New Report Casts Doubt On Red Cross' Claims About How Donation Money Is Spent
SAN FRANCISCO (KCBS) — The American Red Cross has repeatedly touted that 91 cents out of every dollar donated is used to help those in need.
But a new report from the independent, non-profit news group ProPublica shows those numbers are misleading.
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New Report Uncovers Red Cross' Claims About How Donation Money Is Spent
Justin Elliot, one of the two ProPublica journalists who reported the story, told KCBS that in the competitive world of non-profits, low overhead is golden.
"There are actually studies that showed donors like to give to organizations that have low-overhead expenses because they want to see more of their money go into service that help people," he said.
Red Cross' CEO Gail McGovern had used that 9 cents per dollar overhead in speeches and it was featured on their website.
"They set the numbers that we found—that numbers sometimes as high as 25 or 30 cents on the dollar. We can't actually get to an exact number because they wouldn't break out their numbers," Elliot said.
Other figures are also being questioned, such as services rendered following Hurricane Sandy. The Red Cross reported 17 million meals and snacks served when actually it was 17 million meals "prepared."
"Those turn out to be two very different things because in the disaster context, a lot of meals get prepared never end up getting served to a victim. They get wasted; they're sitting around, they have to be thrown out," Elliot said.
In the case of Hurricane Sandy, it's estimated in some areas of response, the level of waste was as high as 30 percent.
The American Red Cross released a statement based on these media reports:
"We firmly stand by the fact that an average of 91 cents of every dollar the American Red Cross spends is invested in humanitarian services and programs. In a wide range of our materials- including donor stewardship reports and publicly available financial statements, the Red Cross has used the wording that an average of 91 cents of every dollar the Red Cross spends is invested in humanitarian services and programs. This has been a long term practice for the Red Cross.
There are some instances where the language used has not been as clear as it could have been, and we are clarifying that language. Asserting that this is an attempt to mislead the public is absolutely and unequivocally untrue.
We arrive at the 91 cents figure by comparing our overall spending each year to our overall spending on management, general and fundraising. The Red Cross receives contributions from many sources, including financial contributions, donations of blood or an in-kind donation of other goods and an average of 91 cents of those donations are invested in our humanitarian programs and services. All of these are important donations to the Red Cross and we do not track management, general and fundraising to each separately.
Our financial statements are clear in this regard. Our costs are listed in those statements and have long been available on our website for transparency. They are audited each year by an independent auditor. The American Red Cross is also an accredited charity by the Better Business Bureau."
