Watchdogs Call For More Oversight Of Red Cross Amid Donation Scandal

An independent government group would evaluate the group's services and audit its spending.

Fresh off damning allegations that the American Red Cross squandered millions of donation dollars, government officials are calling for an independent body to examine the aid group’s disaster dealings.

After analyzing recent claims against the Red Cross’ lack of transparency and its wasting of donor funds, the Government Accountability Office issued a report encouraging Congress to establish a group to evaluate the organization’s services in the wake of a disaster. A congressman supported the GAO by introducing a bill that would require enhanced oversight of the organization and a pilot program that would improve its response capabilities.

In its exhaustive report, the GAO cited recent media reports and watchdogs’ concerns about the Red Cross’ handling of funds after a number of recent natural disasters.

In a joint report in June, ProPublica and NPR alleged that the aid organization raised nearly half a billion dollars after the Haiti earthquake in 2010, but failed to adequately put those funds to use. The Red Cross wouldn’t disclose how it has spent the money, but the report found that while the group vowed to build 700 homes, it’s only managed to erect a total of six over the past five years. 

The news outlets also slammed the Red Cross’ tepid response to Hurricane Sandy in 2012.

It noted that the group was more focused on publicity than actual relief work. The report stated that the Red Cross wasted millions of meals and neglected to properly serve hurricane victims with disabilities, among other issues. 

The aid group fired back against the claims, but watchdog groups weren’t so forgiving.

While the Red Cross typically scored well in the past with nonprofit watchdog groups, after the media reports denounced the Red Cross, they readjusted their assessments.

After Typhoon Haiyan in 2013, for example, Charity Navigator issued an advisory, stating that the Red Cross hadn’t explicitly noted whether money donated to a fund for that event would necessarily be used exclusively for Haiyan survivors and recovery. In November 2014, the same group put the Red Cross on its watchlist in response to the media investigations, the GAO report noted. 

To enhance the government's and donors’ confidence in the Red Cross, the GAO is urging Congress to develop an independent federal mechanism to oversee the group. The responsibility would fall on a federal agency, such as the Department of Homeland Security, to conduct regular checks on the organization’s responses to domestic disasters in which the federal government provides leadership or support.

In response to the GAO report, Rep. Bennie Thompson, a Democrat from Mississippi, proposed the American Red Cross Sunshine Act.

The act calls for regular audits of the humanitarian organization and for it to make its records available and for full cooperation with future GAO investigations.

Thompson told NPR that getting the Red Cross to collaborate with the GAO is critical, since there was notable pushback during the latest investigation.

The Red Cross was reluctant to provide information and CEO Gail McGovern tried to squash the investigation altogether, according to NPR.

"The public deserves and needs to know that the money is going for [that] which it is intended," Thompson told NPR. "If it's going for the purpose intended, there should not be a problem in demonstrating and documenting that."

In its official response to the GAO report, the Red Cross emphasized that it functions as a nonprofit entity that’s independent from the federal government.

The group also noted that it’s open to regular evaluations, but that such systems are already in place. In addition to the IRS and FEMA, the group is evaluated by Charity Navigator and the Better Business Bureau.

“The Red Cross believes there are several already existing mechanisms in place to evaluate our disaster response that provide considerable oversight of the American Red Cross,” the group said in a statement. “It is important to remember that the American Red Cross is not a federal agency, and our disaster relief activities are almost entirely funded by our generous donors -- not the government -- and carried out by a largely volunteer workforce.”