Sen. Chuck Grassley, Chairman of the Judiciary Committee, in July introduced legislation to give the congressional watchdog arm complete access to American Red Cross records for oversight purposes and improve the Red Cross’ internal investigative function.  The American Red Cross Transparency Act followed the results of a Grassley inquiry into the Red Cross’ response to the 2010 Haiti earthquake.  The inquiry found that the Red Cross spent approximately one-fourth of the $487.6 million raised for the relief effort on program management, fund-raising and other expenses; that it tried to quash a Government Accountability Office review of its practices, successfully limiting the scope of the review; and has a poorly staffed ethics and investigations unit.  This week, the organization notified Grassley that it plans to increase its Office of Investigations, Compliance and Ethics (ICE) staff to five full-time employees from three.   Grassley made the following comment on these developments.

“It’s good news to have more staff in the investigations unit, even if it’s a small increase.  My inquiry found that the investigations unit was poorly staffed and so mostly incapable of doing the kind of work donors might expect. When there are concerns about program results or spending, an investigations unit is the kind of entity that should be in place to review those concerns.  I’m disappointed that the Red Cross will continue to keep the investigations unit under management control instead of requiring it to report to the board of governors.  More independence would give the unit more teeth and so increase its effectiveness.  Also, making sure the Red Cross fully cooperates with the Government Accountability Office is still an important goal.  I intend to re-introduce my legislation in the next Congress.  The Red Cross is critical to disaster responses.  The American people rely on it, and Congress has a responsibility to help make sure it functions well.”

The Red Cross is congressionally chartered and considered a federal instrumentality, unique among tax-exempt organizations.  The federal taxpayers pay for some of the Red Cross’ work directly through federal tax dollars for disaster responses and indirectly through the tax dollars foregone to the Red Cross through its tax exemption and through tax deductions donors take for charitable donations to the organization.  The Judiciary Committee has jurisdiction over federal charters.