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04 Dec 2014


Posted by with - in 2014

Two years after the storm, a look at where the money went and what lessons we can lear

red cross sandy

Credit: Emery GrahamListen to the audio report on WNYC, an NJ Spotlight content partner.

The Jersey Shore was still reeling from the damage caused by Hurricane Sandy when a who’s who list of musicians and celebrities gathered at Madison Square Garden in New York for the nationally-televised “12-12-12 Concert for Sandy Relief”. After a rousing opening set by Bruce Springsteen, actor Billy Crystal took the stage to ask for the public’s support.

“Our national and local governments are responding, but it’s just not enough,” he said, noting that the region faced a price tag of close to $70 billion in repairs.
“All of the money raised by tonight’s event will go to the Robin Hood Relief Fund, one of the premier poverty-fighting organizations in the country,” he continued. “One hundred percent of the money you give will be put to work on the streets in a matter of just days from now.”

The Robin Hood Foundation ended up raising $75 million for the recovery, including $32.7 million that it regranted to various organizations to provide housing assistance and aid for storm victims in New Jersey. And Robin Hood wasn’t alone.

According to a recent report from the Foundation Center, nearly 600 foundations and corporations contributed to the relief effort, as did countless charities like the Red Cross and the Salvation Army. Collectively, they raised and donated hundreds of millions of dollars, which pales in comparison to the nearly $70 billion committed by the federal government and private insurance companies, yet experts say this money was essential for storm victims whose needs otherwise might have fallen through the cracks.

As might be expected with a recovery of this scale, however, it has been far from flawless. Some big charities had trouble delivering local services, there were delays in handing out the money, isolated instances of fraud, and concerns about funding not always going where donors had intended it to go. Experts say valuable lessons can be learned from the way private charities and foundations handled Sandy and other disasters and that we should make changes and improvements to ensure that future recoveries are dealt with in a more efficient and transparent manner.

Despite the difficulties, by all accounts, the aid from these groups has been instrumental in the recovery, so some are worried that the funding is now running out, even though great needs remain. As is typical of large-scale disasters, donor enthusiasm has largely dried up now that Sandy has faded from the headlines, leaving nonprofits scrambling to figure out how to continue their important work.

For Sue Marticek, director of the Ocean County Long Term Recovery Group — an umbrella organization of close to 80 nonprofits — the work of nongovernmental organizations has been paramount in New Jersey’s struggle to repair the damages to its coast.

“In the beginning, I think that people thought we were do-gooders, and we were nice and helpful,” she said, “and now the role has shifted, where we are an intricate, vital part of the success of this long-term recovery in our state.”

Marticek’s group and similar groups in other Sandy-affected counties have taken a holistic approach, assigning homeowners personal case managers to walk them through the recovery from start to finish and help them not just navigate the aid process but restructure their mortgages and access important but often-overlooked resources like daycare and marriage counseling. These are needs that go well beyond what the federal government can cover, and which the homeowners themselves may not even realize they have in the midst of the crisis. And the groups have funded their efforts entirely with private donations.

“Essentially, they’re filling the gaps,” Marticek said, noting that aid money from Washington was never intended to provide the entire budget for homeowners to rebuild. While the government often has layers upon layers of bureaucracy and strict rules it needs to follow, she added, nonprofits have the flexibility to change on a dime, which is exactly what is needed following an event like Sandy.

In the aftermath of the storm, aid groups have helped in various ways, from providing volunteers to rebuild homes to offering free meals, mental-health services and financial counseling.

But there were also some problems.

“In terms of these large charities raising large amounts of money and questions about how are things spent, it’s really the same issues that keep on coming up over and over again that we’re seeing reoccur in this region post-Sandy,” said Ben Smilowitz with the Disaster Accountability Project, a national watchdog group.

For starters, some large foundations like the Hurricane Sandy NJ Relief Fund run by Mary Pat Christie — wife of New Jersey Gov. Chris Christie — were initially criticized for taking too long to respond. As with past disasters, there was a tension between getting money out the door quickly to help people with their immediate relief needs vs. holding on to funding to assist with the ongoing, longer-term recovery once the storm was no longer front-page news. Many groups were under pressure from donors to demonstrate that aid dollars were put to good use as soon as possible after the storm.

Drawing down the funding quickly often isn’t the best approach, though.

“I can write a check and get rid of all my money in two weeks,” Marticek said, “but that money spent is unwise. The last thing you want to do is harm somebody and make them have to give back money. And that can happen if you don’t know what all those rules to play in are.”

Indeed, FEMA has already sent letters to about 1,200 New Jersey homeowners, asking them to pay back all or part of the funding they’ve received — a total of $8 million the agency says they never should have gotten in the first place. And the New Jersey Department of Community Affairs said a few months ago that it had asked more than 50 homeowners to return a total of close to $1 million in federal Community Development Block Grant funding, with more audits currently underway. Similar recoupment letters were sent out after Katrina and other disasters.

