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The Almighty Buck News

How the Red Cross Raised Half a Billion Dollars For Haiti and Built 6 Homes 235

An anonymous reader points out an investigation from NPR and Propublica into how the Red Cross spent the $500 million in relief funds they gathered to help Haiti after the country was devastated by an earthquake in 2010. They found "a string of poorly managed projects, questionable spending and dubious claims of success." While the organization claims to have built homes for 130,000 people, investigators only found six permanent homes they could attribute to the charity. The Red Cross admitted afterward that the 130,000 number included people who had attended a seminar on how to fix their own homes.

"Lacking the expertise to mount its own projects, the Red Cross ended up giving much of the money to other groups to do the work. Those groups took out a piece of every dollar to cover overhead and management. Even on the projects done by others, the Red Cross had its own significant expenses – in one case, adding up to a third of the project’s budget." The Red Cross raised far more money for Haiti than any other charity, but is unwilling to provide details on where the money went. In one case, a brochure that extolled the virtues of one project claimed $24 million had been spent on a particular area — but residents of that area haven't seen any improvement in living conditions, and are unable to get information from the Red Cross. The former director of the Red Cross's shelter program said charity officials had no idea how to spend the money they'd accumulated.
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How the Red Cross Raised Half a Billion Dollars For Haiti and Built 6 Homes

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  • by kiphat ( 809902 ) on Friday June 05, 2015 @04:34PM (#49852223)
    Having witnessed first hand how the Red Cross spends its money on IT infrastructure it doesn't need, I refuse to give them a single dime.
    • That's the advantage of benevolence based on private charities — the mismanaged ones lose donations and disappear. I too stopped donating to Red Cross long ago — my charity money goes to the IRC [rescue.org].

      I refuse to give them a single dime.

      Try that attitude with public charities — financed by monies taken from you and me at gunpoint (taxes)... Whatever you may feel about their goals and methods, you can not simply stop paying them — your only recourse is to raise awareness hoping for the eventual healing to begin.

      Oh, and they are unconstitutional [goodreads.com] too, but that stopped bothering anybody long ago.

      • by kenj123 ( 658721 ) on Friday June 05, 2015 @04:50PM (#49852353)
        you could move to a paradise country with no taxes. I think Somalia doesn't have a national tax.
      • The Congress shall have Power To lay and collect Taxes, Duties, Imposts and Excises, to pay the Debts and provide for the common Defence and general Welfare of the United States

        In addition to the power to lay and collect taxes, duties, imposts, and excises, pay the debts, and provide for the common defense, the Congress shall have the power to provide for the general Welfare of the United States.

        Yes, Virginia, the United States government has the Constitutional power to tax and to spend for general welfare, and no amount of libtarded "taxes are theft" nonsense changes that.

    • by ErikTheRed ( 162431 ) on Friday June 05, 2015 @04:55PM (#49852389) Homepage

      Having witnessed first hand how the Red Cross spends its money on IT infrastructure it doesn't need, I refuse to give them a single dime.

      This! I've seen this in other large "non-profits" as well. It's like they don't even know how to do more with less (I own two businesses and could speak volumes on the subject) - they just declare that they "need" more money, fundraise, and then blow it out the way their high-priced consultants tell them to. I don't think they're necessarily evil, but they are run by people whose good intentions far outweigh their management skills (to be charitable, pun intended).

      • by Anonymous Coward on Friday June 05, 2015 @05:31PM (#49852653)

        Though not about the Red Cross, I have two anecdotes about Haiti relief efforts. A 20 year old friend of mine wanted to help so he signed up with a charitable organization to travel to Haiti and help. He used all of his savings to pay for plane tickets, housing, meals, and to donate to the program. He also did it using his 2 week vacation time for the year. They were assigned to teams of about 10 each of college aged Americans. They were given shovels, rakes, and wheel barrows and told to clean up the destroyed shanties. They worked morning until night while the locals watched them. Each week part of the group left and a new group arrived. Some stayed for one week, some for two, others for 2 months. This was going to be a year long project or more to clean the ruined shanties from the valley and hillside. A bulldozer and backhoe could have done it in a month or less, then they could begin rebuilding. The big question is why were the locals that would benefit from all this work not helping? They just stood around and watched. This was unskilled labor anyone could do it.
        The other is our local university has a charitable student org that was also getting students to self pay to go help "Rebuild Haiti". All they ended up doing was teaching English.
        Waste, waste, everywhere.

