Bucking the trend of overspending on disasters and underspending on prevention and preparedness, the Red Cross attempted to divert some of its 9/11 relief monies to more underfunded projects. Outraged donors, however, thwarted the agency’s plans.
Soon after the Sept. 11 attacks, the Red Cross created the Liberty Disaster Relief Fund to handle the surge in donations. After using the funds for immediate disaster relief, including food, water, and health services, the agency still had a lot of money left over. And so the organization decided to spend over $250 million of the Liberty Fund on long-term programs, including terrorist attack preparedness.
By early November, however, public outcry over how charities were spending their 9/11 donations caused Congress to hold hearings on the topic. The Red Cross, which had raised roughly 50 percent of all 9/11 proceeds, faced particularly harsh criticism. Rep. Charles F. Bass of New Hampshire was quoted in The Chronicle of Philanthropy as saying: “I don’t care what it says on the back of an envelope or in a PSA. … If you asked Americans where they thought the money was going when it was to the Liberty Fund, they thought it was going to the victims of the [9/11] disaster.” Donors themselves sent several thousand angry e-mails to the Red Cross in the course of the hearings.
Bernadine Healy, the Red Cross’ outgoing president, defended her organization, saying during the hearings: “The American Red Cross, to my knowledge, has never described its work as limited only to those people who were lost on 9/11 and their families.” More recently, Red Cross spokesperson Scott Snyder commented: “The Red Cross never intentionally misled the public about the Liberty Disaster Relief Fund. The plans for the fund evolved as the Red Cross tried to anticipate future needs.”
On Nov. 14, however, the Red Cross responded to donor demands by pledging all of the Liberty Fund’s proceeds to people directly affected by the 9/11 attacks. The organization also began offering refunds to dissatisfied donors.
By the end of 2004, the Liberty Fund had distributed $390 million in victim compensation to approximately 3,500 beneficiaries – an average of $110,000 per person affected. Never before had a charity distributed so much money per person. Moreover, it was the first time that the Red Cross did not directly tie eligibility for aid to the financial need of the victim.
Read more stories by Catherine Spence.