Surprise! The AP seems to have gotten its story about Army Emergency Relief a little wrong.
Just where did Donn get his information? We really don’t know. Col. Cohen isn’t exactly sure, and neither are his counterparts at other military charities. The AP article says that they analyzed the tax records of the AER, but if they were doing such a great job, how did they miss the following:
- During the period in question ( ‘03-07), the AER distributed $250 MILLION in financial assistance
- Outstanding loan balances are considered an asset of the trust, even though the money is actually not in their possession. Much like a 401(k) plan, outstanding loan balances are included in the total assets, as if they money was still there, because it’s expected to be repaid. Only when a loan is defaulted upon is it reported as an actual expense. Considering the increase in aid given over the past few years, this fact alone explains the increase in “cash” reserves. It’s simple accounting that AP doesn’t seem to understand.
- Current investment capital available for grants and loans fluctuates between $190-$200 million, depending on the day and how well the market is doing. Donn says that the fund swelled to $345 million between 2003-2007, and perhaps at one point it was… but it’s not now. The trust is not sitting idly. In order to be a good steward of the money, it’s invested, awaiting distribution to soldiers and their families.
- During the period in question, the AER distributed nearly twice as much in aid as they received in donations and loan repayments.
If all of this sounds a bit familiar, it should. In December 2007, the Washington Post ran a similar piece on a wider range of military charities. But the conclusions were strikingly similar, and the AP tracked down some of the same critics contacted by the Post, including Daniel Borochoff, President of the American Institute of Philanthropy (AIP). We should note that the Post article was based on a report from Borochoff’s organization.
But that assessment also revealed a fundamental misunderstanding of how the AER–and its Air Force and Navy counterparts–operate. In his 2007 report, Mr. Borochoff wondered why the charities didn’t spend more money on homeless veterans. Apparently, he didn’t understand there are virtually no homeless among the groups served by these charities–active-duty military personnel, retirees and their families.
