As part of a post-September 11 effort to facilitate charitable donations, the IRS expedited the process by which it grants tax-exempt status to nonprofits. But as it turns out, every tax-deductible cent donated to the AFLPA goes not to New York City firefighters or Cantor Fitzgerald widows, but rather to spay/neuter programs for Missouri’s dogs and cats. So why does this organization appear on the IRS list of September 11 charities? “My lawyer disguised it to move it through,” admits AFLPA Co-Chair Michelle Thill. “I was tired of waiting. My lawyer pretty much assured me that we would get the [nonprofit] status, but he just grabbed hold of the opportunity.”
AFLPA is just one of many new charities to claim a September 11 affiliation. On Sept. 18, the IRS announced “a special expedited review and approval process for new organizations seeking tax-exempt status to provide relief to the victims.” These would-be charities needed only to write “Disaster Relief, Sept. 11, 2001” atop their application to receive “immediate attention” that reduced turnaround time—normally 120 days—to as little as five days. To date, more than 200 organizations have been granted expedited tax-exempt status. All of them are listed on the IRS website (www.irs.gov). But not all are providing disaster relief.
Take the Washington, DC Marketing Center, a spin-off of the D.C. Chamber of Commerce, which mysteriously found itself on the IRS list of September 11 nonprofits. Marketing Center representatives insist that the listing “must be an administrative error” because the group’s application was approved shortly after the attacks. But according to an employee, the organization’s lawyer, Olivia Shay-Byrne, managed to put it on the fast track once the expedited disaster-relief procedures were announced. Exactly how Ms. Byrne did this is a mystery. She refused repeated interview requests and wouldn’t release the Center’s 1023 form, even though the latter is required by law.
Then there’s Whitebird Productions, another organization claiming to have been “misplaced” among the disaster-relief charities. Whitebird is a nonprofit that promotes the arts in Ft. Collins, Colo. The charity’s president and co-founder, Jeri Nichols-Park, says that she learned about the September 11 provision from her accountant, who wrote to the IRS requesting expedited approval. She insists, however, that she did not portray Whitebird as a disaster-relief charity. “We did try to get on board as far as helping,” she allows. “We did have a table set aside for donations. We told the IRS we would do that.” But she professes ignorance as to how she wound up on the list, saying “that’s crazy” and reiterating that “our only purpose is to promote the arts in Ft. Collins.”
Or how about the Alaska Culinary Association? The group’s stated mission is not disaster relief, but “to help young culinarians to get established in the local food community.” Yet it got expedited service anyway because the IRS doesn’t demand that an organization be devoted to disaster relief, only that it promise to do something disaster related. To meet its requirement, the culinary association held a single fundraising dinner for the Windows of Hope Family Relief Fund—a bona fide 9-11 charity devoted exclusively to providing aid, future scholarships, and funds to families of the food service industry workers killed in September. As it happens, the association didn’t need a 501(c)(3) designation to hold a charity fundraiser. “You can hold a fundraiser for Windows of Hope without 501(c)(3) status,” says Windows of Hope Director Darlene Dwyer. “People just make out their tax-deductible donations directly to us.”
The only reason to have 501(c)(3) status is if you intend to solicit for tax-deductible contributions, which would appear to be of considerable interest to the culinary association—last year it spent more money on fundraising than it raised in funds.
September 11 provided a convenient fig leaf. The association is under no further obligation to raise a dime for disaster relief, and furthermore, according to Alice McArdle, the CPA who filed the organization’s application, it has no plans to do so.
To be sure, many of the listed charities—even the more unusual-sounding ones—are sincerely working to benefit victims of September 11. The Britney Spears Foundation, for instance, appears on the IRS list. There’s also the Rural American Patriot Fund, established by a group of South Dakota farmers, ranchers, and community leaders, which is raising money to buy war bonds through the sale of grain and cattle. Notes the group’s website: “Each time an American farmer or rancher takes their product to market, be it grain or livestock, they can sign up for the Rural American Patriot Fund and simply indicate how much of the sale proceeds they receive they want to earmark for the Fund.”
But there are plenty of puzzling enterprises on the IRS list, including Creative Freedom of Hawthorne, N.Y.; the 1201/5400 Corporation of Dallas, Texas; or Fight for Freedom, Inc., of Sand Springs, Okla. What, if anything, are these groups doing for disaster relief? Hard to say. They have no web sites, no street addresses, and no listed phone numbers. These could be charitable offshoots of other groups doing disaster-related work. Or they could be stand-alone organizations that just haven’t set up shop. But if you wanted to give them a donation , where would you send the check?
However worthwhile it may be that the IRS cut turnaround time for tax-exempt approval from four months to five days, you’ve got to wonder whether it is conducting thorough background checks before inking the rubber stamp. The IRS maintains that it hasn’t lowered the bar for disaster-relief charities. But while it normally reviews applications on a first-come, first-served basis, September 11 applications are given immediate priority. It’s hard to see how that doesn’t mean that someone else’s application gets delayed and vigilant oversight on charities that sell license plates gets overlooked.
On balance, the IRS’s decision to offer expedited service probably has led to more money going to September 11-related causes, which of course is the most important thing. But it has also led to new scrutiny. At the request of Sen. Charles Grassley (R-Iowa), the General Accounting Office has launched two investigations.
In the meantime, do some homework before donating to a September 11 charity. Otherwise, your tax-deductible contribution may actually sponsor neutering programs in Missouri or dinner parties in Alaska.