American Red Cross

The American Red Cross (chartered as the American National Red Cross) is a humanitarian organization that provides emergency assistance, disaster relief and education inside the United States, as part of the International Federation of the Red Cross.

September 11 controversy

In the aftermath of the September 11, 2001 terrorist attacks, the Red Cross, like many charitable organizations, solicited funds and blood donations for Red Cross activities for the victims of the attacks. Dr. Bernardine Healy, the president of the American Red Cross, appeared on telethons urging individuals to give generously. However, according to America's Blood Centers, the nonprofit consortium that provides the other 50% of the United States blood supply, no national blood drive was needed, since localized blood drives in the affected areas would be sufficient to meet the demand. The American Red Cross felt that the terrorist attacks were a sign of increased unstability and urged people to donate blood, even though it wasn't needed at that time. In the end, some blood was thrown away unused.

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Also, the American Red Cross created the Liberty Fund that was ostensibly designed for relief for victims of the terrorist attacks. However, when the fund was closed in October, after reaching the goals of donations, only 30% of the $547 million received was spent. Dr. Healy announced that the majority of the remainder of the money would be used to increase blood supply, improve telecommunications, and prepare for terror attacks in other parts of the country.

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Many donors felt that they had donated specifically to the victims of the September 11 attacks and objected to the diversion of funds. Survivors complained of the bureaucratic process involved in requesting funds and the slow delivery of the checks to meet immediate needs. Congressional hearings were called and New York State Attorney General Eliot Spitzer investigated the Red Cross. In the end, the American Red Cross appointed former U.S. senator George Mitchell to handle distribution of the funds. Dr. Healy was forced to resign for her role in the situation, and the Red Cross pledged that all funds would go to directly benefit the victims of the September 11 attacks. Healy received a severance payment of $1,569,630 http://www.give.org/reports/arc.asp. In the end, out of the $961 million received, 71% went as cash assistance to those directly affected, 15% went for long term mental care and hospital care for the victims and people in the affected region, and 10% went for immediate disaster relief like shelters, food, and health care. The remaining 4% went for administration. http://www.redcross.org/press/disaster/ds_pr/pdfs/libertyfund013103.pdf

Related Topics:
Eliot Spitzer - George Mitchell

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Significant changes to Red Cross fundraising collection and policy have since been implemented after the Liberty Fund debacle. Numerous watchdog organizations, such as Charity Navigator, have since given high praise to the improved system of honoring donor's intent and minimizing administration costs. During the Hurricane Katrina disaster, the American Red Cross issued a statement saying that 91 cents of every dollar donated specifically for the Hurricane Katrina disaster will go directly to disaster relief. This low overhead is remarkably low for such a large organization.

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