Red Cross Progress Report Raises Some Questions

January 07, 2013

The American Red Cross has issued a new progress report on its work in Haiti since the earthquake, describing how it has used the $486 million USD that it has raised. The report, while brief, and still vague in some places, seems to be intended in part as a response to recent criticism the organization has received over the pace and efficacy of its spending. ARC President and CEO Gail McGovern writes:

At this point, virtually all of the money donated to the American Red Cross has been spent, committed or allocated for planned housing and neighborhood recovery, health, clean water and sanitation and disaster preparedness projects. A relatively small amount of unallocated money—or 4 percent of all donations received—is held in reserve for unanticipated or emerging needs. That’s because even as we focus on long-term recovery, we must at the same time respond to cholera outbreaks and disasters in Haiti such as Tropical Storm Isaac and Hurricane Sandy.

By “virtually all,” McGovern means 85 percent, or $415 million, 33 percent of which it says it has “spent and committed” to “housing and neighborhood recovery”; 16 percent each to emergency relief and health, respectively; 12 percent to water and sanitation; 11 percent to disaster preparedness and risk reduction; 8 percent to “livelihoods” (undefined in the report, but previously described as including “grants, jobs and other help”); and 4 percent to cholera.

The report contains several anecdotal stories, but also some additional useful information. For example, the ARC says “We provided more than 72 percent of the funds needed for the distribution of a cholera vaccine, which more than 90,000 Haitians received this year.” It also notes that “we helped fund the construction of Mirebalais Teaching Hospital and partnered with the International Committee of the Red Cross (ICRC) to rebuild a prosthetics and physical rehabilitation center.” Less useful is the statement “the American Red Cross has also spent more than $50 million on projects that have improved access to clean water and sanitation for 545,000 people,” where “improved access” is not further defined.

The ARC notes that “we have helped build, upgrade or repair more than 14,000 transitional and permanent homes for more than 70,000 people, and have helped more than 20,000 people transition out of camps by subsidizing rents,” but does not differentiate between the “transitional” and “permanent” dwellings, nor does it provide additional information on what people who have “transition[ed] out of camps” have done after leaving, how they live and whether their new situations are sustainable and will allow them to have a dignified, safe and healthy quality of life – even in the near term. The lumping together of “transitional” and “permanent” dwellings is especially problematic since, as so many residents and observers have noted, in many cases “transitional” shelters have become de facto “permanent.”

Then there is the lack of clarity over what the International Federation of the Red Cross (IFRC) has done, versus the American arm. While the ARC says it has “helped” to move over 20,000 individuals out of camps with rental subsidies, the most recent information from the Shelter Cluster says the ARC itself has only given out 103 subsidies, while the IFRC has given out over 5,000.

While the American Red Cross has been the biggest U.S. recipient of individuals’ donations for post-quake Haiti, it states that it has only provided shelter for less than 0.05 percent of the 1.5 million people estimated to have originally been left homeless by the earthquake. The 70,000 people the ARC says it has housed would still only be about 19 percent of the total number of people who remain in IDP camps three years after the quake. This is despite the fact that the ARC states that housing has been the biggest sector of funds “spent and committed.” Housing is the area that the ARC identifies as having the farthest to go toward reaching its “Program Objectives” (at 70 percent so far); however, at this rate the rest of the planned “housing and neighborhood recovery” program will still only affect a small number of Haiti’s IDP’s. This raises the question: why isn’t the program more ambitious? Shouldn’t the goal be to provide housing for all the remaining homeless?

Some of these questions – as well as whether the ARC’s money could be used more efficiently – could be answered with more transparency. As we have noted in the past, the Red Cross has granted some of its funds to other organizations, but has been quiet about amounts and recipients. We cited a Chronicle of Philanthropy article a year ago:

The charity has so far pledged or spent $330-million of the $486-million it received. About $171-million has been committed to other nonprofits. A spokeswoman declined to specify what share has actually gone out the door but said it was the majority of the $330-million.

In its new report, the ARC states, “An average of 91 cents of every dollar the American Red Cross spends is invested in humanitarian services and programs.” But can it be sure there is only 9 percent overhead when it effectively contracts out its work?

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