Getting Blood Out of a Stone

When you give money to a charity, you expect that they'll spend it on the things they promised to. Right?

So when people gave the American Red Cross $300 million for Hurricane Sandy relief, you would expect that the organization would be quite proud to show how well they did for their donors. Right?

Wrong.

ProPublica tried to find out the details of how the Red Cross spent the money it received for Hurricane Sandy. But getting the information from the Red Cross is like getting blood out of a stone:

If those details were disclosed, "the American Red Cross would suffer competitive harm because its competitors would be able to mimic the American Red Cross's business model for an increased competitive advantage," [Gabrielle] Levin [counsel for the Red Cross from the law firm Gibson Dunn] wrote.

People give the Red Cross their very blood for free, a donation which carries significant risk of personal bodily harm, and they turn around and sell it to hospitals for a hefty fee. And they're whining about trade secrets?  People give you blood and money. What's the big secret?

When a tax-exempt public charity starts spouting corporate-speak about trade secrets, competitors and business models, they seem to be hiding something.

But what? By all accounts, the Red Cross is doing a pretty decent job of turning donations into help for people in need (91% of every dollar raised goes to humanitarian services). They post the IRS form with the salary of CEO Gail McGovern ($628,386 in 2013). That's not excessive, even though some Internet nitwits pretend it is, and the five other corporate officers listed also have reasonable salaries.

There are a lot of unscrupulous charities out there that do a lot worse job than the Red Cross. The Red Cross is out there on the front lines whenever there's a disaster, so it's pretty obvious they're actually doing something.

Other charities, not so much. There are a zillion charities for veterans, children (foreign and domestic), animal shelters, wildlife, medical research, and so on. But you can never really tell that they're actually doing anything with your money: we'll always have homeless vets, cancer, heart disease, too many pregnant cats running around loose and endangered species. Lots of these charities are completely phony. Most of them spend far more on fund raising than the cause they're supposed to be helping.

The Red Cross is different. They're always around, always helping people when they need it most. But because we trust and depend on them, they really need to be up front about what they do with the money we give them. Because if they're not doing their jobs right, people are going to die.

All charities should be held to that same standard. If the Red Cross is afraid to divulge their "business model" because they believe that the weaselly worthless charities will start poaching Red Cross donors, then we need to strengthen the laws for charitable giving to stop the scum from ripping us off.