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General Ramblings: Taxes Vs. Fundraising

By Paul Clolery - May 1, 2012

The images of people begging to be rescued from the roofs of their New Orleans homes in the aftermath of Hurricane Katrina are as emblazoned into the memories of Americans as the sight of planes slamming into Towers I and II of the World Trade Center and the television footage of a Secret Service agent jumping on the back of a convertible in Dallas.

As the then-President of the United States was praising the “heck of a job” the head of the Federal Emergency Management Agency (FEMA) was doing in New Orleans, the reality was that thousands of people were warehoused in squalor inside the Super Dome, which had part of its roof ripped off by the Category 5 hurricane’s winds.

It took the charitable sector and the generosity of American citizens to bail people out of the immediate need. It was the American Red Cross, the Salvation Army and dozens of other national, regional and local disaster response organizations that mobilized the basics of food and water and maybe a clean pair of underwear.

Those agencies raised and put to work tens of millions of dollars in a hurry. What did FEMA do? It spent a few billion dollars buying and providing trailers for shelter that were constructed with formaldehyde as insulation that sickened people and had to be abandoned.

And now, the federal government wants to compete with the humanitarian organizations that get the job done every day, that have resources positioned and ready, and have teams of trained staff and volunteers.

U.S. Sen. Daniel K. Inouye (D-Hawaii) has introduced S. 2202, the Preparedness and Resilience Foundation Act. It is to establish “a nonprofit private corporation to be known as the Preparedness and Resilience Foundation.” According to the legislation, the foundation “shall not be an agency or instrumentality of the federal government, and officers, employees, and members of the board of directors of the foundation shall not be officers or employees of the federal government.”

The foundation’s purpose, according to the legislation, “shall be to support and carry out activities that promote the resilience of individuals, communities, structures, and systems against natural disasters and terrorist attacks and other human-caused disasters, and that build and sustain the capabilities of the public, private, and civic sectors to work together to prepare for, prevent, protect against, respond to, recover from, and mitigate all such hazards.”

Funny, that sounds a lot like what FEMA is already supposed to be doing. The legislation would set up an endowment fund for “providing endowments for positions that are associated with FEMA and dedicated to the purpose described in subsection (b). The fund shall consist of such donations as may be provided by non-federal entities and such non-federal assets of the foundation (including earnings of the foundation and the fund) as the foundation may elect to transfer to the fund.”

The bottom line is that tax dollars apparently are not enough and the federal government wants to be able to fundraise outside the scope of its actual authority. What Sen. Inouye is proposing is akin to a hospital foundation raising money and transferring it to the hospital. This foundation would be able to accept cash and non-cash gifts and buy FEMA things that it needs. Let’s see how many lobbying and access laws are circumvented with this concept. There would be zero transparency. The foundation could raise money and buy from friends of whichever administration is in charge.

There are so many opportunities for fraud that this legislation should be a non-starter. The federal government should not be in competition with charities for cash and in-kind donations. There is a theory in fundraising that publicizing large gifts sometimes dissuade people from giving small gifts. The thinking is, what can $10 do when you already have $1 million? Why should people donate to the foundation of an agency of the federal government when they already have tax revenue? The federal government establishing a fundraising arm will suppress all giving in a time of crisis.

Only 3 percent of the legislation introduced in the U.S. Senate was enacted during 2009-2010. If this is an example of what is being introduced, it’s a good thing the percentage is so small.

The challenge is that Sen. Inouye is chair of the U.S. Senate Committee on Appropriations and can slip this into an omnibus package that has to be passed.

Nonprofits can do more than raise money and provide services. They can also advocate. It’s time to call every member of the U.S. Senate and let the members know this is a very bad idea. NPT


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