Did Red Cross spend too much on overhead as part of its Haiti relief efforts?

June 18, 2016
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Red Cross workers carry the body of a man who was killed after a carnival float hit power lines, at a hospital in Port-au-Prince in February 2015. (Reuters/Jeanty Junior Augustin)

With all its good works around the world, the American Red Cross (ARC) has a reputation that is near angelic.

But its halo is a bit askew following a 300-page Senate report that says the humanitarian organization did not spend a large portion of donations for Haitian earthquake relief on the suffering. Instead, 25 percent of the $487.6 million went to management, general expenses and fundraising; program costs; and a contingency fund, according to the report by Senate Judiciary Committee Chairman Charles E. Grassley (R-Iowa).

Grassley began his investigation last year, following news reports by NPR and ProPublica that exposed problems with Red Cross operations in Haiti.

“In light of the news reports, it seemed as though ARC had failed to live up to its responsibility to be a standard-bearer of transparency, efficiency, and good-will among the charitable community,” Grassley said in the report sent to members of the Senate Judiciary and Finance committees.

The Red Cross rejected Grassley’s report, saying the organization “strongly disagrees” with the findings. “We have accounted for every penny spent in Haiti and have posted on our website a detailed financial breakdown of how those donor dollars were spent,” the Red Cross statement said.

Grassley also charged the Red Cross “tried to quash a congressional watchdog review of its practices, successfully limited the scope of the review, and has a poorly staffed ethics and investigations unit.”

He credited the organization’s Haiti Assistance Project with some success, such as providing food for more than 1 million people and building temporary shelters for thousands following the 2011 disaster.

Yet, “despite hundreds of millions of dollars in donations and hundreds of volunteers and employees, ARC managed to build only six permanent homes,” the report says, citing the news organizations.

Grassley explained his probe into an outside organization with a press release that said “federal taxpayers pay for some of the Red Cross’ work directly through federal tax dollars for disaster responses and indirectly through the tax dollars foregone to the Red Cross through its tax exemption and through tax deductions donors take for charitable donations to the organization. The Red Cross is congressionally chartered and considered a federal instrumentality, unique among tax-exempt organizations.”

The Red Cross statement countered, saying it “is not a federal agency” and that it has high ratings for accountability and transparency. Spending on staff is not overhead, but “legitimate expenses to implement humanitarian aid projects.”

“The story of Haiti is a very positive story that shows the American Red Cross and our partners have and continue to deliver close to half a billion dollars of humanitarian assistance in the form of new hospitals, repaired homes, clean water, vaccinations, job training, improved sanitation and other life altering assistance to millions of Haitians—and spent our donor dollars wisely and well,” the organization added. “Our statement that 91 cents of every dollar donated went to our programs and services in Haiti is absolutely true.”

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