      • by DescX ( 4012275 )

        I don't know how it works in the states, but there are multiple ways for charitable organizations to draw revenue here.

        Fun story; I left such an organization where IT costs had ransacked the place rather silently. I was hired to keep a seat warm and not ask questions. Bit of a latch-key kid, so I come off mousey but tend to hit hard. I pushed nearly every single day for consolidation of architecture, refactoring efforts, and other things that would keep costs at net zero and set us up for efficiency. I over

        • Bullshit companies like that are often bullshit because they are just money laundering fronts. Paying people to fill seats is a big tip off. Consider reporting them.

    • The ARC has called me three times a week for several months asking for someone by name. Fuck if I know what they want, but after telling them 3 or 4 times that I've never heard of the guy they're looking for, I added their number to my call blocker.
    • Having witnessed first hand how the Red Cross spends its money on IT infrastructure it doesn't need, I refuse to give them a single dime.

      What I have heard from multiple sources, including people who have worked for it, is that the Red Cross lies to people about where money is being used as part of its business model. It claims to be raising money for disaster X and then puts the money into its coffers. While it does spend some money on disaster X, there is no guarantee (or even likelihood) that the money you sent in for disaster X will be used for disaster X.

      There's a word for that: fraud.

    • I refuse to give them a single dime.

      I never give them dimes either, but I do donate blood every 8 weeks. They can't embezzle that.

      • might want to reword that.

        http://www.slate.com/articles/news_and_politics/explainer/2006/09/the_business_of_blood.html
      • I refuse to give them a single dime.

        I never give them dimes either, but I do donate blood every 8 weeks. They can't embezzle that.

        But they do. They sell it and claim it as a donation, so they don't pay taxes on it, but they don't allow you, the giver to claim it as a charitable donation. Also, they claim 91% of their donations goes toward humanitarian efforts, but they don't include the moneys received from selling the blood, because that would lower their percentage down into the 60s or 70s or lower according to NPR.
        Far better to donate to a local hospital and eliminate the waste and the approximately 50% of blood donation that end

    • by antdude ( 79039 )

      Why a single dime in USA? Try a penny. ;)

    • Yep... I've done work for the Red Cross and they are extremely wasteful. We were brought in to audit the design, development and QA process to make it more efficient and less prone to defects and to reduce iterations... but even though THEY brought us in they fought the process every step of the way. We eventually ended up firing them as a client. I think they just wanted someone to rubber stamp their chaos.

    • Oxfam is no better, There redistribution is around 1%, one cent of every dollar collected. High salaries and benefits consume the rest.

      Salvation army has only 3% overhead. 97 cents of every dollar collected go for aid.

  • there are people who would do better job at a tenth the pay 'nuff said
  • Debunked already. (Score:5, Informative)

    by Anonymous Coward on Friday June 05, 2015 @04:36PM (#49852237)
    This has already been debunked on skeptics stackexchange http://skeptics.stackexchange.... [stackexchange.com]
    • Funny, I had come across that a couple days ago and was about to post it.

      At least they're ahead of Doctors Without Borders, I hear they didn't build any permanent residences in Haiti. Where does all the money go?

      • by nbauman ( 624611 )

        Funny, I had come across that a couple days ago and was about to post it.

        At least they're ahead of Doctors Without Borders, I hear they didn't build any permanent residences in Haiti. Where does all the money go?

        Medical treatment.
        http://www.doctorswithoutborde... [doctorswit...orders.org]

        Haiti had a massive cholera problem (as a result of cholera being introduced to the island by UN workers).

