The unorganized and mismanaged responses to significant natural disasters — including Hurricanes Katrina and Sandy and the 2010 earthquake in Haiti — have raised concerns that the American Red Cross could benefit from federal oversights of its disaster assistance services, according to a new audit report by the Government Accountability Office (GAO).
The American Red Cross is the nation’s largest nonprofit organization involved in disaster relief. It was founded in 1881 and received its first congressional charter in 1900. The most recent version of the charter, which was adopted in May 2007, reaffirms the organization’s mission to provide disaster relief and emergency services by mobilizing the power of volunteers and the generosity of donors.
GAO’s report, American Red Cross: Disaster Assistance Would Benefit from Oversight through Regular Federal Evaluation, examined the nature and extent of the Red Cross’ disaster services, as well as how the organization coordinates with the federal government on disaster oversight and what external oversights exists of its disaster services.
Rep. Bennie G. Thompson (D-Miss.), ranking member of the House Committee on Homeland Security, called for the GAO report after the independent public interest news broadcasters National Public Radio (NPR) and ProPublica published investigative reports on the Red Cross’s handling of Hurricanes Sandy — the deadliest hurricane of the 2012 Atlantic hurricane season — and Isaac, the destructive tropical cyclone that came ashore Louisiana during August 2012.
The reports criticized the organization’sresponse in failing to meet the basic needs of victims in the immediate aftermath of the storms. It also described the Red Cross as “an organization so consumed with public relations that it hindered the charity’s ability to provide disaster services.”
“Robust oversight and transparency are key to good governance and effective management. This is especially true for the complicated and critical needs of large-scale emergencies and natural disasters like Hurricanes Katrina and Sandy,” Thompson said. The GAO "report is crystal clear — adequate Federal oversight of the Red Cross is severely lacking even after Congress tried to correct the Red Cross’s history of mismanagement and shortcomings when it amended the Red Cross’s charter following Katrina.”
Thompson recently unveiled the American Red Cross Sunshine Act in the wake of the GAO audit. The proposed legislation would open the charity to outside scrutiny to ensure the effectiveness of the Red Cross’s disaster services. The bill would do the following:
- Clarify GAO’s authority to investigate the American Red Cross and have access to relevant records and personnel;
- Strengthen the role of the Red Cross ombudsman and require the Red Cross to ensure there is a clear way for concerns to be submitted online; and
- Establish a systemic review process of Red Cross’s activities through the Department of Homeland Security, the Department of the Treasury, and USAID.
“The legislation I am introducing … will ensure that the Red Cross, its donors, federal partners, and those it serves will benefit from improved delivery of services and fiscal management,” Thompson said. “Regular and ongoing Federal oversight is in everyone’s interest, and I hope the Red Cross will work with us, rather than against us, in ensuring we meet this goal.”
Although not a federal agency, the Red Cross has received tens of millions of dollars in federal support in recent years. In addition, it has an official role in the United States’ disaster response plan. The National Response Framework and National Disaster Recovery Framework developed by the Federal Emergency Management Agency (FEMA) in the wake of Hurricane Katrina outlined disaster-related roles for a number of organizations, including the Red Cross.
Despite the Red Cross’ critical role in US disaster response and recovery efforts, GAO found that the Red Cross is subject to minimal federal oversight — it only submits mandated high-level financial reports to relevant federal agencies. There is no oversight of performance or efficiency.
In response to the GAO report, the Red Cross issued a statement explaining they are not a federal agency and its disaster services are almost entirely funded by generous donors and carried out by volunteers. The Red Cross also noted mechanisms exist to evaluate the impact and effectiveness of its services.
For example, the American Red Cross Modernization Act of 2007 already authorizes GAO to review Red Cross involvement in federal government programs and activities. Furthermore, the Red Cross is consistently monitored by nonprofit watchdogs, is led by a board of governors of which all but one is independent, and participates in regular after-action reviews conducted by federal, state and local partners.
“The Red Cross believes there are several already existing mechanisms in place to evaluate our disaster response that provide considerable oversight,” the Red Cross said in its statement, adding, “The recently issued GAO report confirmed that the American Red Cross has well-established plans in place to coordinate with FEMA in responding to disasters.”
