Maybe it's just me, but...

I have a natural disinclination to like the Red Cross.  My dearest friend, Lisa just finished giving two weeks as an American Red Cross (ARC)volunteer.  She considers it to be a life-altering experience to which she credits the ARC.

My first experience with the ARC comes after Hurricane Audrey from back in 1957.  She was a spontaneous hurricane in June in the Gulf of Mexico.  She formed over night and came in the next evening.  Over 500 people died.  My relatives who were affected spoke very highly of the Salvation Army and universally cursed the ARC. 

Shortly after 9/11, it became known that the ARC did not consider the donations to it for those affected by the horror of the World Trade Center to be dedicated to that end.  This week, a widely reported story came out of the Los Angeles Times.

WITH HURRICANE RITA now making news, it's time for Americans to take a more disciplined look at their tremendous generosity. As of last week, the American Red Cross reported that it had raised $826 million in private funds for Hurricane Katrina victims. The Chronicle of Philanthropy has the total figure at more than $1.2 billion for all relief groups reporting. So the Red Cross received about 70% of all giving.

This skewed giving to Red Cross would be justified if the organization had to pay the cost of the 300,000 people it has sheltered. But FEMA and the affected states are reimbursing the Red Cross under preexisting contracts for emergency shelter and other disaster services. The existence of these contracts is no secret to anyone but the American public. The Red Cross carefully says it functions only by the grace of the American people — but "people" includes government, national and local. What we've now come to expect from a major disaster is a Red Cross media blitz.

The national Red Cross reports it spent $111 million last year on fundraising alone. And it's hard to escape the organization's warning of Armageddon if you don't call in a credit card number or send a check or donate blood (which it resells to the tune of more than $1.5 billion annually, part of its $3 billion in income).

In Southern California, we have had the spectacle of "drive-by" drop-offs of bags of money at public places such as the Rose Bowl, massively promoted by local media. Hollywood studios and stars and corporate America compete to make huge donations.

The Red Cross brand is platinum. Its fundraising vastly outruns its programs because it does very little or nothing to rescue survivors, provide direct medical care or rebuild houses. After 9/11, the Red Cross collected more than $1 billion, a record in philanthropic fundraising after a disaster. But the Red Cross could do little more than trace missing people, help a handful of people in shelters and provide food to firefighters, police, paramedics and evacuation crews during that catastrophe.

When New York Atty. Gen. Eliot Spitzer asked for documentation of 9/11 expenditures, the Red Cross' response was that it is federally chartered and not answerable to state government regulators. The clamor rose, however, when the media began dissecting Red Cross activities in the 9/11 aftermath. This resulted in the resignation of the organization's president and chief executive, Dr. Bernadine Healy, and the appointment of ex-Sen. George Mitchell (D-Maine) to oversee its 9/11 fund and help clean up its image. Funds were then pushed out the door — including millions to New York limo drivers who said they lost income after 9/11, and to upscale residents of lower Manhattan to help pay their utility bills.

 The organization also ran into trouble after the 1989 San Francisco Bay Area earthquake when it was revealed that it planned to spend only a fraction of the millions of dollars it had collected in the area damaged by the earthquake. When the Bay Area's mayors found out, they insisted that these funds be spent on housing, homeless shelters and health clinics. The Red Cross had to waive, for one time only, its long-standing policy against funding non-Red Cross groups. (Spare change — and there will be a lot of it this time — stays in a Red Cross "national disaster account." This allows it to spend funds donated for one purpose on another.)

The Red Cross expects to raise more than $2 billion before Hurricane Katrina-related giving subsides. If it takes care of 300,000 people, that's $7,000 per victim. I doubt each victim under Red Cross care will see more than a doughnut, an interview with a social worker and a short-term voucher for a cheap motel, with a few miscellaneous items such as clothes and cooking pots thrown in.

The Red Cross' 3 million unpaid volunteers, 156,000 of whom it says are deployed in Hurricane Katrina, are salt-of-the-Earth Americans. But asking where all the privately collected money will go and how much Red Cross is billing FEMA and the affected states is a legitimate question — even if posed by the president of a small relief agency.

