According to Richard M. Walden (president and CEO of Operation USA), it is estimated that 70% of the $1.2 Billion donated to Katrina-related donations went to the Red Cross, yet the Red Cross is fully reimbursed by the government for any shelters or emergency services they provide. Repeatedly, the Red Cross has run into trouble for spending much less on disaster recovery than they collect, shuffling the extra funds into their "national disaster account," where it can be used for purposes other than that it was collected for. That's the sort of trouble they saw in the aftermath of the 1989 San Francisco Bay Area earthquake, and after 9/11.
Despite landing in trouble for soliciting more donations than they need and squirreling the rest away, the Red Cross continues to operate this way. The organization makes a total of about $3 billion annually, about half of which is from selling donated blood. Some of this surplus money ends up in disaster relief, but it seems that much does not. Last year alone, the Red Cross spent $111 million in fund raising, and their CEO Marsha Evans made just under $652,000. It seems the the main value they offer is the free help of their volunteer force.
From the LA Times article:
Giving so high a percentage of all donations to one agency that defines itself only as a first-responder and not a rebuilder is not the wisest choice. Americans ought to give a much larger share of their generous charity to community foundations, grass-roots nonprofit groups based in the affected communities and a large number of international "brand name" relief agencies with decades of expertise in rebuilding communities after disasters.
The Red Cross also has some disturbing caveats in the agreement form which every volunteer is required to sign. From the BoingBoing article:
So has the Red Cross become little more than a massive PR engine which takes advantage of millions of well-meaning volunteers, and capitalizes on disasters? It's an unpleasant conclusion, but it may just be the truth. Any evidence to the contrary is welcome, because this story is far too depressing if it's true.