Friday, December 5, 2014

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. 


Nonprofit Imperative gathers its information principally from public documents...some of which are directly quoted. Virtually all cited are in some phase of criminal proceedings; some have not been charged, however. Cites in various media: Featured in print, broadcast, and online media outlets, including: Charity Navigator, Vermont Public Radio, Miami Herald, National Public Radio (NPR), Huffington Post, The Sun News, Atlanta Journal Constitution, Wall Street Journal (Profile, News and Photos), “Betrayal”, (a movie), NBC (on Charity Fraud…TBD), FOX2, ABC Spotlight on the News, WWJ Radio, Marie Claire, Ethics World, Aspen Philanthropy Newsletter, Harvard Business Review, Current Affairs, Charity Navigator, The Chronicle of Philanthropy, St. Petersburg Times, Board Room Insider, USA Today Topics, Accountants News, Newsweek.com, Responsive Philanthropy Magazine, New York Times, Portfolio Magazine, The Virgin Islands Daily News, NANKAI (China) BUSINESS REVIEW, National Religious Broadcasters newsletter, The Charity Governance Blog, American Chronicle, Palm Beach Post, Detroit Free Press, Oakland Press, Nonprofit World, Socially Responsible Business Forum, PNNOnline, Ohio Nonprofit Resources, Nonprofit Good Practice Guide, Nonprofit Startup Guide, Nonprofit Blog, National Coalition of Homeless Newsletter, Finance and Administration Roundtable Newsletter, MichiganNonprofit.com, CORP! Magazine, Crain’s Michigan Nonprofit, ncrp.org, PhilanTopic, Nashville Free Press, Nonprofit Law Blog, Seniors World Chronicle, Carnegie Reporter, Assoc. of Certified Fraud Examiners Examiner, msnbc.com, Worchester (MA) Telegram and Gazette, Carnegie Corporation of America, EO Tax Journal, Wikipedia: Non-profit Organizations; Parent: Wise Austin, Accountants News, Veterans Today, Answers.com, Far-roundtable, #Nonprofit Report, nonprofithelpnews, nonprofit news; National Enquirer, Northwest Herald, The HelpWise Daily, The #Nonprofit Report, Wikipedia (Nonprofit Organization), Answers.com, Nonprofits: On the Brink (2006) Silence: The Impending Threat to the Charitable Sector (2011)
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