Another Scathing Review Of The American Red Cross

by Gary Snyder

Apparently members of Congress think that the American Red Cross lied to them.

Let’s see what they will do!

POLITICO reports on a blistering Senate report on the American Red Cross raises fundamental questions about the integrity of the country’s most storied charity and its stewardship of donors’ dollars.

The report, which was released today by Sen. Charles Grassley, R-Iowa, and contains nearly 300 pages of supporting documents, found:

·              After the 2010 Haiti earthquake, the Red Cross spent tens of  millions of dollars more than it has previously acknowledged on internal expenses. The Red Cross told Grassley that the money was largely spent on oversight to make sure the Haiti aid was used properly. But Grassley’s office found that the charity “is unable to provide any financial evidence that oversight activities in fact occurred."

·              Red Cross CEO Gail McGovern made false statements to Grassley’s office about whether the charity cooperated with congressional investigators.

·              McGovern and her subordinates have kept the charity’s own internal investigations and ethics unit “severely undermanned and underfunded.” The charity is “reluctant to support the very unit that is designed to police wrongdoing within the organization.”

There are “substantial and fundamental concerns about (the Red Cross) as an organization,” the report concludes.

Grassley launched his investigation following stories by ProPublica and NPR on Red Cross failures in providing disaster relief, including after the Haiti earthquake. The group raised nearly half a billion dollars after the disaster, more than any other nonprofit. But our reporting found that, for example, an ambitious plan to build housing resulted in just six permanent homes.

Red Cross officials, including McGovern, have repeatedly told the public that the charity retains 9 percent of donations to cover management and administrative costs. But Grassley found that a full 25 percent of donations — or around $125 million — were spent on fundraising and management, a contingency fund, and a vague, catchall category the Red Cross calls “program costs.”

On top of that 25 percent, the Red Cross sent the bulk of the donated money to other nonprofits to do the work on the ground. Those other nonprofits then took their own cuts for overhead costs — as much as 11 percent.

Pressed by Grassley’s investigators, the Red Cross could not give an accounting of the oversight it says it did with the money from the Haitian relief. After repeated requests by Grassley’s investigators over the course of months, the Red Cross finally last month produced a document with a narrative description of oversight but no financial details.

In general, the Red Cross itself doesn’t know how much money it spent on each project in Haiti because of a “complex, yet inaccurate” accounting system, the report found.

The report concludes that the Office of Investigations, Compliance, and Ethics was left so under-resourced that it is “unable to perform its primary function; namely, to perform investigations, ensure compliance, and maintain ethical standards.”

The report echoes confidential findings made by consultants hired by the Red Cross, which were previously reported by ProPublica and NPR.

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)