsible for paying back a loan? It's not a grant program...it's a loan.

Of course there are repercussions in the military for not meeting your financial obligations...this should be no surprise to anyone...hell, it's a problem in the military if you get a speeding ticket on base!! These are the standards.

I was one of those supervisors some of you on here might hate. I had an airman who worked for me that couldn't meet his financial obligations. He was very young, single and just couldn't manage money. I sent him to classes, I helped him with his bills...did everything possible...but he was irresponsible. So I after several LORs and finally with an Article 15...he magically learned how to manage his money. He probably could do it all along...in his case he was making bad choices. Was I a hard-ass? Some may think so, I don't. He turned out to be a great NCO.

Accountability.

Purple I agree and disagree, yes folks should be held to accountability but some time it just don't work out that as easy as I borrow and I pay back we are not talking about a bank here. I have served with soldiers who had families and lived on food stamps and there car break down, now you have to pay back a loan while you are now stretched beyond your means. I my self was in Somalia when I was threaten with a court marshal if I did not sign for a loan for my wife at the time to move to a new apt. However I did sign for the money and the allotment to pay it back monthly and causing me financial problems as well. I swear it was like having a gun held to my head. The battalion commander setting at his desk sweating his a$$ off from the heat made me sign it and did not care if it caused me $$ problems back home..

Link to comment
Share on other sites

On a lighter note..... my only interaction with the Air Force was flying to and from the Gulf and other than that it was on a C141 going there we were treated wonderfully.

But we all got a kick out of the airmen talking about their "dorms" in the chowhall as we waited for our flight. Just a different approach to things in the AF I think. Not that that's a bad thing! LOL

Link to comment
Share on other sites

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!

Register a new account

Sign in

Already have an account? Sign in here.

Sign In Now
×
×
  • Create New...

Important Information

Guidelines and Terms of Use