September 25, 2005

WITH HURRICANE RITA now making news, it's time for
Americans to take a more disciplined look at their
tremendous generosity. As of last week, the American
Red Cross reported that it had raised $826 million in
private funds for Hurricane Katrina victims. The
Chronicle of Philanthropy has the total figure at more
than $1.2 billion for all relief groups reporting. So
the Red Cross received about 70% of all giving.

This percentage was no doubt bloated by the Federal
Emergency Management Agency's mystifying release to
the media of the names of 19 faith-based charities
(plus the Red Cross, Humane Society and three
lesser-known groups) to which the public should donate
— rather than the much wider group of established
relief agencies.

This skewed giving to Red Cross would be justified if
the organization had to pay the cost of the 300,000
people it has sheltered. But FEMA and the affected
states are reimbursing the Red Cross under preexisting
contracts for emergency shelter and other disaster
services. The existence of these contracts is no
secret to anyone but the American public. The Red
Cross carefully says it functions only by the grace of
the American people — but "people" includes
government, national and local. What we've now come to
expect from a major disaster is a Red Cross media
blitz.

The national Red Cross reports it spent $111 million
last year on fundraising alone. And it's hard to
escape the organization's 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 more
than $1.5 billion annually, part of its $3 billion in
income).

In Southern California, we have had the spectacle of
"drive-by" drop-offs of bags of money at public places
such as the Rose Bowl, massively promoted by local
media. Hollywood studios and stars and corporate
America compete to make huge donations.

The Red Cross brand is platinum. Its fundraising
vastly outruns its programs because it does very
little or nothing to rescue survivors, provide direct
medical care or rebuild houses. After 9/11, the Red
Cross collected more than $1 billion, a record in
philanthropic fundraising after a disaster. But the
Red Cross could do little more than trace missing
people, help a handful of people in shelters and
provide food to firefighters, police, paramedics and
evacuation crews during that catastrophe.

When New York Atty. Gen. Eliot Spitzer asked for
documentation of 9/11 expenditures, the Red Cross'
response was that it is federally chartered and not
answerable to state government regulators. The clamor
rose, however, when the media began dissecting Red
Cross activities in the 9/11 aftermath. This resulted
in the resignation of the organization's president and
chief executive, Dr. Bernadine Healy, and the
appointment of ex-Sen. George Mitchell (D-Maine) to
oversee its 9/11 fund and help clean up its image.
Funds were then pushed out the door — including
millions to New York limo drivers who said they lost
income after 9/11, and to upscale residents of lower
Manhattan to help pay their utility bills.

The organization also ran into trouble after the 1989
San Francisco Bay Area earthquake when it was revealed
that it planned to spend only a fraction of the
millions of dollars it had collected in the area
damaged by the earthquake. When the Bay Area's mayors
found out, they insisted that these funds be spent on
housing, homeless shelters and health clinics. The Red
Cross had to waive, for one time only, its
long-standing policy against funding non-Red Cross
groups. (Spare change — and there will be a lot of it
this time — stays in a Red Cross "national disaster
account." This allows it to spend funds donated for
one purpose on another.)

The Red Cross expects to raise more than $2 billion
before Hurricane Katrina-related giving subsides. If
it takes care of 300,000 people, that's $7,000 per
victim. I doubt each victim under Red Cross care will
see more than a doughnut, an interview with a social
worker and a short-term voucher for a cheap motel,
with a few miscellaneous items such as clothes and
cooking pots thrown in.

The Red Cross' 3 million unpaid volunteers, 156,000 of
whom it says are deployed in Hurricane Katrina, are
salt-of-the-Earth Americans. But asking where all the
privately collected money will go and how much Red
Cross is billing FEMA and the affected states is a
legitimate question — even if posed by the president
of a small relief agency.

As Hurricane Rita dissipates, let me answer my
unpopular question like this: Giving so high a
percentage of all donations to one agency that defines
itself only as a first-responder and not a rebuilder
is not the wisest choice. Americans ought to give a
much larger share of their generous charity to
community foundations, grass-roots nonprofit groups
based in the affected communities and a large number
of international "brand name" relief agencies with
decades of expertise in rebuilding communities after
disasters.