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Mismanagement Of Relief Funds? Red Cross Scrutinized For Allegedly Using 25 Percent Of Haiti Donations On Own Expenses

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A new Senate report released Thursday questions the integrity of the most reputable charity in the United States and the stewardship of its donors.

Iowa Sen. Chuck Grassley and his team revealed in a report that the American Red Cross spent approximately $125 million or 25 percent of the money people donated during the 2010 Haiti earthquake for its internal expenses.

The amount is far greater than what the charity had disclosed, researchers said.

The report also said top Red Cross officials obstructed congressional investigators and gave out incomplete information about the Haiti program to the public.

It concluded that there are fundamental and substantial concerns about the charity as an organization.

Details Of The Investigation

Sen. Grassley's almost yearlong investigation was spurred by the Red Cross-Haiti response coverage from the National Public Radio and ProPublica.

The American charity had raised almost $500 million in donations after the disaster in Haiti, an amount higher than those raised by other nonprofits.

However, both the NPR and ProPublica found that the charity's initial plan to build housing for the victims resulted in only six permanent homes.

Other findings of the report include the following:
- Red Cross insisted that $70 million allocated for "program expenses" contained funds to evaluate and oversee the Haiti programs. However, Grassley's staff found that the charity is unable to offer "any financial evidence that oversight activities" occurred.
- Gail McGovern, CEO of Red Cross, told Grassley's office that they gave the Government Accountability Office everything they asked for during an earlier review. But the report says the charity did not provide everything requested, contrary to McGovern's claims.
- The report says Red Cross has kept its own ethics and internal investigations unit severely "undermanned and underfunded." The organization appears to be "reluctant to support" the very unit intended to police any wrongdoing or misdeed.

In an interview, Sen. Grassley said he and his office did not get "satisfactory answers" even after a year of back-and-forth with the charity.

"It was like pulling teeth," Grassley told ProPublica.

The Red Cross has repeatedly said that all but 9 percent of donations go to humanitarian programs. However, the report found that 25 percent were used for fundraising and management, a contingency fund and the category that the charity calls "program expenses."

The charity also sent the remaining donations to other nonprofits to do work on the field. The report said those other organizations took their own cuts for their own expenses.

Meanwhile, the Red Cross has said in a statement that it has not seen Grassley's report yet, but that the charity and McGovern have been transparent, and that the donations were appropriately spent. The group's statement also noted the challenging and serious conditions of working in Haiti.

More details of the report can be read here.

Photo: Elaine Vigneault | Flickr

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