Army charity keeps cash

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Army charity keeps cash

Agency reserved $117 million, dispensed $64 million to U.S. troops

Associated Press

February 23, 2009

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 instead of using the money to help put returning troops 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 entity. During those years, the charity put $117 million into its reserves while dispensing just $64 million in direct aid, according to an analysis of its tax records.

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

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.

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

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

Retired Col. Dennis Spiegel, AER's deputy director for administration, said the charity needs to keep sizable reserves to deal with catastrophes.

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 Army.

Eric Smith, a spokesman for the Internal Revenue Service, said the agency cannot 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.

Most charity watchdogs view one to three years' worth 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.

The American Institute of Philanthropy, which grades charities, gives the Army charity an "F" because of the hoarding.

The AP findings include:

•Superior officers come calling when AER loans are not 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 barred 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 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. Maj. of the Army Kenneth Preston, an AER board member, responded to repeated requests for comment on the military's relationship with AER.

AER pays 21 staff members, all 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.

Copyright © 2009, The Baltimore Sun

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