Veterans advocates riled by report on Army charity

JEFF DONN – Feb 2009

Veterans advocates are venting anger and frustration toward the biggest charity within the U.S. military after revelations that it has been packing more money into reserves than it has spent on aid during the wars in Iraq and Afghanistan.

"We have so many soldiers, reservists and National Guard who are in dire need, and for the Army to be holding this much money in reserve is despicable," chairman Bob Handy of Veterans United for Truth, of Santa Barbara, Calif., said Monday.

He was reacting to an Associated Press investigation that examined five years of tax returns by Army Emergency Relief and reported on interviews with dozens of soldiers, veterans and officials from other military charities.

From 2003 to 2007, the charity, also known as AER, packed $117 million into its own reserves while spending just $64 million on direct aid, records show. By contrast, smaller Navy and Air Force charities both put far more of their resources into aid than reserves. Also, more than 90 percent of AER's aid was given as no-interest loans, not outright grants.

Though tax-exempt and legally separate, AER operates largely under Army control, the AP found. Soldiers are squeezed for contributions, often rewarded for them in violation of regulations, and sometimes delayed in transfers or promotions when loans aren't repaid.

AER, which grew into a $345 million colossus during the Iraq war, is meant to help active-duty soldiers and Army retirees with their cash emergencies and to provide college scholarships to their families.

At a news conference Monday outside El Paso, Texas, Col. Ed Manning, commander of Fort Bliss, said that the charity works well and he was "just kind of surprised that there'd be a question about the money." He said the charity at his post of 20,000 soldiers had distributed $2.9 million over the past year, though he acknowledged that it was mostly in loans.

He said soldiers contribute entirely of their own will, but he defended rules that make needy soldiers request aid through an Army superior. "It's good that a commander knows what's going on in his unit," Manning said.

AER operates on 90 Army sites worldwide. No one at AER headquarters in Alexandria, Va., was available to comment Monday. But retired Col. Dennis Spiegel, AER's deputy director for administration, has previously defended the size of AER's reserves, saying they are needed to keep the charity strong.

Other charities challenged that argument Monday.

"It just makes me sick to my stomach," said Amy Fairweather, director of the Iraq Veteran Project in San Francisco, a nonprofit that helps veterans with shelter and emergency payments. "There are resources that are not being used when organizations like ours ... are pounding the pavement every day in this tough economic time to bring in dollars to help our veterans."

Paul Sullivan, executive director of Veterans for Common Sense, in Washington, D.C., said AER should rework its policies to help more veterans. Right now, it limits emergency aid to active-duty soldiers and veterans who served long enough to retire.

"If they're sitting on all this money and there is a demonstrated need out there, they can expand their mission to meet the need," said Sullivan, an Army combat veteran who used to work as a project manager for the Department of Veterans Affairs.

Veterans for Common Sense and Veterans United for Truth are appealing the dismissal of a federal lawsuit they filed during the Bush administration over federal delays in providing disability benefits.


The Army Emergency Relief (AER) program was founded in 1942 as a non-profit organization entwined with the U.S. Army to help soldiers and their families in need. Traditionally uncontroversial, AER hands out loans, grants and scholarships, and helps with medical expenses, funeral expenses, vehicle repair, food, rent and utility bills. However, an Associated Press investigation revealed that AER has been hoarding the funds it collects. Between 2003 and 2007, it kept in reserve $117 million, while spending only $63 million on direct aid. By contrast, a similar charity for the Air Force kept only $24 million in reserve while giving away $56 million and the Navy charity saved $32 million in reserves and gave $49 million in aid. In addition, the Army charity changed the emphasis of the program from aid to loans to such an extent that during the four-year period, 91% of its dispersals were in the form of loans rather than grants.

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