Magazine article Investigative Reporters and Editors, Inc. The IRE Journal

Red Cross: Disaster Leads to Questions about Handling of Donations

Magazine article Investigative Reporters and Editors, Inc. The IRE Journal

Red Cross: Disaster Leads to Questions about Handling of Donations

Article excerpt

Disaster leads to questions about handling of donations

It's been an American icon for more than a century. Throughout two world wars, conflicts and natural disasters, the Red Cross has endeared itself by directing relief efforts aiding countless victims.

But when victims from a large brush fire in San Diego's backcountry began asking how the agency spent the $400,000 in donations raised on their behalf, they discovered that the Red Cross doesn't like being questioned by anyone - including public officials, victims or the media.

Americans always identify with people struck by tragedy. Most often, they respond by giving generously to charities, such as the Red Cross. The giving surge often fills local non-profit coffers. One former San Diego Red Cross official recalls the old saying, "a good disaster is the best fundraiser."

Take, for example, the January 2001 fire, where San Diegans gave more than $400,000 to the local Red Cross chapter on behalf of victims. Or at least they thought they did. Victims began complaining they weren't getting nearly that much assistance; they had figured it was closer to several thousand dollars, not several hundred thousand.

When the Union Tribune began asking the same questions as the victims, San Diego Red Cross chapter officials detailed a long list of things the charity had done. There were shelters, food, clothes, medications and hotel stays. In all, officials claimed to have spent more than $150,000.

Still, when they were asked to break down assistance to victims, officials balked, citing victims' privacy issues.

"Just trust us" became a Red Cross mantra over the next year, even when the victims themselves expressed doubts about aid and were willing to waive their privacy in order to find out where the money was going.

Disgruntled victims

The first article in April 2001 detailed the victims' complaints along with Red Cross arguments against disclosure. The story struck a chord with the public, elected leaders and internal sources at the charity. One county supervisor, Dianne Jacob - who represents the fire-ravaged area - quickly became a vocal advocate for the fire victims.

Between stories, I boned up on the structure and bureaucracy of the Red Cross. With many chapters having Web sites, I was able to quickly compare services and budget amounts across the country. Figuring out how the chain of command works at the Red Cross would take months.

Red Cross officials agreed to meet with Jacob and disgruntled victims during the summer of 2001. At the meeting, chapter executives refused to show any accounting of costs. They also lashed out at victims and Jacob, who continued to call for an accounting of costs.

As the public questioning intensified, chapter officials became tense and defensive at the most neutral questioning of how donations are spent. For months, they insisted they didn't have annual financial reports for more than the last two years. They also bristled at any requests for information regarding past disasters or spending of local disaster relief funds.

In August, chapter officials released a six-line item budget for the fire totaling $159,000. Out of that total, officials said $46,000 had been spent on direct victim relief costs. Frustrated elected officials called on the national headquarters to investigate.

At the same time, while covering this national investigation, we found deep-seated divisions between San Diego chapter officials and executives in the national office.

For example, Red Cross President and CEO Bernadine Healy immediately contacted local elected officials, promising a full investigation and a public release of the results. Heightening accountability at local chapters had been a centerpiece of Healy's policies since she took over in 1999. That approach drew increasing ire from many of the country's largest chapters, which mostly operate as independent agencies. …

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