1.3 Million Vets Live in Poverty and Army Charity Hoards Millions

...According to 2007 U.S. Census Bureau figures, 1.3 million veterans — or 6 percent — lived in poverty, with 537,000 unemployed....

Army Community Services financial educator Yolanda Davis, center, talks with AP – Army Community Services financial educator Yolanda Davis, center, talks with Pvt. Terrence Nicholas and …

FORT BLISS, Texas – As soldiers stream home from Iraq and Afghanistan, the biggest charity inside the U.S. military has been stockpiling tens of millions of dollars meant to help put returning fighters back on their feet, an Associated Press investigation shows.

Between 2003 and 2007 — as many military families dealt with long war deployments and increased numbers of home foreclosures — Army Emergency Relief grew into a $345 million behemoth. During those years, the charity packed away $117 million into its own reserves while spending just $64 million on direct aid, according to an AP analysis of its tax records.

Tax-exempt and legally separate from the military, AER projects a facade of independence but really operates under close Army control. The massive nonprofit — funded predominantly by troops — allows superiors to squeeze soldiers for contributions; forces struggling soldiers to repay loans — sometimes delaying transfers and promotions; and too often violates its own rules by rewarding donors, such as giving free passes from physical training, the AP found.

AER was founded in 1942 to soften the personal financial hardships on soldiers and their families as the country ramped up its fight in World War II.

Today, AER's mission is to ease cash emergencies of active-duty soldiers and retirees, and to provide college scholarships for their families. Its emergency aid covers mortgage payments and food, car repairs, medical bills, travel to family funerals, and the like.

Instead of giving money away, though, the Army charity lent out 91 percent of its emergency aid during the period 2003-2007. For accounting purposes, the loans, dispensed interest-free, are counted as expenses only when they are not paid back.

During that same five-year period, the smaller Navy and Air Force charities both put far more of their own resources into aid than reserves. The Air Force charity kept $24 million in reserves while dispensing $56 million in total aid, which includes grants, scholarships and loans not repaid. The Navy charity put $32 million into reserves and gave out $49 million in total aid.

AER executives defend their operation, insisting they need to keep sizable reserves to be ready for future catastrophes.

"Look at the stock market," said retired Col. Dennis Spiegel, AER's deputy director for administration. Without the large reserve, he added, "We'd be in very serious trouble."

Navy- and Air Force-sponsored charities also are deeply intertwined with their services, but they impose controls that help safeguard their independence.

Officers in those services are expected to keep their noses out of requests for aid. Sailors should "be comfortable coming to us without any fear that the command is going to be involved," says retired Rear Adm. Jan Gaudio, executive vice president of Navy-Marine Corps Relief Society.

Meanwhile, civilian charities for service members and veterans say they are swamped by the desperate needs of recent years, with requests far outstripping ability to respond.

According to 2007 U.S. Census Bureau figures, 1.3 million veterans — or 6 percent — lived in poverty, with 537,000 unemployed.

"I have so many people who are losing their homes, they're behind on their mortgage payments, they're losing their jobs because of PTSD (Post-Traumatic Stress Disorder) or the medication they're taking — and the Army Emergency Relief can't help them," says Outreach Director Sema Olson at U.S. Welcome Home Foundation, which finds aid for combat veterans....

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