        MSF had a detailed report on what they did with the money.

        Emergency Response After the Haiti Earthquake: Choices, Obstacles, Activities and Finance
        Six months after the earthquake
        Six months after Haiti’s January 12 earthquake, MSF describes the organization’s largest ever emergency response.
        http://www.doctorswithoutborde... [doctorswit...orders.org]

    • Re:Debunked already. (Score:5, Informative)

      by amicusNYCL ( 1538833 ) on Friday June 05, 2015 @05:12PM (#49852509)

      I wouldn't call that "debunked". People are certainly throwing around the $500 million number assuming that all went to housing, which is not correct (only about $100 million did), but the Red Cross still failed at their own stated goals, and their lawyers refuse to provide any accurate accounting of where the money went beyond lumping large sums into large buckets (e.g., $24 million went into development of Campeche). The Haitians living in Campeche are equally curious about where the money went, because they haven't seen much done beyond some sidewalks and a wall painted with the Red Cross logo. The Red Cross specifically said they were going to build hundreds of homes and rebuild entire neighborhoods, and they've done neither. Even though it's true that they did not budget $500 million to that single effort, they still have failed to accomplish what they said they were going to do, and they have still failed to account for where that money went.

      • by nbauman ( 624611 )

        I wouldn't call that "debunked". People are certainly throwing around the $500 million number assuming that all went to housing, which is not correct (only about $100 million did), but the Red Cross still failed at their own stated goals, and their lawyers refuse to provide any accurate accounting of where the money went beyond lumping large sums into large buckets (e.g., $24 million went into development of Campeche). The Haitians living in Campeche are equally curious about where the money went, because they haven't seen much done beyond some sidewalks and a wall painted with the Red Cross logo. The Red Cross specifically said they were going to build hundreds of homes and rebuild entire neighborhoods, and they've done neither. Even though it's true that they did not budget $500 million to that single effort, they still have failed to accomplish what they said they were going to do, and they have still failed to account for where that money went.

        That's a good summary of the Pro Publica/NPR article. https://www.propublica.org/art... [propublica.org]

        I would add that the people who wrote that article actually went to Haiti where the Red Cross said they provided aid, and talked to the people there on the ground.

        I will bet money that the guy who wrote that attack job http://skeptics.stackexchange.... [stackexchange.com] did all his research sitting on his/her ass surfing the Internet within the US.

    • I doubt anything serious will ever be debunked on stackexchange.
  • Gave money to the Red Cross? Consider the advice of the great philosophers Nelson and Mr. T.
  • As I said on another site, Not as bad as they try to make it sound. The red cross initially committed to building homes but when that didn't work out due to them not being able to buy land they spent the money on improving some homes, building a hospital, and helping out elsewhere as possible. It's true there was a lot of administrative waste, but that waste was due to careful management. The article echos complaints of hiring "lazy" locals. Then it criticizes them for hiring expensive ex-patriot workers. T
    • The article echos complaints of hiring "lazy" locals. Then it criticizes them for hiring expensive ex-patriot workers. Then it criticizes them for contracting the work out to other companies causing high administrative costs. Well how the fuck were they supposed to do it?

      If only there was a 19 minute story filed with that kind of discussion.

      To be sure, building in Haiti is very difficult. Land title and government requirements are complex and time-consuming. But still, it can be done. A nationwide review found other charities have built almost 9,000 homes so far. Not far from the Red Cross's neighborhood development project in Campeche, two charities, Global Communities and PCI, built 260 one-story homes and 75 two-story homes and rebuilt the main road in Ravine Pintade. Now the charities are building a series of multifamily homes with running water.

      JOHN WILDY MARCELIN: (Through interpreter) This little house will have two bedrooms. And this is the kitchenette living room, and this will be the bathroom.

      SULLIVAN: John Wildy Marcelin is head of construction. He says this project's had a lot of momentum because the majority of the managers are Haitian. He says they're passionate about rebuilding their country.

