Iowans and other Americans give generously to charity. When a natural disaster strikes, people are moved to donate as much as they can spare to the cause. That was the case after an earthquake struck impoverished Haiti in 2010. The Red Cross raised about $500 million for the relief effort and planned on rebuilding a number of communities.
In one community alone, the Red Cross planned to build 700 homes. Instead, in all of Haiti, the Red Cross finished only six permanent homes, according to investigative reporters who looked in detail at the organization’s work in that country. The news reports suggest the Red Cross has not been forthcoming with itemized accounts of how it spent the money raised to help Haitians and what kind of results it achieved. The organization also has been the subject of controversy over whether it overstates the proportion of its donations spent on direct services and understates the amount spent on overhead.
Citing the news reports, I asked the Red Cross to account for the many pieces of information that appear to be missing so far about the Haiti work.
Why should the taxpayers care about how this organization or any other non-profit group spends its money? The donations made to charities are tax-deductible on the federal level. These organizations are exempt from federal, state and local taxes. In exchange for forgoing tax revenue, the public has a reasonable expectation of the responsible use of tax-exempt dollars and transparency over how the money is spent. In the Red Cross’ case, it has a special link to Congress as a congressionally chartered organization. I worked to enact legislative reforms after prior concerns about the Red Cross’ use of donations.
The Red Cross does a tremendous amount of good work, from conducting blood drives to responding with clean water, food and shelter after floods, fires, tornadoes and earthquakes. With transparency and accountability to the charity-supporting public, the organization will be made stronger to continue its critical service to people in need.