News and analysis
January 08, 2015

Sen. Grassley Asks Red Cross to Explain Its Finances

Jason Colston/American Red Cross
Sen. Charles Grassley has asked the American Red Cross to explain how it calculates figures showing how much of a donated dollar goes to services after recent media reports uncovered apparent discrepancies in how the organization portrays its overhead costs.

"The public’s expectation for an important, well-known organization like the Red Cross is complete, accurate fundraising and spending information," Sen. Grassley, an Iowa Republican, said in an email interview. "In reaction to the news reports on this topic, I’m asking the Red Cross to elaborate on how it calculates the facts and figures given to the donating public."

A joint investigation by ProPublica and NPR said that while the organization regularly says it puts 91 cents of every donated dollar into services, that figure is inaccurate. The news organizations said that the Red Cross failed to provide an accurate estimate when questioned.

Ethics Complaints

The story is the latest in a series ProPublica and NPR produced last year to examine the Red Cross’s response to Hurricane Sandy in 2012, as well as concerns employees have raised about the organization’s ethics and its financial reporting.

Senator Grassley’s aides contacted the American Red Cross on Wednesday. The nonprofit’s representatives told his office they would brief his staff in the next few weeks.

The organization declined to comment to The Chronicle, but it responded to the ProPublica and NPR story in December by changing its statement to say that 91 cents of every dollar the organization spends, rather than raises, goes toward services. It said the charity could not provide the news organizations with the estimate they requested because it does not track costs that way.

Senator Grassley has raised concerns about the Red Cross before. He reviewed the charity’s use of donations after the September 11, 2001, terrorist attacks, and in 2006, as chairman of the Senate Finance Committee, he called for major reforms at the organization, which led to passage of a law amending the organization’s Congressional charter.

Federal Audit Under Way

The Red Cross faces more federal scrutiny in an investigation begun in 2013. Rep. Bennie Thompson, a Mississippi Democrat, asked the U.S. Government Accountability Office to audit the charity’s disaster-response activities.

Andrew Sherrill, an official of the GAO, said the audit is reviewing how the Red Cross determines the nature and extent of its disaster-related services and whether external oversight of the organization is sufficient.

Even though the audit began before ProPublica and NPR made public their findings, Mr. Sherrill said the American Red Cross’s response to Hurricane Sandy will be among the topics the auditors consider.

Send an e-mail to Rebecca Koenig.