The American Red Cross' decision to spend some of the millions of dollars raised for victims of the Sept. 11 terrorist attacks for other purposes has created some controversy.
The Red Cross has received about $550 million in pledges for the Liberty Fund, which the nonprofit set up to benefit terrorism victims. Donations normally are fed into a general fund to be used for all types of disaster relief.
As of Oct. 19, the Red Cross had collected $356 million in donations pledged for the Liberty Fund and spent $121.3 million. The Red Cross has acknowledged that it expects to spend only $300 million of the $550 million pledged directly on disaster relief, the Associated Press reported yesterday.
For example, the Red Cross is spending $50 million for blood readiness and a reserve program to increase the organization's supplies from two days to 10 days. Another $29 million is being spent on relief infrastructure, while $26 million is being used for nationwide community outreach.
“We believe very much that we are honoring donor intent,” Red Cross spokesman Mitch Hibbs told the Associated Press. “Yes, we are helping families, but we're also helping everyone else.”
Red Cross president Bernadine Healy resigned Oct. 27, citing among her complaints disagreement with the Red Cross board of directors over how Liberty Fund monies were being spent. Healy created the Liberty Fund soon after Sept. 11.
The Red Cross is not alone in its unusual predicament of having too much money, said Neal Denton, executive director of the Alliance of Nonprofit Mailers, Washington. Other aid organizations, such as the Salvation Army, are trying to figure out what to do with the surplus of money donated for Sept. 11 disaster relief while still fulfilling their non-disaster responsibilities.
The situation is unfamiliar for nonprofit organizations, Denton said.
“We're kind of in uncharted waters right now,” he said. “The kind of revenues generated after Sept. 11 were unprecedented.”
Most consumers trust the leadership of the Red Cross and recognize the organization's dilemma, Denton said. It has consistently earned good marks for spending high percentages of donated money on programs and services and keeping administrative costs low.
Beyond disaster relief efforts, the nonprofit community's needs remain great, such as the needs of local charities that have suffered from a lack of attention after Sept. 11, Denton said. Meanwhile, many in the nonprofit community are calling for aid organizations to set aside surplus money for future disasters.
“I don't think any of us believes this is all over yet,” Denton said.