To their credit, Americans donated millions to the American Red Cross after a 2010 earthquake decimated Haiti. But the charity was heavily criticized after not spending at least half of the half-billion dollars it raised for relief as of a year later. Officials said they wanted to spend the money wisely.
ProPublica is trying to find out if the same thing happened with the funds for Hurricane Sandy victims, but this time the Red Cross is fighting back, according to the investigative news organization.
It filed a Freedom of Information Act request for the documents the Red Cross provided to the New York state attorney general, but ProPublica says the Red Cross is insisting how it spent the money is a trade secret.
The documents include “internal and proprietary methodology and procedures for fundraising, confidential information about its internal operations, and confidential financial information,” wrote Gabrielle Levin of Gibson Dunn in a letter to the attorney general’s office.
If those details were disclosed, “the American Red Cross would suffer competitive harm because its competitors would be able to mimic the American Red Cross’s business model for an increased competitive advantage,” Levin wrote.
The letter doesn’t specify who the Red Cross’ “competitors” are.
The Red Cross is a public charity and occupies a unique place responding to disasters alongside the federal government.
Among the sections of the documents the Red Cross wanted redacted was “a two-line title” at the top of a page, one line of which was “American Red Cross.”
The attorney general’s office denied that redaction, writing that it “can not find disclosure of this two line title will cause the Red Cross any economic injury.”
Asked about the effort to have Sandy materials kept secret, Red Cross spokeswoman Anne Marie Borrego told ProPublica: “We sought to keep confidential a small part of the letter [sent to the AG] that provided proprietary information important to maintaining our ability to raise funds and fulfill our mission.”
Barry Ritholz, who writes the Big Picture blog, says today he’s done with the Red Cross.
Nobody is obligated to give money to a charity — we just do because we want to help people in need. The very least we expect from these charities is transparency in how our donations are spent. Shame on the Red Cross for failing to provide that transparency. And shame on Gibson Dunn for putting forth such an intellectually disingenuous and dishonest defense.
The Red Cross may win the battle for opacity, but it will lose the war for philanthropic donations in times of crisis. Until it opens its books on Sandy, it’s off my list of charities.
That certainly puts people in a bind. Despite the Red Cross’ reluctance to release its secrets, it and faith-based groups seem to be the only ones fulfilling promises of help that the politicians delivered when the cameras were rolling two summers ago.
Related: FEMA starts verifying Minnesota flood damage (Minnesota Public Radio News).