9/13/17 Circa News: Hurricanes Harvey and Irma are reminders of red flags raised over Red Cross transparency


Hurricanes Harvey and Irma are reminders of red flags raised over Red Cross transparency

By Allison Maass

September 13, 2017 10:42 AM EDT

After major natural disasters like Hurricane Harvey and Hurricane Irma hit the United States, donations flood into the American Red Cross for relief efforts, but both the federal government and private groups have been calling for the Red Cross to be more transparent about their expenses and actions with the public.

The Government Accountability Office (GAO) released a report two years ago that addressed this issue. They said they found that there had been no regular, outside review of the Red Cross, and the organization could benefit from having one. They recommended that Congress establish a review and make the results available to the public.

But that never happened.

“Since the report came out, I don’t know that they’ve done anything different. But our recommendation was really to the Congress, and several bills that would clarify GAO access to information at the American Red Cross, but also provide for external assessment. None of these have passed,” Barbara Bovbjerg, managing director of education workforce and income security issues at the Government Accountability Office, said.

The most recent bill proposed in Congress is the American Red Cross Transparency Act, which was introduced in March by Sen. Chuck Grassley (R-IA) and Rep. Bennie Thompson (D-MS). The bill would require the Red Cross to share their records with GAO, which had been an issue during GAO’s review.

Part of the Red Cross’s response to GAO’s results is that they are a private organization that does share all records required of them as a tax deductible non-profit. But Bovbjerg said that they do have some responsibility to be more open with the public since they are a federally chartered organization, meaning they are required to act on government requests.

“We always seek free and unfettered access to information. We did not have that with the American Red Cross. At the same time, we did get sufficient information to do our work and prepare a report, so I don’t want you to think that it stood in the way of responding to our congressional request, but there were some things that were asked for that they didn’t provide,” Bovbjerg said.

But it is not just the government that has questioned the transparency and effectiveness of the Red Cross. Ben Smilowitz had previously been a volunteer with the Red Cross, and it was this experience that helped him start the Disaster Accountability Project and be a watchdog for humanitarian relief organizations.

“They’ve managed to escape oversight in so many ways, and in a lot of ways they’re like a third rail because people think that they are doing amazing work, and in many ways they are, but there is a tremendous amount of oversight needed,” Smilowitz said.

The Red Cross said they spend 91 cents of every dollar donated towards humanitarian services and programs, and in Fiscal Year 2016 they spent a total of $332.8 million on domestic disaster services alone.

Red Cross CEO Gail McGovern told reporters after Hurricane Harvey that of the money donated for Hurricane Harvey relief efforts specifically, donations will be spent on things like blankets, food water, hygiene kits and volunteers and their travel.

But the Red Cross said on their website they do not track the exact expenses for every disaster because they usually respond to over 60,000 a year.

“I challenge them to open their books. If you’re really a public serving organization with that much money raised after these disasters then just open your books what do you have to hide and allow independent overseers have access to everything you do,” Smilowitz said.

But defending the Red Cross is Hurricane Katrina survivor Harry Joachim from Biloxi, Mississppi.

“Slowly but surely the water started to rise and coming into my house and I was there for it. And I had a glass of chardonnay in one hand and a hatchet in the other,” Joachim said.

Joachim agreed the Red Cross could improve on transparency, but that he thinks they are a great organization who was there for him and his neighbors in their time of need.

“Red Cross came through here in their truck every single morning for weeks and fed us and asked us what else we needed,” Joachim said.

GAO and Smilowitz do not deny that the Red Cross does good work, but they think being more open with the public could bring the possibility of more donors, and in turn help more people.

And Smilowitz is trying to bring more transparency to humanitarian relief in general through a website called Smart Response that was launched on September 1. The website allows organizations to share their records directly with the public so people can make more informed decisions when choosing where to send their money.

“The idea is that organizations will only get placed on the how to help list if they are sharing their data. The algorithm values the amount of questions answered and takes into account how many questions are left unanswered and the frequency of updates,” Smilowitz said

The Red Cross was not able to answer all of Circa’s questions about the expenses for humanitarian programs, but said, “We will use financial donations to help people recover and get back on their feet in the challenging weeks and months ahead. 91 cents of every dollar we receive for Hurricane Harvey will be spent to help people affected by Hurricane Harvey.”

Allison Maass is a multimedia investigative reporter for Circa, covering news, national security and government accountability stories.