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Red Cross Responds to Grassley Memo: Defends Transparency and Spending of Donor Dollars in Haiti

Thursday, June 16, 2016 (Washington, D.C.) – The American Red Cross strongly disagrees with the findings in Chairman Charles Grassley’s Memo released today. We have accounted for every penny spent in Haiti and have posted on our website a detailed financial breakdown of how those donor dollars were spent. The publication of this breakdown represents a new level of transparency in the nonprofit sector.

The Red Cross already enjoys the highest rating for accountability and transparency from the independent nonprofit watchdog Charity Navigator, as well as meeting the 20 Standards for Charity Accountability from the BBB Wise Giving Alliance. The Red Cross is not a federal agency—we rely on the generosity or our donors and a volunteer workforce—yet we receive more oversight from Congress than any other nonprofit we know.

Spending in Haiti

As outlined on our publicly-available website, the Red Cross has and is continuing to fund approximately 100 projects in Haiti, working with 50 partners to help us execute this work, and the funds awarded to each partner and status of each project are posted. We also fully shared what we spent on staff needed to carry out the work—83 percent of our workforce are Haitians—and on the systems to support the delivery of our humanitarian assistance and conduct careful oversight of donor dollars. These are not overhead costs; they are legitimate expenses to implement humanitarian aid projects—and ensure they are properly implemented by our partners.

Chairman Grassley’s Memo does not note a single finding of fraud or abuse in the Haiti Assistance Program. Red Cross accounting follows guidelines issued by the Financial Accounting Standards Board. In addition, we are annually audited by an independent auditor (currently KPMG) and reviewed by the U.S. Army Audit Agency. Each year, the Red Cross publishes the results of its audits for the public to see.

The story of Haiti is a very positive story that shows the American Red Cross and our partners have and continue to deliver close to half a billion dollars of humanitarian assistance in the form of new hospitals, repaired homes, clean water, vaccinations, job training, improved sanitation and other life altering assistance to millions of Haitians—and spent our donor dollars wisely and well. Our statement that 91 cents of every dollar donated went to our programs and services in Haiti is absolutely true.

GAO Report

The Red Cross has always been committed to providing the Government Accountability Office (GAO) with the information it needs to conduct its research on the American Red Cross. The GAO’s authority to review the Red Cross is defined by federal law—a law written by Senator Grassley—and is limited by this law to review the Red Cross’s “involvement in any Federal programs and activities.” Initially, there were several issues the GAO began to explore but ultimately did not pursue after the Red Cross raised legitimate issues about its scope as going beyond that authorized by Congress. But at no point did the Red Cross refuse to provide requested information. A dozen Red Cross personnel participated in interviews, and we shared many internal documents with GAO and provided extensive information about many aspects of our disaster relief activities and coordination with FEMA.

Red Cross CEO Gail McGovern did respectfully request of Congressman Bennie Thompson, who ordered the GAO report, if he would consider meeting face-to-face with us to address these concerns and end the GAO inquiry which was using a great deal of staff resources while the Red Cross was preparing for hurricane season and simultaneously responding to tornadoes, storms, wildfires and floods across multiple states. When that request was not granted, we continued working with the GAO.

Channels for the Public to Report Concerns

The American Red Cross offers many ways for the public, employees and volunteers to report concerns regarding the ability of the organization to fulfill its mission, including two 24-hour, confidential, toll-free tip hotlines, as well as online.

We maintain an active Office of Investigations, Compliance and Ethics (ICE). We also have an Ombudsman’s office created in 2007 as a result of bipartisan legislation first introduced by Chairman Grassley. The Ombudsman’s office handles hundreds of questions and internal and external concerns and provides a report issued annually to 10 Congressional Committees and posted on our public website.

The reason our Office of Investigations, Compliance and Ethics (ICE) is not as big as it was during Katrina, is because we were handling a lot more investigations during Katrina. In addition, the number of whistleblower complaints have been declining over recent years, and we believe this is because we have improved fraud detection and other compliance measures.

However, to ensure our investigations unit is adequately resourced, we are combining ICE and the Ombudsman’s office to pool those resources so we can more effectively respond to whistleblower and other concerns in a timely manner.

Red Cross Public Affairs, Phone: (202) 303-5551, media@redcross.org, FOR MEDIA ONLY

This press release is available in French here: La Croix-Rouge répond au sénateur Grassley : Elle défend la transparence et les dépenses des contributions des donateurs à Haïti

About the American Red Cross:

The American Red Cross shelters, feeds and provides emotional support to victims of disasters; supplies about 40 percent of the nation's blood; teaches skills that save lives; provides international humanitarian aid; and supports military members and their families. The Red Cross is a not-for-profit organization that depends on volunteers and the generosity of the American public to perform its mission. For more information, please visit redcross.org or cruzrojaamericana.org, or visit us on Twitter at @RedCross.

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