Because of Lack of Transparency at American Red Cross, The Federal Government Wants To Step In

Grassley, Thompson Introduce American Red Cross Transparency Act of 2017

WASHINGTON – Sen. Chuck Grassley (R-Iowa) and Rep. Bennie Thompson (D-Miss.) today introduced legislation to give the congressional watchdog arm complete access to American Red Cross records for oversight purposes. The bipartisan, bicameral American Red Cross Transparency Act of 2017 responds to concerns that the Red Cross tried to quash a review by the Government Accountability Office (GAO) of its practices, successfully limiting the scope of the review, and has failed to be as transparent as it should be.

“The American people rely on the Red Cross to respond when tragedy strikes,” Grassley said. “The Red Cross is congressionally chartered and is a federal instrumentality.  It receives federal tax dollars for some of its disaster responses, and it receives the financial benefits of tax exemption and tax-deductible donations.  For those reasons, Congress has a responsibility to make sure the Red Cross answers questions asked on the public’s behalf and is operating up to the standards required of it during national disasters.   The Red Cross has shown an unwillingness at times to answer questions.  This legislation strengthens transparency to help make the Red Cross more accountable to the public.”  

“Response to and recovery from large-scale emergencies and natural disasters the scale of Hurricanes Katrina, Rita, and Sandy are complicated and difficult and we must always look for ways to improve,” Thompson said.  “If the Red Cross continues to thwart oversight and stall goodwill attempts to be investigated, their operational challenges are sure to persist and improvement will never happen. To ensure that Red Cross will respect the GAO’s audit authority, I am partnering with Senator Grassley to introduce bipartisan legislation that clarifies Congress’ intent regarding GAO’s oversight authority and give GAO new tools to enforce it.  We owe it to our constituents to ensure that the Red Cross is subjected to the oversight necessary to ensure that funds that Americans so generously donate are not misused and that the Red Cross is a reliable response and recovery partner to the Federal government.”

The American Red Cross Transparency Act gives the GAO complete access to the Red Cross’ records when needed to conduct oversight.  If the Red Cross refuses to comply, the legislation provides the GAO with the authority to bring an action in court to force compliance.  

Ten years ago, Congress gave the GAO the broad authority to “review [Red Cross’] involvement in any Federal program or activity the Government carries out under law.”  Despite clear legislative intent, the Red Cross essentially stonewalled GAO when it tried to carry out an investigation requested by Thompson in September 2013.  After two years of stall tactics, delays, and a request from the Red Cross’ president that Thompson  cancel his GAO request and conduct future oversight via cell phone, the GAO analyzed information the Red Cross begrudgingly made available to complete its investigation.  Grassley explored the GAO access problem as part of his inquiry of problems with the Red Cross’ Haiti earthquake response.  He sent the results as a memo to his fellow committee members on both the Judiciary and Finance committees in 2016.

The Red Cross is congressionally chartered and considered a federal instrumentality, unique among tax-exempt organizations.  The 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 legislation is available here.