Red Cross In The Bad Spotlight Again By Fudging Numbers

by Gary Snyder

The American Red Cross regularly touts how responsible it is with donors' money. "We're very proud of the fact that 91 cents of every dollar that's donated goes to our services," Red Cross CEO Gail McGovern said in a speech in Baltimore last year. "That's world class, obviously."

McGovern has often repeated that figure, which has also appeared on the charity's website. "I'm really proud" that overhead expenses are so low, she told a Cleveland audience in June.

The problem with that number: It isn't true.

McGovern and other Red Cross officials have used it repeatedly to potential donors around the country.

After being contacted by ProPublica and NPR, the charity changed the wording on its website to another formulation it frequently uses: that 91 cents of every dollar the charity "spends" goes to humanitarian services.

In a response, the ARC  is now resting its claim of 91 cents of donations going to services on the idea that donations include not just money but also "donations of blood." This is in spite that the Red Cross' own audited financial statements show, blood isn't considered a contribution. (Since the Red Cross sells the blood people give, it is not a donation but rather revenue from sales.) Indeed, the IRS prohibits people from claiming the blood they give to the Red Cross as a charitable donation. Its latest position counters its own tax filings.

But that too and other issues are misleading to donors.

• Of the more than $3 billion that the Red Cross spent last year, two-thirds was spent not on disaster relief but rather on the group's blood business.
• The Red Cross says that it served 17.5 million meals and snacks during the Sandy relief effort. It has used that number in responses to inquiries from New York State Attorney General Eric Schneiderman. Others say it is misleading. Red Cross volunteers and staffers say over-counting meals served is commonplace partly because disaster responders are less experienced than in the past.

Note: The American Red Cross' responses remind us of those from the Susan G. Komen Foundation which got the organization in more hot water and resulted in double digit loss in donations. Without Congress stepping in (as it previous did under similar circumstances ) ARC is in trouble. Trust and accountability are folding. The only saving grace is that there is little competition on the disaster relief side, but not on the blood supply side were it is losing business based on quality issues that resulted in payment of tens of millions of dollars in fines. 

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