American Red Cross Where Does the Money Go?

The Red Cross claims to know exactly where it sent every dollar donated to relief following the devastating 2010 Haitian earthquake – but, agreements with organizations that receive funding from the charity prevent it from sharing information with the public about who received that money.

According to a spokeswoman, the agency defends itself by insisting that it is currently working with partners too closely to begin revealing their identities. But all this secrecy begs the question: is it safe to donate to the Red Cross when the money gets funneled to anonymous third parties? The Red Cross, after all, raised about half a billion dollars for Haitian relief – and five years later, nobody outside the agency itself and Congress really knows where very much of it went. Every disaster seems to be a rerun for the non-profit Red Cross, which raises enormous sums of money – $1 billion after 9/11, a claimed $3 billion following Hurricane Katrina – and then faces criticism again and again over where, when and how the money gets spent.

“[The Red Cross] lost a clear view of how to conduct themselves … It’s all about money, and that trumps their mission,” said Ben Smilowicz, Executive Director of the Disaster Accountability Project, a watchdog group based in Washington, D.C. Smilowicz is a Red Cross critic and also a former volunteer who served during Hurricane Katrina.

“I think they’re trying to ride it out like a bad storm that never ends,” he added.

Smilowicz said that the Red Cross appears to accept donations for disasters – for example, the earthquake in Haiti, or the more recent devastating earthquake in Nepal – in places where it has no capacity, pre-existing network, or experience dealing with such large-scale problems. This leads the organization to “raise more money than it knows what to do with,” he said, and then sluggishly attempt to learn as it goes.

As for Haiti, the 2010 earthquake “officially” killed 316,000 — a much-disputed government figure. Other estimates by the United States Agency for International Development and academics place the death toll anywhere from 46,000 to as high as 158,000. In July, the Red Cross released a full account of its spending after a recent investigation by Iowa Sen. Charles “Chuck” Grassley. The agency’s partner organizations, however, were redacted from the public version of the report, with the Red Cross citing agreements with those groups as the reason it could not share the information with anyone except Congress. The Red Cross redacted 60 pages listing partners from the 72-page report.

A spokeswoman for Grassley emailed The Suit Magazine to say that he would “continue to ask questions” about Red Cross spending, but sidestepped questions about whether potential donors should look elsewhere. Grassley also released a statement regarding the heavily redacted Haiti report. “Who’s driving the lack of disclosure, the Red Cross or the grant recipients? … It’s hard to see how disclosing the dollar amounts given from the Red Cross to the individual organizations and how those organizations spent the money would harm anyone,” the statement said.

The Red Cross, Smilowicz said, is part of the nation’s natural disaster framework — i.e. it is written into disaster relief plans at the local, state, and national level, and has been for decades — which can hinder government oversight efforts. There are no agencies with the size or reach of the Red Cross to take over those functions, and members of Congress might hesitate to tangle with a vital piece of disaster relief infrastructure.

The aid agency’s seemingly incremental transparency, meanwhile, has failed to impress accountability advocates.

“This is the same organization that said their internal workings were ‘trade secrets’ just over a year ago,” Smilowicz said. He added that the Red Cross is only responsive to Congress because that body has subpoena power.

Smilowicz was referring to the organization’s stonewalling of the investigative journalism outfit ProPublica when it requested information on Red Cross expenditures related to 2012’s Hurricane Sandy, which devastated shorelines in parts of the New Jersey and New York. The agency first declined to release any information, saying it contained “trade secrets” that “competitors” could exploit. A year later, the Red Cross reversed itself, providing more detailed information about how it spent the roughly $312 million raised.

While the Red Cross is a non-profit and must disclose its finances in annual form 990 filings, those forms slice expenditures into rough categories — not detailed, line-by-line expenses. For example, the Red Cross’ filing for its 2013 fiscal year shows that the agency reported spending $92,741,617 on international disaster relief. Flip to the schedule that goes into detail on this line, however, and you fins a generic explanation of how the Red Cross, “helps vulnerable people around the world prevent, prepare for, respond to, and recover from disasters … the organization works with our partners … and other international relief and development agencies to build local capacities, mobilize and empower communities, and establish partnerships.”

The form does not include any detailed expenditures on Haiti, or other specific disasters abroad.

In June, ProPublica and NPR also jointly released a story asserting that, despite collecting massive amounts of money on behalf of Hatian relief and rebuilding, the Red Cross has built just a shocking six homes there. Meanwhile, staggering needs on the ground in Haiti, and the possibility that aid dollars will dry up as the earthquake recedes from memory, loom large.

Only about 15 percent of the country has access to reliable electricity or running water, according to World Bank figures, which also show that education is poor and finding work remains a struggle.

Dr. Joyce Pulcini, a professor and Director of Community and Global Initiatives at The George Washington University School of Nursing. Pulcini, who spoke with The Suit in a personal capacity, has been going to Haiti for three years with groups of medical and nursing students. Most of Pulcini’s work has been in a smaller community two hours from Port-Au-Prince, Haiti’s capital. She has also been involved in the development of a health clinic located near a new school and factory complex spearheaded by a large Korean corporation. For projects like that, however, Haiti needs money. “More sustainable development of that sort is desperately needed,” Pulcini said, “but some aid groups appear to have left the country already.”

“The Red Cross may perform well at the local level,” Smilowicz said, referring to the agency’s work in the aftermath of house fires that displace families and other hyper-local disasters, “but it might be wise to hold off on donating to them after an international crisis. Donors should look for organizations that have demonstrated capacity in the disaster area,” he added.

“They’re the American Red Cross, not the Nepal Red Cross … No organization has people everywhere,” he said. “This is the problem with going to the biggest brand after a disaster.”

So for that next donation to disaster relief, follow your compassion to help – but it might be wise to do some judicious investigation before automatically writing that check to the biggest “brand.”

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