A new report released by Sen. Charles E. Grassley (R-IA) finds that the American Red Cross spent a quarter of the nearly $500 million it raised after the 2010 earthquake in Haiti on internal expenses, a number far larger than the charity previously had disclosed, National Public Radio and ProPublica report.
Following a nearly year-long investigation, the report to the Senate Judiciary and Finance committees found that the charity spent $125 million, or a full 25 percent of the donations it received for earthquake relief and recovery efforts, on fundraising and management, a contingency fund, and "program costs," even though the organization repeatedly has stated that nine out of every ten dollars it receives in donations are spent on programs. NPR/ProPublica also found that nonprofit organizations working on the ground in Haiti that received funds from the Red Cross spent as much as 11 percent of those funds on internal overhead costs. As a result of a "complex, yet inaccurate" accounting system, the report notes, the Red Cross doesn't know how much it spent on each project in Haiti.
Accompanied by nearly three hundred pages of supporting documents, the report also found that top Red Cross officials stonewalled congressional investigators and released incomplete information about the organization's activities in the impoverished country. They have insisted, for example, that $70 million spent on "program expenses" included funds to oversee and evaluate its Haiti projects, yet Grassley's office found that the charity "is unable to provide any financial evidence that oversight activities in fact occurred," despite the fact that, in the past, the organization has committed large sums to grant management. When it awarded $4.3 million to the International Federation of the Red Cross in 2010 for disaster preparedness work, for instance, it spent another $2 million to manage the grant, on top of the hundreds of thousands of dollars it claimed in administrative fees.
According to the report, the Red Cross also kept its own internal investigations and ethics unit "severely undermanned and underfunded" and "appears to be reluctant to support the very unit that is designed to police wrongdoing within the organization."
"The most important [takeaway from the report] is an unwillingness to level with the people exactly where the money went," said Grassley, who chairs the Judiciary Committee. "There's too many questions in regard to how the money was spent in Haiti....[I]t gives me cause to wonder about other money being donated for other national disasters."
In a statement to NPR and ProPublica, the Red Cross said that while it has not yet seen the report, the charity and its president, Gail McGovern, have been transparent about the organization's accounting and finances, donors' money was properly spent, and the costs of the projects are "entirely justifiable given the size and complexity of the Haiti program, the scale of the destruction, and the challenging and sometimes dangerous conditions of working in Haiti."