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Richard Walden

Richard Walden

Posted: September 2, 2005 08:07 PM

How Much Is Too Much?


As of noon on Friday, September 2, The American Red Cross was reporting it had already raised $73 million in private funds for Hurricane Katrina victims. At the same time, the authoritative journal, The Chronicle of Philanthropy, which monitors nonprofit fund raising, stated that $108 million had been raised by all private charities willing to report.

That means about 70% of the public's compassion has flowed to The Red Cross. [This percentage was no doubt bloated by FEMA's mystifying screw-up when it released the names of only certain faith-based charities -- like Pat Robertson's wholly-owned nonprofit Operation Blessing -- rather than the wider group of established relief agencies.]

This skewed giving to Red Cross would be fine if the Red Cross were paying for the cost of the 80,000 people they are expertly sheltering in 240 designated shelter sites; but FEMA and the 4 affected state governments (including Texas which will shelter up to 75,000 people) are reimbursing the Red Cross under pre-existing contracts for emergency shelter and other related services. The existence of these contracts is no secret to anyone but the donating public. The Red Cross carefully says it exists by the grace of the American people -- yeah...and "people" includes the US government, 50 state governments and thousands of county governments, too.

What we've come to expect from a major disaster is a media blitz -- paid and unpaid -- by the American Red Cross' expert fund-raising staff. Last year, the Red Cross reports it spent $125 million on fund-raising; and if you surf the net or watch TV or listen to radio, you can't escape the faux Red Cross news breaks 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 over $1.5 billion annually out of its $3 billion in income). In Los Angeles, we're currently going through the spectacle of "drive-by" drop offs of bags of money at public places like Pasadena's Rose Bowl all promoted by local media. Hollywood studios and Hollywood stars compete to make 6 and 7 figure donations to the Red Cross almost robotically. The Red Cross brand is platinum.

No one asks what The Red Cross actually does, what it does not do, and whether it has another primary source of funding for those rapid responses it claims to do so well and so comprehensively.

Not wanting to dwell on the present Hurricane disaster while it's in progress, let's look at September 11th. The Red Cross collected over $1 billion, a record in philanthropic fund raising after a disaster. But the Red Cross had very few things it could do in the 9/11 disaster -- a modest amount of tracing missing persons, a handful of people in the few shelters that were opened, some comfort food for the fire, police, paramedics and excavation crews, but little else. When NY Attorney General Elliot Spitzer asked for documentation of expenditures and income, the Red Cross' response was that it is federally chartered and not answerable to state governments. The crescendo rose, however, when the unusual conjunction of the New York Times and Fox News' Bill O'Reilly began dissecting the Red Cross' activities in the 9/11 aftermath. This resulted in the firing of the Red Cross CEO, Dr. Bernardine Healey, by its largely GOP-dominated board and the appointment of ex-US Sen. George Mitchell (D-NH) to clean up the Red Cross' image. Funds were then literally pushed out the door -- $30 million to limousine drivers who "attested" that they lost income when the World Trade Center fell; many millions to randomly chosen residents of lower Manhattan to help pay their utility bills; and, tens of millions to various powerful Red Cross chapters around the country who wanted their share of the largess. [sounds like "The Godfather IV"?]

These problems were predictable. In fact an earlier Red Cross CEO was fired after the San Francisco Bay Area earthquake when it was revealed that Red Cross only spent $16 million of the $54 million it had collected. The problem was that the 4 major Bay Area cities' mayors shilled for the Red Cross and only the Red Cross, much like President Bush, the media and Hollywood are doing now. When they found out about the surplus funds they insisted that they be spent on Bay Area housing, homeless shelters and health clinics -- not things the Red Cross normally does through non-Red Cross agencies.

Since then, the American Red Cross uses slippery language about "national disaster accounts" so it has post-9/11 deniability if questioned about why funds designated or donated for one purpose were used for another.

This saga goes on but here's one man's prediction: Red Cross will have between $1 and $2 billion before Hurricane Katrina giving subsides. If they take care of 80,000 people as they are at present, that works out to between $12,500-$25,000 per victim. I can't believe each victim of Katrina will see much more than coffee and a doughnut, a cot, a blanket, a social service interviewer and perhaps receive a box of clothing or some new pots and pans.

I hope I'm wrong about the Red Cross but I predicted as much on September 11th in a NY TV studio run by the local Fox station.