Fast-Paced Spending

Charities have distributed almost all of the $2.2-billion donated to help people who suffered after the terrorist attacks

Almost all of the $2.2-billion that American charities raised to help victims of the September 11,

2001, terrorist attacks has been spent — or put on reserve to pay for long-term needs, such as college scholarships for children whose parents were killed, a new Chronicle survey has found.

The money that charities raised after the attacks was far more than had ever been donated for a single catastrophe, a record that was not broken until the past year, when Americans donated $3.3-billion for the recovery and rebuilding after Hurricane Katrina.

The bulk of the cash raised was spent within a year of the attacks; about $150-million remains in charities’ hands. The biggest piece left is the $112-million in the coffers of Scholarship America, in St. Peter, Minn., which will be used over the next 25 years to help pay for the education of the children of victims of the attacks.

Several other groups are spending leftover money to provide mental-health services to rescue workers and other people who faced emotional traumas after the attacks, and to treat long-term health problems, including respiratory problems among those exposed to environmental hazards caused by the collapse of the World Trade Center.

One reason so much money went out the door so fast is that donors, the news media, and government regulators put a lot of pressure on charities to distribute the funds as quickly as possible.

But charity and foundation leaders say that may not have been ideal.

Michael Seltzer, president of the New York Regional Association of Grantmakers, says nonprofit groups should learn one critical lesson from the response to the September 11 attacks: While it is easy to be overwhelmed by immediate relief efforts, charities must focus as soon as possible on raising money to deal with long-term needs as well.

“Immediately after the disaster occurs, there is a tremendous emotional response because people see the faces of those affected and they want to do something,” he says. “You have to seize that opportunity to educate donors about why they need to be involved for the long haul.”

Biggest Fund Raisers

Five organizations accounted for more than 85 percent of the funds raised by the major charities in the September 11 relief effort: The Red Cross’s Liberty Disaster Relief Fund (which took in $1-billion); the September 11th Fund, operated by the New York Community Trust and the United Way of New York City ($534-million); the Twin Towers Fund, established by the New York City mayor’s office ($216-million); the New York Fire Fighters 9-11 Disaster Relief Fund, organized by the International Association of Fire Fighters, in Washington ($168-million); and the Families of Freedom Fund, set up by Scholarship America ($125-million).

Scholarship America plans to spend its money through 2030, providing educational assistance to relatives of people who were killed in the attacks or those who suffered severe financial hardship as a result of them.

Clifford Stanley, president of the organization, says that it has awarded $13.4-million to 584 students. “We’re spending until every last person is able to finish college,” he says. None of the money in the fund will be spent on additional staff members or other expenses, he adds.

“We plan to spend every penny in the fund on their education,” says Mr. Stanley. “We take no fee.”

He says he is “very sensitive” to making sure that none of the money is diverted to any other use because he had a personal connection to the tragedy. Mr. Stanley, who retired from the Marines as a major general in 2002, had left his office in the Pentagon just a short time before the hijacked plane crashed into the building.

Although the scholarship fund is no longer soliciting donations, it is still accepting them, he adds, and is working with other relief groups to find more eligible beneficiaries. “We know we don’t have everyone registered yet,” Mr. Stanley says.

With the exception of the Scholarship America funds, most of the remaining money raised after September 11 has been committed to efforts to provide mental-health services. Officials at several of the relief funds said they decided shortly after the attacks to set aside money for long-term counseling programs after consulting with leaders of the Oklahoma City Fund, established after the bombing of the Alfred P. Murrah Federal Building in 1995.

“They said that one of the lessons they learned is that, more than five years out, they were still seeing people come in for help,” says Terry O’Hara Lavoie, director of the Survivors’ Fund at the Community Foundation for the National Capital Region, in Washington. “Trauma sets in years later, because people try really hard to manage the impact of an event like this on their own, until they deplete their emotional and financial resources.”

Ms. Lavoie says the foundation expects to spend the remaining $4-million in its fund by March 2008. Although the foundation is not actively soliciting donations to the fund, she adds, it is still accepting contributions. The money is being spent mainly to run emotional-support groups and other mental-health services. For example, a support group helps flight attendants who lost colleagues in the plane crashes.

Long-Term Aid

The Red Cross Liberty Disaster Relief Fund set aside $93-million to subsidize charities that provide mental-health and long-term health-care services to rescue workers and other people who suffered in the attacks, says Alan Goodman, the fund’s executive director. That money is being distributed gradually to charities that need it, but will be spent by 2008.

The Red Cross doesn’t usually give money to other charities, but in this case it decided to change its approach.

“We don’t have the expertise to provide long-term services to these folks, so the challenge then became, what do we do to continue to provide for their needs?” he adds.

The Red Cross also spent $55-million to pay for programs that provide health care to people suffering from respiratory problems.

Recent health studies have found such problems to be the most serious long-term health threat that resulted from the collapse of the World Trade Center buildings. Rescue workers, volunteers, and residents who lived close to the site suffered lung damage from breathing in the dust that engulfed the area.

“The government was paying for health monitoring but not for direct treatment,” Mr. Goodman says. “That’s going to be one of the biggest social issues we’ll be dealing with for a long time. We lit the way for the federal government to begin putting resources into this area.”

Money from the September 11th Fund, which was created by New York City’s United Way and the New York Community Trust, is still distributed to community groups working to prevent health problems caused by environmental issues, says Ani Hurwitz, director of communications at the trust. (The fund has closed its doors, but grants will be paid out through 2010 by the New York Community Trust.)

“Our program officers who deal with the environment and health knew this would happen,” she says. “You can’t have buildings go down like that and not have there be pollution and health problems. One of the things we did to mitigate against things getting even worse was to give grants to groups to retrofit the earth movers, cranes, and other construction equipment so they were using clean fuels and not contributing to even worse pollution.”

Ms. Hurwitz says money collected by the September 11th fund is also being used to spur economic development.

“There are nonprofits and small businesses that still need help,” she says. For example, she says, the Chinatown section of Manhattan “was really hurt economically. We knew long term we wanted to reserve money for that.”

Several other nonprofit groups said they continue to serve survivors and victims’ families, but are paying for those services from their annual budgets now that the September 11 donations have been spent.

“Our programs for the victims are still running, but the folks who still need services, who are even five years later experiencing some trauma, have been folded into our normal counseling services,” says the Rev. Larry Snyder, president of Catholic Charities USA, in Alexandria, Va.

Jennifer C. Berkshire contributed to this article.