Investigation Of American Red Cross Finances Finds 'Fundamental Concerns' A congressional inquiry finds that the American Red Cross stonewalled lawmakers as they sought to understand the charity's finances, and that it sent significantly less money to Haiti than claimed.
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Report: Red Cross Spent 25 Percent Of Haiti Donations On Internal Expenses

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Report: Red Cross Spent 25 Percent Of Haiti Donations On Internal Expenses

Report: Red Cross Spent 25 Percent Of Haiti Donations On Internal Expenses

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RENEE MONTAGNE, HOST:

Let's turn now to a congressional report out this morning. It finds that 25 percent of the money people donated to the American Red Cross to help victims of the 2010 earthquake in Haiti was not spent directly on relief efforts there. Instead, it went to the charity's own internal expenses. That is far higher than the Red Cross had said. The report also accuses that charity's senior leadership of stonewalling congressional investigators looking into the Red Cross's work. NPR's Laura Sullivan has more.

LAURA SULLIVAN, BYLINE: Senator Chuck Grassley asked the American Red Cross for a thorough accounting of how it spent donors' money in Haiti. The request came after a series of stories from NPR and ProPublica detailing problems the charity was having in the country - for example, how the Red Cross raised almost $500 million but built just six permanent homes. Congressional investigators sought to find out where the money went. But according to their report, the Red Cross may not even know. What is clear is that the charity kept as much as $124 million for itself for management and fundraising costs, a contingency fund and for things the charity calls program services, something Grassley says the Red Cross could not fully explain.

CHUCK GRASSLEY: We did not get satisfactory answers.

SULLIVAN: Grassley, a Republican from Iowa, described the process of getting information from the Red Cross as, quote, "pulling teeth."

GRASSLEY: They need to shape up and get back to rebuilding the confidence of the American people in them.

SULLIVAN: The report found Red Cross CEO Gail McGovern attempted to quash an earlier government investigation into the charity's work and that senior officials were able to limit its scope by not cooperating. The report says there are, quote, "substantial and fundamental concerns with the Red Cross." Grassley summed it up this way.

GRASSLEY: What I take away from it is this - I think the most important thing is an unwillingness to level with the people exactly where the money went.

SULLIVAN: In a statement, the Red Cross noted that it has not yet seen the report. But it says the charity has been transparent and donors' money was properly spent. The statement says the cost of the projects are, quote, "entirely justifiable given the size and complexity of the Haiti program, the scale of the destruction and the challenging conditions of working in Haiti." The Red Cross tells the public 91 percent of the donations it spends goes to help the people of Haiti. The report suggests that number is closer to 75 percent, and that still doesn't account for administrative expenses that its partner organizations might charge. Take one example - in 2010, the Red Cross gave the umbrella Red Cross group, the IFRC, $4.3 million. According to the numbers the charity gave Grassley, the Red Cross kept two million more dollars for itself. The Red Cross said in a statement the money went to overseeing the grant and evaluating the work. But that money was on top of hundreds of thousands of dollars the charity already collected in expenses for the project. Then, the IFRC took out its own administrative fees. Those fees can be as high as 11 percent.

JAKE JOHNSTON: Is sort of a shocking amount of money.

SULLIVAN: Jake Johnston is a research associate at the Center for Economic and Policy Research.

JOHNSTON: You're talking about, you know, a little bit more than half that actually ends up going to a project.

SULLIVAN: The Red Cross told congressional investigators that the 2 million in this case went to something it calls program services. In total, the charity placed almost $70 million of its Haiti donations in this category. The report notes that the charity was never able to explain what exactly the category pays for. The report also found the Red Cross was unable to tell investigators how much each project in Haiti actually cost.

JOHNSTON: Maybe the most distressing part of the report is that, you know, after six and half years of asking where the money went, it sort of looks like the Red Cross itself doesn't really know.

SULLIVAN: Johnston says the greater problem for the Red Cross and the people of Haiti is what the charity did or failed to do with the money it did send.

JOHNSTON: The scrutiny of the Red Cross came about not because they weren't spending enough money on the ground or because they were taking too much for their own headquarters, but because people weren't seeing the results on the ground of $500 million.

SULLIVAN: When disasters strike, millions of Americans open their wallets and donate to the Red Cross, the country's largest and most venerated disaster charity. But in Haiti, donors may never know where their money went. Laura Sullivan, NPR News, Washington.

MONTAGNE: And Laura co-reported that story with ProPublica's Justin Elliott.

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