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Oklahoma City bombing fund audit reveals no improprieties

An independent forensic audit of Oklahoma City's bombing relief fund has revealed no improprieties related to the disbursement of donated funds.
by Randy Ellis Published: March 22, 2013

Uses unrelated to bombing

Trustees upset many bombing survivors when they decided to reallocate about $4.4 million in investment income from bombing donations to purposes that would not directly benefit survivors.

Trustees designated that the reallocated funds be used to:

• Establish a $2 million endowment to train community people on how to respond to future disasters.

• Establish a $1.5 million endowment that would provide annual earnings to the Oklahoma City National Memorial for survivor support and activities.

• Set aside $400,000 to assist other communities that experience disasters and $500,000 for long-term studies on things like how money can best be used to assist survivors of disasters.

Auditors questioned the reallocation.

“The decision to reallocate the funds, while laudable in its intent, was potentially a problem from a public and donor perception standpoint,” they said. “It cannot be ignored that a certain amount of frustration would result from survivors who were told years earlier that ‘funds were running low' for living expenses, only to discover that $4.4 million had been reallocated from the Disaster Relief Fund and provided to help other causes.”

Auditors indicated it is still possible for fund administrators to get back all but about $20,000, which was spent on out-of-state tornado victim assistance efforts. They suggested trustees consider doing that.

Dividing up funds

Some survivors have advocated that remaining funds be divvied up among survivors and the fund disbanded.

Doing that could pose problems, auditors said.

“Based on the IRS guidance, it appears that the Disaster Relief Fund as an exempt organization would likely be in violation of federal tax laws if it began liquidating the funds that are left among the survivor group in a manner similar to compensation funds,” auditors said. “Nothing in the governing Disaster Relief Fund documents indicates its purpose was to be a compensation fund to be shared among survivors.”

Auditors suggested that trustees seek a private letter ruling from the IRS that would resolve “what can and cannot be done with the remaining funds.”

Other recommendations that auditors suggested trustees consider included:

• Establish a written policy for survivor appeals.

• Formalize a policy for use and distribution of remaining funds.

• Implement a consistent outreach policy to make sure no survivor falls between the cracks.

• Hire experts to project the amount of fund money needed to cover future medical costs, mental health expenses and educational costs of bombing survivors.

Read the report
by Randy Ellis
Investigative Reporter
For the past 30 years, staff writer Randy Ellis has exposed public corruption and government mismanagement in news articles. Ellis has investigated problems in Oklahoma's higher education institutions and wrote stories that ultimately led to two...
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