      MARCELIN: (Through interpreter) All this work you are looking at now, the calculation was made by Haitian people, Haitian engineers, Haitian architects, Haitian foreman. We know what to do.

      SULLIVAN: The Red Cross does not seem to have used that strategy. One manager emailed supervisors in Washington complaining that Haitians were not being hired for top positions and in some cases, were treated disparagingly. Current and former employees told us the Red Cross relied on foreigners who often couldn't speak either French or Creole.

    • by nbauman ( 624611 )

      As I said on another site, Not as bad as they try to make it sound.

      The reporters at Pro Publica and NPR went to Haiti. The reporters went to the locations where the Red Cross said they had been working, to see what the Red Cross had accomplished, and they talked to the people that the Red Cross was supposed to have been helping.

      I don't suppose you went to Haiti yourself to check them out, did you?

  • that have the money

  • Local charity (Score:5, Insightful)

    by vivaoporto ( 1064484 ) on Friday June 05, 2015 @04:45PM (#49852317)
    This and many other examples like

    - PETA euthanizing more animals than they shelter [petakillsanimals.com]
    - UNICEF expenses of 52 million dollars (pdf) [unicefusa.org] in expenses related to management and fundraising (out of a 600 million dollars budget, and that's one of the best managed ones out there)

    show that it is much more efficient to donate time or money locally instead of to big organizations.

    Donate to your local food bank, soup kitchen, volunteer some time in the retirement home, the satisfaction will be the same and the effects will be much more efficient. Or, at the very least, don't screw people over, it is more than enough if you can do that.

    Why should you donate anything to help someone in the other side of the world while people needs your help in your own neighbourhood?
    • Re:Local charity (Score:5, Informative)

      by grcumb ( 781340 ) on Friday June 05, 2015 @06:05PM (#49852913) Homepage Journal

      - UNICEF expenses of 52 million dollars (pdf) [unicefusa.org] in expenses related to management and fundraising (out of a 600 million dollars budget, and that's one of the best managed ones out there)

      (I'm not even going to comment on PETA because they have jack shit to do with the current conversation.)

      You are actually complaining about an administrative overhead of 9%? Seriously?

      For comparison, Apple's OPEX was a little over 25% of revenues as of March 2015. Google's was a little less than 25%. Microsoft's was 22%

      These are all operations that have significant global logistical operations, and involve a combination of scale and skill in their day-to-day operations.

      I assisted UNICEF (as a local 'fixer') with their operations when cyclone Pam hit Vanuatu. (See here [pacificpolicy.org] for a blow-by-blow account.) It is emphatically true that costs are very high in the immediate aftermath of a disaster. Spending time nickle-and-diming over expenses can cost lives. We needed phones, cars, room to work (their local HQ was damaged), food and water, and sufficient staff and infrastructure to move hundreds of tonnes of food and supplies at a time.

      For the record: The Red Cross and UNICEF were the first organisations [pacificpolicy.org] to deliver emergency supplies, because they had the foresight to pre-position materials and equipment in-country prior to the disaster. That was money well-spent.

      And yet... and yet the biggest problem we faced was middle management second-guessing the people at the operational level, failing to support them because of the expenses they were incurring. And this fear continues to permeate precisely because of stories like this.

      Let's be perfectly clear: It was the AMERICAN Red Cross that screwed up so royally here. Not the International Red Cross, which provides unique and necessary services throughout the world.

      You wouldn't tar every single technology company with the same brush as games maker Electronic Arts (who really do deserve their own special circle in Hell). So why, when one NGO manages their way to disaster, does giving to charities suddenly become unwise?

      I have witnessed—up close and in more detail than anyone could ever want—the effects of disaster. I'm still working to document the many successes and failures of cyclone Pam. And I will say without hesitation that the mantra here in Vanuatu was 'we will not be another Haiti'. Haiti really was a clusterfuck from start to finish, mostly because of the local government's inability to control and coordinate the response. In Vanuatu, government officials stayed on the front foot, and were unafraid to take NGOs to task [pacificpolicy.org] when they first refused to cooperate.

