Disaster Relief Fund or Red Cross Relief Fund? – PDF

2001 Disaster Relief Fund or Red Cross Relief Fund?

The donations were small and they were large. Children brought in their allowances, baked and sold cookies, individuals and businesses donated cash and set up collection sites and major corporations gave huge amounts and matched or even tripled their employees donations. In less than two months the Red Cross had raised $574 million, more than half of the total monies raised for the victims of the attacks on September 11th.

It seems likely that most, if not all of the donors, believed their contributions to the Red Cross were going to aid the families of those who perished in the attacks and others who were injured. After all a special fund, called the American Red Cross Liberty Disaster Relief Fund, was set up immediately after September 11th. Both the fund’s name and the timing of its establishment led people to presume that donations were to aid those killed and harmed by the attacks.

This was certainly the message that was advertised by the Red Cross in a major advertising campaign to raise money for the fund. In a national press release on September 18th the Red Cross thanked Americans for their unbounded generosity “during this time of crisis” and explained that “because we are on site providing services to disaster victims and workers” we know what is “most needed.” What was most needed were “financial donations” to the special fund. Other ads explicitly stated that “contributions to the Liberty Fund in the aftermath of September 11th will meet needs of victims and families.” Donors were even told to write “Disaster Relief Fund” in the memo section of checks if they wanted to help with the relief efforts in New York City and Washington D.C. It is no wonder that donors such as the Verizon Foundation announced in a press release that a $1 million dollar gift was going to the special Disaster Fund, a “new program established by the American Red Cross to help families of the victims of the September 11 terrorist attacks.”

As we all now know, a lot of this money will never be seen by the families of the victims or anyone else affected by the attacks. At least $200 million and possibly more will be used as so-called insurance against future terrorist attacks and $50,000,000 was used to install blood freezers nationwide. In other words, almost half the money is not going to the victims of September 11th. While these may be worthy endeavors, they were not the reasons people were asked for money and not the reasons for which they gave. This massive Red Cross fund-raising drive may also have deprived less well funded direct aid groups from raising money they needed to aid victims of September 11th.

So far there has been some public outcry, a few editorials and congressional hearings. At those hearings the Attorney General of New York, Elliot Spitzer, was sharply critical of the Red Cross and testified that it was “unacceptable” that up to $260 million of the “Liberty Fund” would not be used directly for victims of the September 11 attacks. The President of the charity watch dog group, the American Institute of Philanthropy, testified that the Red Cross had “behaved opportunistically,” and is spending money “on areas other than what was most heavily advertised and perceived to be the need by the public” which was direct aid to the victims, their families and relief workers. Despite these hearings the Red Cross is persisting in its plan to use almost half the money for purposes other than the victims of September 11th and is continuing to collect money for the disaster fund, although it has stopped advertising.

Something can and must be done. There are federal and state laws aimed at preventing charities and others from doing precisely what the Red Cross appears to have done: misleading the public into believing that charitable contributions were going to the victims of September 11th. Courts can require charities to return donations taken as a result of false advertising, misrepresentation or fraud. False advertising can include ads that have a tendency to deceive or mislead. New York courts have insisted that donors to a charity should be “fully informed with respect to the use to which a contribution is being put and should not be misled into believing that the funds will applied for one purpose when, in reality, they are being utilized somewhere else.

The question is whether the Attorney General of New York or any other state or federal officials will act. It is certainly obvious that they should. No reason has been given by these officials as to why they have not dragged the Red Cross into court. If they do not act, then donors can and should file suit themselves. It is a national scandal that hundreds of millions of dollars are not going where the donors intended: to those most in need: the families of the victims of September 11th.