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Reports of mismanagement in Haiti hurt Red Cross' reputation

Much is made of the importance of transparency in government — operations and spending. The same is true, or should be, for nonprofit organizations.

People making donations to charities expect their money to be spent wisely, effectively and in ways the charity promised.

Troubling reports have made news recently over how the Red Cross spent money donated for earthquake relief in Haiti.

Two respected media organizations, ProPublica and NPR (National Public Radio) looked into how nearly $500 million was spent following the devastating earthquake that hit Haiti in January 2010.

Media investigations found large gaps between Red Cross claims and evidence on the ground in Haiti. The Red Cross claims it provided permanent housing for 130,000 people, but ProPublica and NPR reporters found that only six new homes had been built. In response, the Red Cross said it provided rental subsides to thousands of people and repaired many homes. But when asked to show reporters the evidence, it refused.

Associated with fast response and assistance after a disaster, the Red Cross leads most people to think of providing blankets, warm food and temporary housing after fires and floods. But Haiti was well beyond the scope of anything the Red Cross had tackled before. The earthquake flattened large parts of the desperately poor island nation, destroying homes, government buildings, stores and roads. The quake displaced 1.5 million people and killed more than 250,000.

Recent media reports suggest many Red Cross projects were badly managed and often were handed over to other organizations that were equally challenged. The investigations found a large percentage of funds were spent on managing “third-party projets.”

Another news organization, the Thompson Reuters Foundation, reported that the Red Cross spent about 17 percent of the money raised for Haiti on overhead expenses, despite claims that 91 cents of every dollar goes directly to helping people.

Another troubling part of the media reports found that the Red Cross raised more money than its target for Haiti and used that surplus to pay off a $100 million debt. The reporting noted that Doctors Without Borders, the international medical assistance group, stopped fundraising for Haiti once it reached its goal.The Red Cross, however, kept pulling in money after hitting its target. Reporters quoted one former Red Cross official saying the Haiti earthquake was “a spectacular fundraising opportunity.”

When ProPublica reporters asked Red Cross officials to show how hundreds of millions of dollars had been spent to help rebuild Haiti, the organization refused. When asked questions about the lack of newly constructed houses by Thompson Reuters reporters, the organization refused to answer. CNN reported that the required Form 990 tax filing showed few details for Red Cross spending in Haiti.

The Red Cross says the critical reporting on its Haiti efforts lacks “balance, context and accuracy.” If that’s true, then the organization should be stepping forward to show what it did accomplish with $500 million in donations. It should be showing reporters and photographers its work on the ground. It should not be refusing to show reporters its projects or answer questions about its spending and project management.

NPR and ProPublica reports found that the Red Cross suffered staff turmoil in Haiti and many of the failures to deliver aid to the people was traced to the organization’s reliance on “foreigners who could not speak French or Creole.” Overhead expenses reportedly were much higher because of the third-party groups hired by the Red Cross.

The reports of mismanagement are troubling, and embarrassing for the Red Cross. Still, the agency would be better served if it stepped forward to show concrete evidence of its work and spending rather than stonewalling. The scope of the crisis in Haiti was doubtless beyond anything the Red Cross or any other aid organization had encountered before. If that explains the failures, then the Red Cross should say so. Dismissing criticism with terse press releases will not end the story or stop the reporters.

Accountability is essential for the Red Cross or any charitable organization to retain the public trust. People need to know that their donations, meant to help desperate people, are being well spent. The Red Cross has an obligation to open up its Haiti operation to reporters and to open up its spending records, too. If mistakes were made, the Red Cross should admit it and explain how it will avoid it in future efforts.

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