Where did 500 million dollars’ worth of Red Cross donations go?
“Would you like to donate to the Red Cross?” The girl in the red uniform asked at my doorway “All proceeds are going towards relief efforts for the 2010 Haiti earthquake”. Encounters similar to this happen everyday, where charities such as the Red Cross ask for donations door-to-door. They also air heart-aching commercials with young helpless children and the 1-800 number in bold at the bottom of the screen. Upon seeing and hearing what those in developing countries face, people donate money to the charity, being promised that their money will be given to these communities. Unfortunately, some non-government organizations (NGOs) are not transparent with your donated money. One such case occurred in 2010, when the American Red Cross (ARC) fundraised 488 million dollars for one of the most devastating natural disasters of its time, the Haiti Earthquake.
With such an enormous sum of funds, the ARC planned multiple projects, with focuses ranging from housing development, access to water and healthcare. According to a report by ProPublica and NPR, the Red Cross claimed to have “helped 132 000 Haitians to live in safer conditions” but in reality had only built a total of 6 houses instead of the 700 initially promised , . Despite the internal failures of this project and others, Red Cross exaggerated their achievements and hide the misuse of donated funds.
"The group has publicly celebrated its work. But in fact, the Red Cross has repeatedly failed on the ground in Haiti. Confidential memos, emails from worried top officers, and accounts of a dozen frustrated and disappointed insiders show the charity has broken promises, squandered donations, and made dubious claims of success." Excerpt from ProPublica/NPR Investigative Report 
In a Five-Year Update Report from the ARC, they stated that “an average of 91 cents to every dollar ... is invested in humanitarian services and programs”. The truth of the matter, however, is that Red Cross hired other groups to implement aid work in Haiti . This in turn increased the actual amount of overhead being charged with every donated dollar. An analysis by ProPublica revealed that Red Cross’ overhead and management fees along with the additional costs of externally hired NGOs lowered this value to only 60 cents to the dollar .
After the release of the in-depth investigative report by journalists from ProPublica and NPR outlining the failure of the Red Cross’ projects in Haiti, an inquiry was launched by the Iowa Senator Chuck Grassley. The findings of the inquiry were released in 2016, where Grassley and staff discovered that the Red Cross had spent 25% of the $487.6 million on “program management, fundraising and other expenses” . In addition, they found that the ARC lacked internal investigations or an ethics unit. These units are necessary in organizations such as the Red Cross in order to investigate wrongdoings and misconduct. Following this report, the Republican introduced the American Red Cross Transparency Act, S. 3128, to ensure that the Red Cross will be overseen by the Government Accountability Office.
There is no denying that the Red Cross had many failings with its internal management, particularly with its mishandling of funds in Haiti Relief. But do not forget that the task that they signed up for is extraordinarily complicated. Disaster relief requires varying types of skilled individuals on all levels depending on the type of aid needed. The earthquake not only shocked Haiti but shocked the world along with the NGOs scrambling to help. This was something they had not been faced with before. At the same time, these organizations need to be held accountable with the large donations that have been fundraised in the names of those who need it most. NGOs should present their work on international aid projects in such a way that is transparent to the donors.
Despite the fact that not all NGOs are perfect and that many have improved the lives of those in developing countries, donors would be better off giving to local organizations that can provide more effective relief and manage funds appropriately. Nonetheless, when you’re looking to donate to a certain organization, do not hesitate to do the research and pick the organization that will help the cause the most.
1. Justin Elliott, L.S., How the Red Cross Raised Half a Billion Dollars for Haiti and Built Six Homes. 2015, ProPublica, NPR.
2. Haiti Earthquake Response. 2015, American Red Cross. p. 1, 2.
3. Grassley Introduces American Red Cross Transparency Act Following Haiti Relief Inquiry. 2016: Washington.