Red Cross Plans to Spend All Donations to Help September 11 Attack Victims

After enduring weeks of criticism, the American Red Cross appears to have assuaged the concerns of government officials and donors by declaring that it will spend all the money it collected after September 11 solely to help the victims of the terrorist attacks.

Originally the charity had said it would use some of the money to strengthen its own operations in anticipation of future terrorist threats. Members of Congress held two hearings earlier this month to attack the charity for that decision, saying that the charity had misled donors, and the Attorney General of New York threatened legal action.

“The people of this country have given the Red Cross their hard-earned dollars, their trust, and very clear direction for our September 11 relief efforts,” said David T. McLaughlin, chairman of the charity’s board of directors.

“With this action,” he added, “we hope to restore the faith of our donors and the trust of the American public and, most importantly, to devote 100 percent of our energy and resources to helping the victims of the terrorist attacks.”

All of the $543-million the Red Cross has collected in its Liberty Disaster Fund will be spent on aid for families of victims, rescue workers, and those who have lost their homes or jobs as a result of the attacks, said Harold Decker, the Red Cross’s interim chief executive.

Mr. Decker was named to his post last month by the Red Cross Board of Governors after the charity accepted the resignation of Bernadine P. Healy as its chief executive.

The Red Cross has spent about $137-million of the money so far, and expects to have spent $275-million by the end of the year, Mr. Decker said.

The Red Cross will extend to one year the period in which it will make its emergency aid available to families of victims, up from its previous plan to provide such aid for three months. And the relief organization will announce in January how it plans to spend the remainder of the funds, Mr. Decker said.

The disaster-aid group is trying to rebuild its public image by running ads in national newspapers and magazines announcing its decision to focus the Liberty Fund only on September 11.

It will also produce television public-service announcements, to be broadcast nationwide, that will feature volunteers, donors, and recipients of Red Cross assistance describing what the Red Cross has accomplished in the wake of the attacks.

To donors who remain dissatisfied with the organization, the Red Cross has offered to refund contributions. The Red Cross’s national office said it does not know how much has been returned, because local chapters are in charge of returning the money.

New Money Sought

Criticism of the Red Cross grew after Dr. Healy announced that the charity planned to spend $264-million of the Liberty Fund on items such as improvements to its blood-collection operations.

The Red Cross has not abandoned its plans to improve blood collection, distribute brochures with information on anthrax, and provide mental-health counseling for children nationwide related to the September 11 attacks, said Mr. Decker.

But he said the charity will seek new donations to pay for those efforts rather than drawing money from the Liberty Fund.

The organization’s announcement appeared to have eased relations with New York State Attorney General Eliot L. Spitzer.

“The organization made a misstep in this particular situation, but now it has been corrected,” Mr. Spitzer said. The Red Cross’s decision “represents a dramatic step forward in improving the overall relief effort.”

Legislators also seemed satisfied by the changes.

The relief group’s ability to “change its policies to reflect what Americans really want has reinvigorated Americans’ faith in the Red Cross,” said Rep. Charles F. Bass, a New Hampshire Republican who had been one of the Red Cross’s most vocal critics.

As criticism of the Red Cross has abated, so too have calls for new federal oversight of charities.

Rep. J.D. Hayworth, an Arizona Republican who was one of the first to call for a federal overseer of relief efforts, said he would continue his scrutiny of funds related to September 11 but would not seek any immediate legislative changes.

“I am continuing to study the overall picture because, as we know, this is not exclusive to the Red Cross,” Representative Hayworth said. But he added: “I’m not in a mad rush to turn out window dressing. If I move, I want to make sure it’s legislation that is reasonable, rational, and enforceable.”