Hurricane Katrina: The Red Cross: Trying to Get It Right This Time

In the weeks following the last great domestic disaster, 9/11, the American Red Cross stockpiled blood for those who didn't need it, refused to share critical victim information with other charities, and was dressed down before Congress for planning to use relief funds to improve its internal operations. So is it good news that, as reported by the Chronicle of Philanthropy, of the $1.06 billion American charities have raised for Katrina relief so far--a record pace--a remarkable 72%, or $762.5 million, went to the Red Cross?

Despite the group's past blunders, charity watchdogs insist the $3 billion giant, mandated by Congress to work with federal agencies to aid victims of natural disasters, has risen to Katrina's various challenges. "The Red Cross has turned over a new leaf,"says Daniel Borochoff, president of the American Institute of Philanthropy. Fund raising has obviously not been a problem. The organization teamed with Google, MSN and Yahoo! to channel money through their websites--and nearly half its Katrina funds arrived via the Internet. Though not as forthcoming with details of its spending as critics would like, the Red Cross is at least edging toward transparency. It says it has used $358.7 million of its cash to house more than 380,000 Katrina survivors in shelters and hotels, serve nearly 9.8 million hot meals, and provide mental-health counseling to more than 235,000 people. "One thing the Red Cross has learned since 9/11," says Eugene Tempel, executive director of the Center on Philanthropy at Indiana University, "is the importance of communicating more openly, more deliberately."

The agency's response has had its flaws. At the height of the New Orleans flooding, the Red Cross followed government orders to steer clear of the Superdome and New Orleans Convention Center, leaving starving people stranded. A few posers have slipped through the cracks: a Georgia woman is in county jail for scamming the charity out of $1,300 in relief funds. In Mississippi, victims have complained about a lack of Red Cross presence. In Houston, it ran out of debit cards that could be used for cash or supplies and had to write checks by hand.

All of this raises the question: Should Americans continue to pour so much money into a single nonprofit known more for first response than for long-term rebuilding? "The beauty of the nonprofit sector is its diversity," says Borochoff. "Americans need to figure out that they should use the Red Cross, but don't use the whole wad. Save it for some other groups."

The Red Cross, insisting it's in the Gulf for the long haul, aims to raise millions more in donations. Smaller charities may want the Red Cross to spread the wealth, but "the Red Cross raised the money fair and square," says Trent Stamp, executive director of nonprofit-rating agency Charity Navigator. "We have to understand it's going to spend as it sees fit." --By Sean Gregory. With reporting by Greg Fulton/Atlanta