Red Cross Reportedly Spent 25 Percent Of Haiti Donations On Internal Expenses

Haitians outside a Red Cross field hospital in Carrefour, Haiti, on Dec. 14, 2010, 11 months after a magnitude 7.0 earthquake hit the country's capital, Port-au-Prince. Thony Belizaire/AFP/Getty Images
Haitians outside a Red Cross field hospital in Carrefour, Haiti, on Dec. 14, 2010, 11 months after a magnitude 7.0 earthquake hit the country’s capital, Port-au-Prince.
Thony Belizaire/AFP/Getty Images

The American Red Cross spent a quarter of the money people donated after the 2010 Haiti earthquake — or almost $125 million — on its own internal expenses, far more than the charity previously had disclosed, according to a report released Thursday by Iowa Sen. Chuck Grassley.

The report also says the charity’s top officials stonewalled congressional investigators and released incomplete information about its Haiti program to the public. It concludes “there are substantial and fundamental concerns about [the Red Cross] as an organization.”

The report follows a nearly yearlong investigation by the Iowa Republican and his staff, launched after coverage by NPR and ProPublica of the Red Cross’ Haiti response. The venerated charity raised nearly $500 million after the disaster, more than any other nonprofit, but an ambitious plan to build housing resulted in just six permanent homes, NPR and ProPublica found.

Other findings in Sen. Grassley’s report:

  • The charity insisted to congressional investigators that $70 million spent on “program expenses” included funds to oversee and evaluate its Haiti programs. 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 told Grassley’s office the charity “gave [the Government Accountability Office] everything that they asked for” during an earlier review. The report, however, says the organization did not provide everything requested, “contrary to Ms. McGovern’s multiple claims that it did.”
  • The Red Cross has kept the charity’s own internal investigations and ethics unit “severely undermanned and underfunded,” the report says, and the charity “appears to be reluctant to support the very unit that is designed to police wrongdoing within the organization.”

Red Cross officials defended the charity’s work in a statement responding to the Grassley report, calling the organization’s spending “entirely justifiable given the size and complexity of the Haiti program.” They also noted that the Red Cross receives favorable ratings for accountability from charity watchdog groups.

Grassley, who chairs the Senate Judiciary Committee, said in an interview that even after a year of back-and-forth with the Red Cross, “we did not get satisfactory answers — like pulling teeth, it was very difficult.”

The Red Cross, including McGovern, repeatedly has told the public that all but 9 percent of donations spent go to humanitarian programs. But Grassley’s office found that 25 percent of donations sent to Haiti — or nearly $125 million — were spent on fundraising and management, a contingency fund and the catchall category the Red Cross calls “program expenses.”

The Red Cross sent the bulk of the remaining donated money to other nonprofits to do the work on the ground. Those other nonprofits then took their own cuts — as high as 11 percent — for their own expenses.

“The most important thing [from the report] is an unwillingness to level with the people exactly where the money went,” Grassley says. “There’s too many questions in regard to how the money was spent in Haiti … it gives me cause to wonder about other money being donated for other national disasters.”

“One of the reasons that they don’t want to answer questions is it’s very embarrassing,” Grassley adds.

In its statement, the American Red Cross notes that it has not yet seen Grassley’s report, but that the organization and McGovern have been transparent, and that donors’ money was properly spent. The statement also notes “the scale of the destruction and the challenging and sometimes dangerous conditions of working in Haiti.”

The Red Cross, created by a congressional charter more than a century ago, receives a range of special benefits from the U.S. government.

Here are more details from the report:

The Red Cross Didn’t Explain How Money Was Spent

Click here to read more.

SOURCE: NPR – Laura Sullivan