After the hurricanes, relief fundraising stumbles

Red Cross in the red
No organization has a larger mandate to help — or a larger budget shortfall — than the American Red Cross. Even before the latest hurricanes, the organization had raised just $63 million of the $263 million spent helping out after other disasters — from massive flooding in the Midwest, an early wildfire season in the West and tornadoes in Tennessee.

“It has been a record year for disasters and also a very difficult year for fundraising,” said DeFrancis, the Red Cross spokeswoman.

The Red Cross has called for Congress to provide $150 million to help cover costs — a request under consideration in the current budget discussions.

The organization also launched a new fundraising drive on Sept. 10, with a goal of raising $100 million for relief work in the areas stricken by Gustav and Ike.  The Red Cross estimates that the costs of sheltering, feeding and providing medical care and other services in the Gulf Coast could run as high as $150 million.

The campaign is targeting grassroots giving, which makes up 50 to 75 percent of Red Cross funding. It has the support of both the presidential candidates, who have exhorted Americans to donate, and from the NFL, which has plugged a text-message fund drive.

“We recognize in an economy where people are concerned about the future, when gas prices are high — all that does eat into disposable income, so it is a challenge,” said DeFrancis.

While the sagging economy and lack of media attention have likely contributed to the Red Cross’ fundraising troubles, the organization's own missteps have played a part.

The Red Cross, which is chartered by Congress to answer all domestic disasters, was criticized for lack of preparation in responding to Hurricane Katrina and is seen by many in the public as having grown so large that its efforts tend to bog down in bureaucracy.

The organization has also run into trouble with donors for diverting funds when it became  “oversubscribed” — or raised more money than is required is raised for a specific disaster. The most controversial example of that came when it decided to redirect some of its Liberty Disaster Relief Fund — money raised to aid people directly affected by the Sept. 11 terrorist attacks — to other purposes. The ensuing uproar among survivors and Congress prompted the Red Cross to reverse the decision, and led to the resignation of Red Cross President Bernadine Healy.

Heavy investments in preparation
Philanthropy experts find irony in the fact that one reason Red Cross and other organizations now lag in fundraising is because of investments they have made in the last few years to prevent these problems that occurred after Katrina.

The Red Cross said it has invested $80 million since Katrina to position warehouses of food and supplies closer to the Gulf Coast and to purchase more mobile food kitchens. The organization has nearly tripled the size of its pool of trained workers and volunteers in the region — from 26,000 in 2005 to 75,000 — and formed partnerships with many of the smaller relief groups to extend its reach.

"You've got to feel for the Red Cross and other agencies," says Eric Kessler, principal of Arabella Philanthropic Investment Advisors, a Washington, D.C., firm that advises private philanthropists. "They put in huge resources in anticipation of demand (from the hurricanes).... They have new leadership and a new understanding of efficiency and advanced planning, so its regrettable that their improvements are being met with a lack of support."

The investment in preparedness may ultimately improve the hurricane relief efforts, but in the meantime, it only seems to worsen budget woes.

“The reality is that if the nonprofits, FEMA and Red Cross were unprepared for Gustav and Ike, there would be a huge outcry, you know, ‘Didn’t we learn anything from Katrina?,’” said Rooney at the Center for Philanthropy. “So the expectations have grown, but the giving hasn’t.”

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