      People need to be reminded: Disaster zones are shitty places to work. They are in fact some of the worst places in the world. And on top of this there are indeed thousand-dollar-a-day careerists who descend on them as a matter of course. But for every one person like that, there are hundreds of dedicated professionals who have devoted themselves simply to helping out. Many of them work on a purely voluntary basis. Mistakes get made every day, for countless reasons, but not least because in a post-disaster situation, you're working with whatever information you've been able to gather by word of mouth; you've got virtually no means to coordinate your efforts, and you cannot know what the worst-affected areas look like until you go there yourself. On top of all that, you're working as much as 20 hours a day, resting for maybe 10-15 minutes at most, and eating whenever someone stuffs an emergency ration into your hand.

      Not to put too fine a point on it, It's really fucking hard.

      So yes, rag all you like on the American Red Cross.

      • by amiga3D ( 567632 )

        Interesting response. I have to say that you make good points. Still, as long as a charity hides information on where their money was spent it only causes these accusations to gather momentum. The best thing is to explain where money was spent and why as openly as possible. If you fail to be open it will only look like you have something to hide.

    • This and many other examples like - PETA euthanizing more animals than they shelter [petakillsanimals.com] - UNICEF expenses of 52 million dollars (pdf) [unicefusa.org] in expenses related to management and fundraising (out of a 600 million dollars budget, and that's one of the best managed ones out there) show that it is much more efficient to donate time or money locally instead of to big organizations. Donate to your local food bank, soup kitchen, volunteer some time in the retirement home, the satisfaction will be the same and the effects will be much more efficient. Or, at the very least, don't screw people over, it is more than enough if you can do that. Why should you donate anything to help someone in the other side of the world while people needs your help in your own neighbourhood?

      Agree. Local charities aren't big enough to mismanage the funds, and the people are close enough that they will probably volunteer their time as well and not need a half million dollar salary.
      There is too much graft and corruption in all of the big charities. Red cross makes $2 billion a year selling your blood and not giving you any tax credit for it, but claiming it on their taxes as a donation.
      United Way and March of Dimes encourages quotas, threat of firing and ostracizing to force people in organizat

  • The Red Cross decided they needed high-power ex execs from places like AT&T who have no idea whatsoever how to run a relief charity. They destroyed the company from the inside out.
    • The Red Cross decided they needed high-power ex execs from places like AT&T who have no idea whatsoever how to run a relief charity. They destroyed the company from the inside out.

      I assume that they wanted the company destroyed. After all, these high power execs also destroyed the companies from which they came.

  • Their CEO, Gail McGovern makes $500,000 / year in base salary. I bet it's built her a house or two...

    • by hondo77 ( 324058 )
      Is she worth it? Has she cut expenses and/or increased income enough to justify her pay? I don't know the answers to that but I would at least look into it before criticizing her pay.
  • by Just Some Guy ( 3352 ) <kirk+slashdot@strauser.com> on Friday June 05, 2015 @05:14PM (#49852527) Homepage Journal

    In my hometown, Red Cross kept raising the rates they charged to local hospitals for donated blood. Eventually it became so expensive that a local coalition founded their own blood bank and began distributing blood products for much lower prices.

    I don't begrudge the Red Cross selling donated blood. Supplies, equipment, refrigeration, etc. all cost a lot of money and even a 100% volunteer organization can't wave that stuff away. I begrudge them charging so much that another, much smaller group without the same national recognition or economies of scale can set up a parallel system offering the same services for far less money.

    • by penix1 ( 722987 )

      Red Cross blood services has been separated from the National Red Cross Disaster Services for many years. I remember when it happened. It caused the closure of many Red Cross offices because it was Blood Services that was supporting the Disaster side. They have a separate management tree, budget and facilities. A big part of the cost associated with blood is in the testing for blood diseases and processing such as blood separation processes. The testing alone costs a small fortune.

