Senate Report Finds Red Cross Spends More Than Disclosed On Overhead And Avoids Oversight

Following an investigation into one of the world’s highest-profile charities and its management of funds, Sen. Chuck Grassley’s office has released a highly critical report on the American Red Cross. The study, issued last week, found that the aid group, although it rakes in millions of dollars in donations to help with disasters like the 2010 Haiti earthquake, often seems to have some trouble using that cash for the actual task of helping people in need.

Grassley’s office decided to investigate the Red Cross after a series of stories jointly published by ProPublica and NPR noted many failings within the organization. Among the shortcomings found or confirmed by Grassley’s report — which was reported on by ProPublica and NPR as well — are high levels of overhead spending and failures to provide promised services. The report also found that Red Cross officials had tried to avoid oversight in 2014 when Congress attempted to investigate their disaster relief operations.

During the investigation, Red Cross CEO Gail McGovern made false statements to Grassley’s office about her charity’s cooperation with congressional investigators, according to the report, and was responsible for leaving her internal investigation units “severely undermanned and underfunded.”

“We did not get satisfactory answers. It was like pulling teeth,” Grassley, R-Iowa, the chairman of the Senate Judiciary Committee, told ProPublica and NPR following the release of the report. “The most important thing is an unwillingness to level with the people about exactly where the money went. There’s too many questions in regard to how the money was spent in Haiti that it gives me cause to wonder about money being donated for other national disasters. ”

While Red Cross officials frequently say their management and administrative costs soak up just 9 percent of all donations, the report found the true figure is closer to 25 percent. And, since the organization frequently hires outside charities to do work, even more money is generally spent on overhead.

The Red Cross has also failed to follow through on promises. In the aftermath of the Haiti earthquake, half a billion dollars was raised to help. The group subsequently launched a multimillion-dollar project to build hundreds of permanent homes. But ProPublica found that only six were built.

The Red Cross was created by congressional charter more than a century ago, and that special status gets it several benefits from the government. The charity spends hundreds of thousands of dollars lobbying the federal government on issues including the tax rate for organizations like itself. It spent more than $130,000 on lobbying in 2015 alone.

The Red Cross responded to the Grassley memo by defending its transparency and its effectiveness in Haitian recovery efforts.

"The story of Haiti is a very positive story that shows the American Red Cross and our partners have and continue to deliver close to half a billion dollars of humanitarian assistance in the form of new hospitals, repaired homes, clean water, vaccinations, job training, improved sanitation and other life-altering assistance to millions of Haitians — and spent our donor dollars wisely and well," said the statement.