The Red Cross -- A Humanitarian Agency, or Is It A Major Disaster?
January 16, 2010
By Pokey Anderson
When there is a big disaster, it's almost a reflex for American media, supermarkets, and individuals to join in a generous chorus to "send money to the Red Cross." It's comforting to believe that our good-hearted impulse to help people in dire straits WILL help, in a timely, cost-effective way.
A closer look, however, is not that comforting. In the past decade, the Red Cross has had frequent turnover in its top job, and has squandered millions of dollars in severance pay to chief executives who bungled the handling of two of our country's major disasters, September 11 and Katrina. It also spent at least half a million dollars to burnish the image of one of its CEOs and the agency.
1. 2001. The Red Cross spent only 27% of the money raised after the September 11 attack for that purpose, reserving the rest, explaining that the money had "evolved into a war fund."
The Red Cross raised more than $564 million for the Liberty Fund, which was set up in response to the September 11 attacks. While the agency stated on its Web site that it was spending more than any other relief agency responding to the attack, it had distributed only $154 million.
"Don't confuse us with the 9/11 Fund in New York. Don't confuse us with Habitat for Humanity. Don't confuse us with the scholarship in New York for the victims." Red Cross CEO/President Dr. Bernadine Healy said.
Controversy over the Liberty Fund was one reason Healy decided to resign at year's end. But she defended the agency's decision of how to use the money.
"The Liberty Fund is a war fund. It has evolved into a war fund," she said. "We must have blood readiness. We must have the ability to help our troops if we go into a ground war. We must have the ability to help the victims of tomorrow."
Source: CNN http://archives.cnn.com/2001/US/11/0...arity.hearing/
Dr. Healy might have more knowledge about war and war-making than the average head of a humanitarian organization -- she has long served on the board of Battelle Memorial Institute, a defense contractor that makes biochemical weapons, including anthrax.
Sources: Ohio State University release, 07-07-95 http://www.osu.edu/news/releases/95-...n_of_Medicine; Guidestar, fiscal year 2007 http://www.guidestar.org/pqShowGsRep...oId=100193572; Morningstar board profile, January 16, 2010 http://quote.morningstar.com/insider...&t1=1263632568
2. 2001. Red Cross CEO/President Bernadine Healy was forced out following controversy about the Red Cross handling of September 11 funds it raised. Her severance package from the Red Cross was nearly two million dollars.
"Former American Red Cross President Bernadine Healy got salary and settlements totaling $1.9 million the year she left the charity in a dispute over how it handled donations it received after the Sept. 11 terrorist attacks. The nonprofit's latest tax filings show it gave Healy $1.63 million on top of her $296,661 partial-year salary ... at the end of 2001."
Source: The Plain Dealer, posted at Charity Navigator http://22.214.171.124/search?q=cache...gl=us&ie=UTF-8
3. 2005. Marsha Evans was president and CEO of the Red Cross during Hurricane Katrina. A Rear Admiral, she had spent 30 years in the Navy. Her master's degree was supplemented by professional studies at the Naval War College in Newport, R.I., and the National War College in Washington, D.C.
Source: Bio at LPGA.com http://www.lpga.com/content_1.aspx?pid=17783
Senator Chuck Grassley led a congressional probe of the Red Cross in response to criticism of its response to Hurricane Katrina. A House report found that the Red Cross was plagued by supply shortages and poorly run shelters. Red Cross aid often didn't reach remote Gulf Coast communities, the report said.
During Evans' tenure (August 2002 through December 2005), the Red Cross paid consultants more than $500,000 for public relations efforts for Evans and attempts to heighten the image of the charity in Hollywood.
Source: USA Today http://www.usatoday.com/news/washing...ed-cross_x.htm
4. 2005. Even heading up an agency with an annual budget of $3.4 billion at the time, former Rear Admiral Marsha Evans didn't manage to get ANY Red Cross relief personnel or material into New Orleans immediately after Hurricane Katrina. Curiously, the Red Cross was not allowed into New Orleans after the hurricane, and made no public outcry to demand to go in and aid those in New Orleans needing everything, including just a drink of water or a ride out. The Red Cross website attempted to explain why:
"Hurricane Katrina: Why is the Red Cross not in New Orleans?
--Acess [sic] to New Orleans is controlled by the National Guard and local authorities and while we are in constant contact with them, we simply cannot enter New Orleans against their orders.
--The state Homeland Security Department had requested--and continues to request--that the American Red Cross not come back into New Orleans following the hurricane. Our presence would keep people from evacuating and encourage others to come into the city."
Source: Red Cross website, obsolete link: http://www.redcross.org/faq/0,1096,0...00.html#4524); new link: http://web.archive.org/web/200510010...2_4524,00.html
5. 2005. Marsha Evans did okay for herself financially heading up the Red Cross and, like her predecessor Healy, did even better when she left under sharp criticism after a major disaster.
Evans' salary at the Red Cross was $651,957 for the fiscal year ending June 2003, and $468,599 salary the following year.
Source: Forbes Charity reviews http://web.archive.org/web/200606141...niqueId=CH0013 and http://126.96.36.199/search?q=cache...gl=us&ie=UTF-8
Evans received a severance package valued at about $780,000 after she was ousted from the organization in December, 2005.
The Washington Post reported in March 2006: "Yesterday's correspondence, as well as internal memos, e-mails and letters released this week by the Senate Finance Committee, reveal an organization racked with infighting and management turnover. In the past seven years, it has had five acting or permanent heads and has paid out about $2.8 million in severance, deferred compensation and bonuses to its former leaders -- beyond Evans -- according to Red Cross records."
Source: Washington Post, March 4, 2006 http://www.washingtonpost.com/wp-dyn...301734_pf.html
6. 2007. Red Cross President Mark Everson was ousted after the board discovered he had engaged in a "personal relationship" with a subordinate employee. Everson, former IRS Commissioner, married with two children, had headed up the Red Cross for only six months.
Source: Associated Press story in Houston Chronicle http://www.chron.com/disp/story.mpl/front/5332578.html