FEMA’s Expansion Threatens Charitable Competition

In 2003, in the aftermath of 9/11, the Federal Emergency Management Agency (FEMA) was placed under the Department of Homeland Security. The disastrous aftermath of Hurricane Katrina two years later marked the first test of the new FEMA, and there is widespread agreement that the agency utterly failed. Much of the tragedy following Katrina was exacerbated by or would not have occurred at all had FEMA not displayed gross incompetence, in stark contrast with private, voluntary efforts. I have detailed these differences and their implications in “Public and Private Responses to Katrina, What Can We Learn?”, and further insight is provided in “The Long Road Back: Signal Noise in the Post-Katrina Context,” by Emily Chamlee-Wright (The Independent Review, Fall 2007).

Of course, precious few government agencies are ever shut down for failure—each is instead almost always, and generally significantly, expanded. In the case of FEMA, the extent and danger of this expansion is only now coming to light, in the aftermath of the first significant hurricanes since Katrina, Gustav and Ike this year. Apparently, since private charities have been repeatedly shown to be so effective, FEMA has now chosen to avoid the embarrassment and simply eliminate the competition. Unlike Katrina, which was a media bonanza, FEMA took inordinate control of media access following Gustav and Ike, greatly diminishing awareness among Americans of the true extent of the aid needed in the affected areas. In fact, significant aid is needed and is being provided by the traditional responders to such disasters such as The Salvation Army and Red Cross. Yet the viability of these agencies—which have been efficiently and effectively providing disaster relief since the 19th century—is now threatened by FEMA’s deliberate move to de-fund those life-saving private charities that have been so effective through the establishment of its own agency, the Aidmatrix Foundation, to intercept disaster relief contributions from private donors and divert them to government efforts.

The Salvation Army first became aware of these efforts during the Republican National Convention, when word came that Cindy McCain and Laura Bush were going to make a joint appeal for donations for hurricane relief. Salvation Army personnel quickly made calls to make sure the Salvation Army would be among the agencies listed, and received assurances it would be. During the event however, the screen behind Mrs. McCain and Mrs. Bush during their appeal, directed concerned viewers wanting to assist hurricane victims instead to Aidmatrix’s toll-free phone number, four state government websites (www.servealabama.gov; www.floridadisasterfund.org; www.mississippirelief.com; and www.texasresponds.org), and Aidmatrix’s own website. Each of these state websites in turn links to Aidmatrix’s site for making contributions.

The Aidmatrix Foundation was created by FEMA, and FEMA and 27 states have in turn signed a Memorandum of Understanding with Aidmatrix, designating it as the approved solicitor for disaster relief contributions. While claiming that Aidmatrix only targets “unaffiliated” donors, in practice, Aidmatrix has broken the traditional link between private donors and private charity, by diverting those seeking to provide contributions in aid of victims of natural disasters to FEMA’s Aidmatrix site.

The flow of money out of Aidmatrix is completely intransparent, and will, by definition, be determined politically by inside interest groups. In the case of the aforementioned Gustav appeal, for example, websites for the four states ruled by Republican governors were displayed on the convention’s screens; relief for the one state ruled by a Democrat—Louisiana—was referred directly to Aidmatrix’s site. And the resulting influx of funds can only provide attendant political benefits to those Republican governors.

And thus, the politicization of charitable disaster relief.

Meanwhile, the impact to The Salvation Army and others has been dramatic:

  • The Salvation Army received $399 million in private contributions for the relief it provided following Katrina
  • It has received $1/2 million following Ike.

The Red Cross has been similarly severely impacted, and last week asked Congress for $150 million in emergency funding to replenish its disaster relief reserves. Paul C. Light, a professor of nonprofit groups and the federal bureaucracy at New York University, warns that by so doing the Red Cross risks blurring its status as an independent charity, resulting in its being seen as a quasi-governmental organization. Light further predicts that “if the Red Cross takes federal money, it will effectively become a ‘de facto arm of the federal government,’ which could make donors skeptical and less likely to contribute.”

As experience has shown time and again, government money drives out private money, and government agencies drive out competing private agencies. People quickly and easily forget that things used to be different, and it will soon be commonplace to accept that, “of course,” it’s the federal government’s responsibility to provide disaster relief, just as it’s allegedly responsible for bailing out investment banks.

The displacement of committed, experienced and proven-effective voluntary disaster responders with unaccountable, expensive and proven-incompetent bureaucrats bodes ill. FEMA’s power grab of the disaster relief sector will predictably result in many more Congressional investigations into FEMA’s future failures, and the cry for greater and greater amounts of taxpayer money to achieve results falling farther and farther short of those historically provided by the Red Cross, The Salvation Army, and countless other voluntary associations and charities.

Mary L. G. Theroux is Senior Vice President of the Independent Institute. Having received her A.B. in economics from Stanford University, she is Managing Director of Lightning Ventures, L.P., a San Francisco Bay Area investment firm, former Chairman of the Board of Advisors for the Salvation Army of both San Francisco and Alameda County, and Vice President of the C.S. Lewis Society of California.
Full Biography
Beacon Posts by Mary Theroux
  • Catalyst
  • MyGovCost.org
  • FDAReview.org
  • OnPower.org
  • elindependent.org