So I'm asking outloud.  Is the price we pay for this "mercy" worth the price we pay for it? Are we well served for the billions it costs us?

They spend $100 million a year on fund raising.  Wow!!  Who would have thought?  The general point of this post is to ask the question outloud.  Are any of you better read than am I about this subject, and di you form any conclusions based on your research? 

Inquiring minds want to know. 

Comments

[fragileindustries]

I must say this is the first time I've heard myself described as a "salt-of-the-earth American" and I'm not sure I like it -- Johnny Cash, maybe, or Tom Joad, but me?

Anyway, here's my shorthand, mole's-eye-view after being "imbedded" with the ARC. I want to respond to several issues raised by the editorial.

I remember the Loma Prieta debacle clearly, and thereafter stopped donating from my paycheck to ARC or the United Way (a contributor to the ARC). I volunteered because ARC is the only game in town for volunteers, in any meaningful sense. They could get me there and have me doing something more quickly than anyone else.

It was my understanding, reinforced by what I heard from senior volunteers and supervisors, that quite a shake-up of both policy and leadership followed Loma Prieta and 9/11; now, donations made in response to a specific disaster does stay within that fund. I was told that is specifically true for Katrina. My job involved issuing benefits to Katrina survivors. The process was not easy for would-be scammers. I only had one instance where I felt the ARC might have been ripped off, but fraud exists in every enterprise at a fairly consistent level of 1-2%. Duplicate or fraudulent claims will be prosecuted, and again, this is hearsay, but I was told by supervisors that the mechanism for this is in place. One large regional center where I worked processed about 1,400 claimants a day, and after 2 weeks of operation, had about 80 claims worthy of investigation. This is less than 1%. The benefits, while significant to the claimant, were not enough to steer any wealthy or limo-driving people to my table. We were instructed to tell people that the initial payment was intended to be a kick-start for immediate needs and that, as with 9/11, further benefits might be forthcoming once everyone had a chance to claim the initial benefits and the shelters closed, or at least their cost could be projected. The remainder of the Katrina fund could then be reallocated to the claimants.

Until the recent FEMA meltdown, ARC has always had a cordial relationship, and in some areas their missions overlap. The money ARC will receive from FEMA is to reimburse ARC for hotel/motel vouchers given to evacuees when shelters are full. I doubt that this figure will rise to a significant amount. I have no knowledge of what agreement led to this arrangement, but FEMA does have a responsibility to house people after disasters. After Hurricane Andrew, both FEMA and ARC had tent cities. In smaller disasters (and better-led times for FEMA), FEMA provides trailers. ARC provides immediate mass shelter housing, food, and cash disbursements. During my interviews with about 150 Katrina benefit claimants from Louisiana, Mississippi and Alabama, less than 5 had received hotel vouchers. Many had been promised trailers; none had arrived. During my talks with the county FEMA representative, he said it would take months (if ever) to supply all the trailers needed after Katrina. The vast majority of my claimants were with family or could make do in what was left of their house during repairs. In the various motels where I stayed, (most of which made Motel 6 look like Club Med) only two households were put up courtesy of the ARC. On the other hand, the bulk of the volunteers were working at the shelters scattered over the area, which leads me to believe that the bulk of the people who are homeless as a result of Katrina are or were in shelters. I was told there would be a need for such volunteers well past the first of the year. In sum, I did not observe anything that led me to believe that the ARC was shuffling people into motels willy-nilly to bilk taxpayers or donors, or that money was spent on the undeserving.

Not that I think the ARC is perfect. This was a massive operation, and mostly volunteer-run, and as my duty progressed, it was apparent that the organization learned as it went about the business of mobilizing the biggest relief effort in its history. Any waste I saw was of human resources, and that improved markedly during my stay. Under such circumstances, I think the saying is appropriate: "It is not how well the bear dances -- it is that it dances at all."

Until there's an accounting for the FEMA money, it is important to ask these questions, but I think the editorial is blowing the issues, especially the reimbursement issue, out of proportion.