A Pig in a Python: How the Charitable Response to September 11 Overwhelmed the Law of Disaster Relief

Abstract

The terrorist attacks of September 11, 2001 ("9/11") inspired an unprecedented amount of charitable giving while imposing extraordinary burdens on the charities that received these gifts. It is generally thought that donors outperformed charities at their respective tasks. This Article locates some of the difficulties that charities encountered in two latent tensions within the legal regime that governs charitable organizations in general, and disaster relief organizations ("DROs") in particular. Charities hold donations in trust or a trust-like arrangement whose terms are formed through donative transactions within the parameters set by charity law. Such arrangements can be strained when donors demand or expect charities to act in ways that exceed the bounds of what is legally charitable. Another clash can occur when donors ask a charity to act at odds with its broader mission or principles. The outpouring of charitable giving after 9/11 exposed both these tensions on a grand scale. This Article examines the predicament of oversubscribed 9/11-specific DROs that sought to distribute funds to 9/11 victims who were not financially distressed. It then examines the predicament of general DROs that sought to reconcile an institutional commitment to inter-disaster equity with the desire of some donors to target their gifts towards 9/11 victims. The Article demonstrates how, through legislative and executive intervention, almost all of these entities were either permitted or pressured into distributing their post-9/11 receipts to 9/11 victims. It remains to be seen whether this experience has caused any long-term change or damage to charity law principles developed over the course of centuries in more placid times.

Keywords: nonprofit organizations, tax-exempt organizations, 9/11, September 11, charity, charitable, philanthropy, philanthropic, cy pres, donor intent, disaster relief, Liberty Fund

JEL Classification: L31