The American Red Cross received a windfall of generosity in 2010 the wake of the earthquake in Haiti — raising $500 million in relief funds. It was one of its biggest fundraising events ever.
Five years later, news reports are revealing that it's hard to know where all the money went. NPR and ProPublica have done a series of critiques of the Red Cross that report poorly managed projects and questionable spending, from Haiti to Hurricane Sandy relief.
The most recent report, published Wednesday, finds the Red Cross set aside millions for housing, and has only built six houses.
Much of the $500 million raised for Haiti relief was funneled toward emergency food, medicine and shelter. But $170 million was earmarked for permanent housing and rebuilding, and the report, which is based on an investigation of hundreds of internal Red Cross documents and emails, and dozens of interviews with officials and locals, finds little to show for it.
One of the blunders the report hones in on is that while the Red Cross is a well-known disaster relief program, it has little rebuilding experience. It seems after emergency food, blankets and shelter had been handed out, the organization, which out-fundraised many others, had lots of money but little know-how to finish the job.
Lacking expertise, the Red Cross appears to have outsourced much of its housing work, which allowed for multiple agencies to take their cut of the relief money.
"It's a cycle of overhead," Jonathan Katz, the Associated Press reporter who tracked postdisaster spending for his book "The Big Truck That Went By,"told Philanthropy News Digest. "It was always going to be the American Red Cross taking a 9 percent cut, regranting to another group, which would take out their cut."
The Red Cross has responded to the NPR report by saying the $500 million has built and operated eight hospitals and clinics, curbed a cholera outbreak, provided clean water and sanitation as well as new roads and schools, and moved more than 100,000 people out of make-shift tents and into better homes.
"The Red Cross is disappointed, once again, by the lack of balance, context and accuracy in the most recent reporting by ProPublica/NPR, which follows the pattern of all their previous Red Cross stories," said the Red Cross statement.
NPR reporter Laura Sullivan told PBS News Hour that while it’s true archaic land titles and government requirements make it very difficult to rebuild in Haiti, other organizations have managed to build 9,000 homes there.
“We went to one project that was done by Global Communities and PCI, where we saw more than 300 homes being built. In the project now, they’re building 75 homes that have running water for people. And those — and they say that a lot that is because they hired Haitians to do the bulk of the work,” she told PBS.
The Red Cross has also come under scrutiny for lack of transparency in its spending. A CNN review of tax filings from July 2010 to June 2013 shows “no detailed expenditures” for its relief programs, including Haiti.
Those documents, called Form 990, do show salary details, including CEO Gail McGovern's $597,961 total compensation in the most recent filing.
In response, the Red Cross has said it produces annual reports online to show where donor dollars go, and accusations that "details of Red Cross spending are so broad as to be useless" is a myth.
The Red Cross accused the news organizations of “ignoring positive public comments about the Red Cross while pretending that only negative comments exist,” according to the Chronicle of Philanthropy, and overrelying on the testimony of one former Red Cross employee.
ProPublica and NPR have stood by their reporting, saying they gave the Red Cross a chance to respond "to every fact, detail, and allegation from our reporting" before the stories were released, and the reports were modified in response to some of their exchanges.
“The tragedy of the Haiti earthquake seems to have become a way for the ARC to make a $100 million budget deficit vanish while offering plenty of overhead expenses for an array of projects, many never completed,” the Center for Economic Policy and Research wrote on its blog.
“The lack of results, exclusion of Haitian voices and reliance on foreign expertise are symptoms of the aid industry’s problems writ large," the blog post read.