      So please keep in mind tha

  • by Greyfox ( 87712 )
    I bet it built some really nice homes for the guys in charge of the Red Cross.

    Damn, I'm cynical.

  • this is why I'm a socialist. Anyone who complains about gov'ts wasting money has never paid any mind to how charities spend their bucks. With gov't we can at least bring corruption charges when this sort of thing happens (assuming we have the political will). With these private charities it's all nice and legal...
    • by nbauman ( 624611 )

      this is why I'm a socialist. Anyone who complains about gov'ts wasting money has never paid any mind to how charities spend their bucks. With gov't we can at least bring corruption charges when this sort of thing happens (assuming we have the political will). With these private charities it's all nice and legal...

      Under a well-run socialist government, you can set the priorities in a rational way, where there is the greatest need. In Haiti, they have to develop, equip and maintain their main hospitals, and in public health, the most cost/beneficial priorities are pregnancy and infant care, vaccinations, and sanitation.

      Private charities respond to emotional and psychological needs.

      We spend so much money on breast cancer that we're harming women from over-screening. The Koman Foundation got hijacked by the anti-abortio

  • I lost respect for the Red Cross when they over paid their executives.

  • Ask a Vet (Score:3, Interesting)

    by Gim Tom ( 716904 ) on Friday June 05, 2015 @06:09PM (#49852947)
    I don't know about other veterans experiences with the Red Cross, but one I had over 40 years ago has kept me from giving them a dime ever since. I would not be surprised if many veterans had similar or worse experiences. I remember my Father talking about his during WWII, but didn't really understand until it happened to me.
    • What kind of story is that?
      • Re:Ask a Vet (Score:5, Informative)

        by Gim Tom ( 716904 ) on Friday June 05, 2015 @08:49PM (#49853929)
        In my case it was when I was trying to get home from South East Asia on emergency leave after my mom had a cerebral hemorrhage with a poor prognosis for survival. I landed at Travis AFB near San Francisco after being awake for most of 3 days travel with only a little cash, but a good balance in a Bank America checking account and the Red Cross at Travis said it would take them 3 or 4 days to get an ok to cash one of my checks. I gambled my last cash on a bus ride to San Francisco International Airport and fortunately Delta was happy to take my check for a ticket and I got home in time to see my mom in the hospital. That is my personal experience, I have heard GI's tell of much worse.
  • by Karmashock ( 2415832 ) on Friday June 05, 2015 @06:28PM (#49853073)

    ... And don't give to any charity unless you can audit to some extent how the money is spent.

    The waste in these things is beyond unethical. Huge salaries for management, lots of money funneled to things that have NOTHING to do with what they raised the money for...

    The Red Cross pocketed most of that money. In their minds they need that money for their other good works. So tehy show up at a disaster say "oh look at teh poor people, give to the red cross to help them"... and then basically just put all that money into their general fund.

    There's no compartmentalization. So money donated to help Haitians could actually go almost anywhere... including the CEO's yacht/hooker/cocaine fund.

    • Re: (Score:3, Interesting)

      by koick ( 770435 )
      A great, objective resource is charitynavigator.org. Only give to charities with a 4 rating.
      • Unless they're paid off or someone on the review board is involved in one of the corrupt institutions.

        Conflicts of interest are really common in these subcultures. They all know each other. They all go to the same events. They're all fucking each other in the back room. So its really hard to know what they actually think or if that is just what they're saying.

        You see this is a lot of issues. Its a big issue in journalism as well. They all know each other and they all talk to each other. You think an article

  • About 10yrs ago I decided to do some volunteer work. By the time I was done, I decided not to volunteer anymore. It's just too depressing that most, if not all, of the charities are run so poorly. But the red cross was one of the worst. I told them I was a programmer and a DBA so they made me the "host" meaning I handed out cookies and made people frozen pizzas while they donated blood. For this I had to go through a background check, speak with a councilor. They told me that if I couldn't pass the backgrou

  • Comment removed based on user account deletion

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