May 29, 2003 | Read Time: 3 minutes
The American Red Cross says its disaster-relief fund has declined precipitously, and it is appealing for donations to replenish it.
The fund’s balance has plunged from $68-million last year to just $5-million today, not even enough to cover the estimated $8-million cost of current relief efforts in the 13 states where recent flooding and tornadoes have damaged more than 19,000 homes and left thousands of people in need of shelter. The disaster fund has dipped this low just five times since 1960, said Dana Allen, a Red Cross spokeswoman, most recently in 1992.
Ms. Allen attributed the drop to “a series of low-visibility disasters” — including some of the flooding and tornadoes, plus a typhoon last December in Guam — that attracted relatively little attention from the news media.
“When smaller disasters nickel-and-dime the fund, then donations don’t come in,” she noted. “But help can’t wait for headlines.”
The collapse of the disaster fund is just one of several obstacles facing the Red Cross after the hail of criticism it endured two years ago, which culminated in the ouster last year of Bernadine Healy as its chief executive. Soft financial support has prompted its chapters in Denver, Philadelphia, San Diego, and elsewhere to lay off staff members, and some smaller chapters are merging with others to save money.
The national office has also drawn criticism recently for paying Ms. Healy $1.9-million last year, which included a severance package worth $1.6-million.
The Red Cross emphasized that the compensation was not drawn from either the disaster-relief fund or the Liberty Fund, set up to aid families of victims of the September 11 attacks. The Red Cross’s new president, Marsha Evans, has requested a study of compensation practices for the charity’s senior executives, while the Board of Governors has hired a consultant to examine compensation issues.
Weak Economy Blamed
Unfavorable publicity is not the main reason giving has slowed, Ms. Allen said. In polls conducted for the Red Cross, donors cite the poor economy and concerns about their financial future as the primary reason for not giving more, rather than distrust of the charity. Indeed, Red Cross appeals following well-publicized wildfires in Colorado last summer raised enough money in five days to cover the cost of relief operations there, Ms. Allen said.
Under the Red Cross’s new fund-raising policy — instituted after the charity drew charges of misleading September 11 donors about how their funds would be used — the organization told prospective donors motivated by the wildfires that it had met its target and suggested other uses for their gifts.
“That was our first big disaster since 9/11,” said Ms. Allen, “and we’re buoyed by the fact that people gave so generously.”
The Red Cross’s current campaign includes direct mail, as well as radio and television spots and online appeals. A special Mother’s Day appeal on its Web site, which drew attention to the plight of homeless and displaced mothers and children, raised $25,000 — “a very good donation for a weekend,” Ms. Allen said.
