Homeland Security: 9/11 Victim Relief Funds

Publication Date: March 2003

Publisher: Library of Congress. Congressional Research Service

Author(s):

Research Area: Banking and finance

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Abstract:

In the first days following the terrorist attacks of September 11, 2001, an unprecedented number of Americans contributed over $2.2 billion (some estimates run as high as $2.7 billion) in donations to assist in the relief of victims. (Two hijacked planes crashed into the World Trade Center, a third into the Pentagon, and a fourth went down in Shanksville, Pennsylvania.) According to the New York State Attorney General's office, over 250 new charitable funds were created in the weeks following the 9/11 crisis.

The federal government responded to the attacks in various ways. In the first week after the disaster, Congress passed the 2001 Emergency Supplemental Appropriations Act for Recovery from and Response to Terrorist Attacks on the United States (P.L. 107-38), part of which provided at least $20 billion for disaster recovery in New York, Virginia and Pennsylvania. Then 12 days after the attack the September 11th Victim Compensation Fund of 2001 (P.L. 107-42) became law. This $6 billion program is intended to compensate any individual (or the personal representative of a deceased individual) who was physically injured or killed as a result of the attack. Nearly 3,000 victim families are expected to apply for compensation. Attorney General Ashcroft appointed a Special Master who is presently in the process of distributing the fund. Congress also passed, and the President signed into law, the Victims of Terrorism Tax Relief Act of 2001 (P.L.107134). Among other things, this law states that victims will not be subject to federal income taxes for the year in which they died and also for the previous year. This law also exempts from gross income, amounts received from the Victim Compensation Fund.

In response to the terrorist attacks, the American public donated unprecedented amounts of money to charities nationwide. Questions were raised about where the money was going and whether the victims and their families had access to the donated money in a timely manner. To help assure victims and donors that the money was getting to the intended beneficiaries promptly, hearings were held in the U.S. House of Representatives on November 6 and 8, 2001. New York Attorney General Eliot Spitzer testified, as did representatives of the Better Business Bureau Wise Giving Alliance, among others. The American Red Cross was particularly questioned because of concern that part of the $1 billion raised would be held in reserve rather then spent on the 9/11 victims as was expected by the people who donated the money. Subsequently, Red Cross officials declared that all the funds raised for the Liberty Disaster Relief Fund would be distributed to 9/11 victims.

This report also discusses the amounts of money collected and distributed by some of the larger victim relief funds such as the New York State's World Trade Center Relief Fund Distribution, the Twin Towers Fund (established by Rudolph Giuliani, the former mayor of New York City), the Red Cross Liberty Disaster Relief Fund, September 11th Fund (organized by United Way), Safe Horizons, the Families of Freedom Scholarship Fund and several Firefighters and Police Relief Funds.

This report will be updated periodically as more information is available.