To minimize the chance of such problems occurring, Marticek said the Ocean County Long Term Recovery Group helps homeowners communicate with the government, their insurance companies, private organizations, and other providers of aid money to avoid violating rules prohibiting duplication of benefits. She also said it’s important that contractors hired by homeowners cross their “t’s” and dot their “i’s” to ensure that all building repairs they do are fully in compliance with federal and local construction standards, particularly in flood zones. Going through such steps can be time-consuming and frustrating for storm victims eager to move on with their lives, but it can help avoid even bigger headaches down the line.

To Smilowitz, some of the concerns about charities and foundations not delivering aid fast enough could have been avoided if the groups had simply been more forthright about how they were operating behind the scenes.

“I think it depends on how the money was solicited and how donors intended the money to be distributed,” he said. “If an organization is raising money on the ‘let’s save lives and help people right away’ line, then that money should be used for the more short-term events.”

Transparency is key, he added.

“I think it would be really honorable for an organization to say, ‘Here’s our policy: We save as much as 25 percent of the money you donate for long-term recovery. The interest generated on this cash is going to go right back into the recovery fund.’ If they just posted a policy that offered some level of transparency upfront, then that could help. I think as long as organizations are straightforward and honest about details and specifics, then the public would be much more forgiving.”

Another reason for the delays, he said, was that while some big, national charities had the name recognition to raise millions of dollars, they didn’t always have the capacity to respond in the most-effective way possible.

“These organizations asking for dollars are often not the ones positioned to deliver services,” he said. “When all the money’s based thousands of miles away from the disaster, and the decision-makers are based out of state, then oftentimes the community is not making the decisions they need to be making, and the recovery often mismatches the needs of a certain area that’s been affected.”

In a possible demonstration of this concern, the American Red Cross came under fire after an investigation by NPR and Pro Publica, drawing upon internal documents, found that the organization diverted assets for public-relations purposes and sometimes lacked adequate basic supplies like food, blankets, and batteries to distribute. The Red Cross has vigorously disputed many of the charges.

Smilowitz added that it’s often impractical to donate to national groups that didn’t have the boots on the ground and the local connections prior to the disaster, regardless of their reputation.

“It’s like taking a layover on your way somewhere when you’re flying,” he explained. “Most people want direct flights. They want to get somewhere as fast as possible. What we see after these disasters is the cash often takes a six month or one year layover, really quite far from the actual disaster.”

Compounding the delays, he noted, is the fact that large organizations doing the regranting or redistributing funds to their local chapters often take a cut of between 9 percent and 12 percent for administrative overhead and operating expenses. That creates an incentive for some groups to solicit donations even if they never intended to do any of the work themselves, and it means larger portions of donor dollars could be siphoned off along the way rather than making it to the end user.

Smilowitz recommends giving instead to local groups with deeper ties to the communities they serve.

“It’s often OK to wait a week or two and see how things play out and see where needs fall,” he said, “because ultimately, even though someone’s going to text $10 or send a check for an organization the day after an event, that money’s likely not going to move that quickly to help people in need, even though you’re going to see them on TV, and the organization’s going to represent that they’re helping those people in real time. Chances are that waiting to figure out which organization’s actually responding and which is just putting a donation link on their website saying, ‘donate to us’ I think is a really helpful thing.”

To help people make that determination, the Disaster Accountability Project is building a web tool to collect data on nonprofit resources and staffing.

“The idea is that if we know which organizations are operating in each of these locations and what their capacities look like, we can tell the donor public that an organization actually has operations in this area, or they don’t have operations in this area, and they have no business raising money for a particular disaster,” Smilowitz said.

On top of the concerns about delays in distributing aid money, there were also isolated instances of fraud in the aftermath of the storm. The New Jersey Attorney General’s Sandy Fraud Working Group says it’s filed criminal charges in 20 fraud cases related to Sandy, and has coordinated charges with other agencies in more than 75 cases statewide.

Many of these cases involved price-gouging and cases of home improvement contractors ripping people off, but in one instance, the Division of Consumer Affairs sued the operators of a group called the “Hurricane Sandy Relief Foundation” for running an unregistered charity, allegedly diverting donated funds into their personal bank accounts and falsely claiming that donations were tax-deductible. As part of a settlement with the state, the group eventually redistributed the $325,000 it had raised to other charities working to help Sandy survivors.

In the end, Smilowitz thinks recovery from events like Sandy might operate more smoothly if the federal government — particularly the National Guard — were to play a greater role in delivering relief.

“The current system almost privatizes disaster relief. I think that we put a lot more responsibility and trust into charities than we should,” he said, adding that on the other hand, “I don’t think that we have as a country a better system that’s going to be implemented anytime soon.”

As things stand, however, Marticek believes that storm-impacted homeowners would greatly benefit if the long-term recovery groups that operate in each of the counties had more funding — from both private donors as well as perhaps the government — to hire additional disaster case managers. She said she and her colleagues in Ocean County have had great success helping Sandy victims rebuild their homes, but they may run out of money by the middle of next year.

“These are the things that keep you awake at night,” she said. “The thought of bringing that progress to a complete halt is just frightening because we know how many people really need this help to get home.”

She said there’s a backlog of thousands of residents waiting for assistance, and more keep coming every day, but at this point, it’s unclear where the groups will get the funding to continue.

  | DECEMBER 4, 2014

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