In 2010, the world banded together in a humanitarian effort to help the people of Haiti by donating to the Red Cross. But five years and nearly $500 million later, the world is left asking where all that money went.
In January 2010, a 7.0 magnitude earthquake devastated Haiti, killing over 230,000 and displacing 1.5 million people from their homes. Many nonprofit organizations participated in the relief effort, but the Red Cross raised the most money with over $488 million in donations worldwide, promising to change the lives of the people affected by the earthquake. Now, Haitians are still fighting an ongoing battle for reliable shelter, food, clean water, and more. In light of several recent revelations about the practices of large nonprofits, many now wonder if the Red Cross is part of an emerging trend of misconduct.
Funds donated to the Red Cross were given with the expectation of creating a better life in Haiti. The Red Cross set goals to build and develop brand new communities for the people of Haiti during its donation campaign. The Red Cross proposed building roughly 700 homes by January 2013, each with finished floors, toilets, showers, and rainwater collection systems. A review of the Red Cross’ efforts shows that these goals do not appear to have come to fruition.
A recent investigation into the Red Cross by Propublica and NPR found unfulfilled promises to build homes, wasted donation funds, unnecessary fundraising, and exaggerated claims of success. The investigation showed that many of the Red Cross’s shortcomings in Haiti were of the charity’s own doing. According to the investigation, a lack of expertise and leadership led to inefficiency and fund mismanagement. For example in 2012, documents revealed that nine of the 30 leadership positions in Haiti, including experts on health and shelter, remained unfilled.
In its progress report, the Red Cross said it “helped 132,000 Haitians to live in safer conditions—ranging from providing temporary homes and rental subsidies to repaired and new homes.” But according Propublica and NPR, the Red Cross has actually built just six permanent houses in Haiti, nowhere near the number of new communities that they planned. The Red Cross cited a lack of land rights for its inability to build more homes, yet other charities facing the same challenges with less funds managed to build approximately 9,000 homes. In an interview with PBS Newshour, NPR Investigative correspondent Laura Sullivan said, “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.”
Mismanaged funds include unnecessary expenditures like financial perks for non-Haitian officials. For example, a project manager–a position reserved for an expatriate–was given an allowance for housing, vacations, and other expenses for about $140,000 a year. But a senior Haitian engineer–the top local position–received only $42,000 a year. Shelim Dorval, a Haitian administrator who worked for the Red Cross to coordinate travel and housing for expatriate staffers told Propublica:
For each one of those expats, they were having high salaries, staying in a fancy house, and getting vacation trips back to their countries…A lot of money was spent on those people who were not Haitian, who had nothing to do with Haiti. The money was just going back to the United States.
The Red Cross also continued soliciting money from donors well after it had collected enough for its relief plans. In contrast, organizations like Doctors Without Borders stopped fundraising when they received enough money to accomplish their goals. The investigation also revealed that the organization used some of the extra money to erase a $100 million deficit that was unrelated to the Haiti relief project. The Red Cross declined continuous requests from NPR and Propublica to disclose details of how much money went to relief projects, and what the results of each project were.
A Recurrent Trend
This recent report falls in line with many other cases of mega nonprofit organizations involved in questionable practices. The most recent were the charges brought against four well renowned cancer non-profit organizations. Last month, the Federal Trade Commission, along with 58 law enforcement partners from across the country, charged four organizations and their operators with defrauding more than $187 million from donors. One of the charges alleged that the charities used telemarketing calls, direct mail, websites, and other methods to disguise their organizations as legitimate charities only to use the money to help friends and family acquire lucrative jobs, as well as for luxuries like cars and cruises. The organizations were The Cancer Fund of America, Cancer Support Services, The Children’s Cancer Fund of America, and The Breast Cancer Society.
These organizations and many others amass millions of dollars each year from donors trying to help those in need, but instead take advantage of their status. Organizations like Kids Wish Network repeatedly accepted millions of annual donations, of which large sums were given to solicitors rather than to the individuals that the organization was supposed to help. Federal tax filings from the last 10 years show that the Kids Wish Network received $137.9 million in donations, but used $115.9 million of the donations for “fundraising costs.” Put simply, that means paying people or companies to raise money for the organization. The Cancer Fund of America, one of the four charities recently charged with fraud, also received over $86 million from donors and gave $75.4 million to solicitors. The chart below shows the amount of money given to non-profits, and how much they spent on solicitors.
The reality is that many donors still donate to these charities because of name recognition without knowing where their money really ends up. Charity navigator, America’s largest charity evaluator, encourages donors to research and ask questions about a non-profit organization before donating. Questions like whether a non-profit clearly explains its goals, the specific problems it intends to improve, and whether it regularly achieves its objectives are all encouraging steps to finding the right charity. Researching, and questioning organizations like the Red Cross is the next step in holding said organizations accountable for the millions they receive from the people.