In the 10 years since the Sept. 11, 2001, terrorist attacks, many of the charities and foundations created to help victims and their families have been shuttered. For two of the largest ones remaining, there are divergent objectives — spending it all vs. reinvigorating the charity — and different investment strategies.
Some of the highest profile relief funds took in a lot, but gave it away quickly:
• The Twin Towers Fund, which raised $180 million that was managed for free by J.P. Morgan Chase & Co., New York, closed in 2004, said Larry Levy, its former president.
• The $1.1 billion Liberty Disaster Relief Fund, set up by the American Red Cross, spent $700 million its first year. The $132,000 in assets remaining now are being used to manage grants made by the fund, according to a spokeswoman.
• Catholic Charities USA in Alexandria, Va., raised $31 million and disbursed it to related social service agencies “long ago,” said spokesman Roger Conner.
• The September 11th Fund set up by the New York Community Trust and United Way raised $501 million, but closed at the end of 2004.
Of the funds still in existence, the largest appears to be the Families of Freedom Scholarship Fund, with $102 million in assets as of June 30, according to Anne Cheney, controller of Scholarship America, formerly Citizens Scholarship Foundation of America, a professional scholarship manager based in Minneapolis that manages the fund.
Families of Freedom Fund managers, board members and an investment management committee work closely with actuaries to target their spending needs until the last recipient is served, Ms. Cheney said. “It is a fascinating exercise” that factors in age, estimated college costs and projected family income through 2030.
“Having a large pool of assets without knowing the specific recipients is a different model. What we're trying to do is help restore the lives of the people whose worlds were upended that day. It feels like you're making a contribution.”
The portfolio, a mix of stocks and bonds, is managed by The Vanguard Group, with investment policy set by the board. Like any endowment, “you're trying to get the greatest return with an acceptable level of risk,” said Ms. Cheney.
The Families of Freedom fund has plenty of money left because its sole purpose is giving college scholarships for surviving family members of all 9/11 victims. Many of the intended recipients just started reaching college age in the past two years.
Through 2010, the fund had distributed $62.9 million in need-based postsecondary scholarships to 1,697 students, according to its website, and this academic year expects to give $10.5 million in scholarships to 527 eligible members, including 173 first-time recipients. The endowment is expected to close in 2030.
Scholarship America's track record as scholarship professionals led to an alliance with the Citigroup Relief Fund, which the financial firm established immediately following the attacks. A $15 million pledge from Citigroup, plus another $5 million collected through employees and others, created a $20 million endowment administered and managed through the Citi Foundation, which gives out $1 million in scholarships each year, through Scholarship America.
Including an initial $5 million transfer in its first year, Citigroup has given $8 million in scholarships. “There was a tremendous need to take care of the families,” said Citigroup spokesman David Roskin.
Another financial firm to respond quickly was Deutsche Bank, which according to spokeswoman Mayura Hooper, was the first bank to donate a day's profits to the victims, in 2001. Kevin Parker, head of the firm's equities business at the time, got personally involved by joining the board of the New York Police & Fire Widows' and Children's Benefit Fund Inc., New York, which has raised $135 million for 700 families of New York City police officers, firefighters, emergency workers and port authority officers killed during the rescue efforts.
Fund Treasurer John W. Neary said the fund has distributed some $135 million of the roughly $150 million it has raised since it started in 1985, with the bulk of contributions made after September 11. Its current assets of $44 million are managed equally by PIMCO All Asset Fund and JP Morgan Chase Money Market Fund, in mainly short term investments.
As the economic downturn has forced charities to compete for donors, the fund board's in-house investment committee of investment professionals has focused on raising its investments and governance to a level of institutional quality, said Citigroup's Ed Munshower, committee chair.
”We want to provide our donors with the highest confidence that everything we do is to a very, very high standard,” Mr. Munshower said in an interview. The key to that, he said, is looking at risk factors within each asset class. “We're building a portfolio based on diversifying those risks, and looking at a higher return of profits per unit of volatility.”
Demands for charitable giving “are greater than ever, so you've got to differentiate yourself,” he said, and having a committee of top investment professionals certainly helps. “It's a real serious volunteer organization, and they're proud to be able to help the people who do so much for everyone else.”
Now global head of Deutsche Bank Asset Management, New York, Mr. Parker is working to raise the charity's profile and keep a spotlight on the families through efforts that include a fundraising gala honoring Goldman Sachs Chairman and CEO Lloyd C. Blankfein on Oct. 13, a date that represents the police code “10-13” for “officer down”.
Linda Giammona, director of development for the New York Police & Fire Widows' and Children's Benefit Fund, said contributions to the 26-year-old charity spiked after 9/11, especially after getting a plug from President George W.Bush during a post-event visit to New York City. “It just opened up everyone's eyes about the risk of being police officers and firefighters. It just provided such a connection between them and Wall Street, which really was the leader in doing that kind of charitable work. It said volumes.”
The group also is working on a capital campaign to try to overcome budget cuts triggered by the recession that forced them to cut their annual $13,000 check per family to $5,000 in 2011; the fund would like to give bigger checks in the future. But even during the depths of the recession, Wall Street firms and individuals came through,” Ms. Giammona said. “They stood by us.”