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Comment by avar | Hacker News Reader

The biggest revelation to me in that article, which I feel should be highlighted more, is that the Red Cross provides almost zero information about how it spends its money.

It refuses to provide more than very vague information about how the money was spent in Haiti (information like "35% of $488 million on shelters"), with no specific details about what projects they spent the money on, how those projects went etc.

When the author challenged the general counsel of the Red Cross to provide more detailed information ("because clearly you must have it") he just gave her some evasive boilerplate spiel about having provided the summary information he'd provided already.

How can anyone donate to a charity that's so stunningly opaque about how it spends its money?

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More context on this project:

http://www.propublica.org/series/red-cross

After the first investigative story into their Hurricane Sandy response efforts [1], the Red Cross argued that how it spent its money was a "trade secret" [2]. It later stepped back from that position [3]. Later that year (Oct. 2014), ProPublica/NPR published their first indepth story about Red Cross [4]; I haven't read the entire project but I think the OP is the second big feature. And full disclosure: I used to work at PP but not on this project.

[1] http://www.propublica.org/article/long-after-sandy-red-cross...

[2] http://www.propublica.org/article/red-cross-how-we-spent-san...

[3] http://www.propublica.org/article/red-cross-reverses-stance-...

[4] http://www.propublica.org/article/the-red-cross-secret-disas...

Could it be that actually getting things done in horrible environments requires interacting with, and paying off, some shady people? This is of course a charitable guess, but could it be that the Red Cross has made a decision to make morally questionable choices in the short term in support of the greater good, and they know they can't publish such truths and continue to exist?

If the only way they can exist is by doing things so morally reprehensible that they have to keep everyone ignorant of their actions then they shouldn't exist.

That's great in theory, but should the people suffer more of Haiti because of these individuals? I'm guessing that none of these organisations could exist without compromising things for the greater good.

This assumes that the Red Cross is the only organisation that could help in Haiti, and that their approach is the only one that could possibly work. Neither of those things are necessarily true. If they're bribing people then they should report that - not the details (although maybe they should), but they should at least be saying "We raised $500m, and spent $50m on bribes so we could get the job of helping people done. It sucks but that's what we're working with here."

Also, at what point does "compromising things for the greater good" become untenable? To go down the argumentum ad absurdum route, if we learned that the Red Cross were hiring contract killers to eliminate officials that were standing in the way of building homes for Haitians would that be something they shouldn't do, or that they should do but they should keep quiet about? At some point it is right to say "Let's not do that even if it means people will suffer." That's definitely before killing people, obviously, but is it before bribing people?

"Morally reprehensible," in this situation, could be something like "bribe a corrupt official." If it takes bribing a corrupt official to save lives, I don't think most donors would have a real issue with that.

However, admitting that publically would embarrass the official (if named), remove the efficacy of all future bribes (which are by nature secret), and could even open the organization up to legal action.

I don't, FWIW, think that's what's going on here, but it's a plausible enough line. Certainly better than "I already told you everything you need to know!"

> If it takes bribing a corrupt official to save lives, I don't think most donors would have a real issue with that.

Except in this case it seems they bribed so many corrupt officials that there was nothing left for actual aide...

I think it's far more plausible they just waste the money away on "Administrative" fees and project mismanagement at enormous scale.

This is a "charitable" organization which has run rampant and unchecked for a long, long time. Nobody has dared to question the organization before because of the stone wall of "charitable projects and relief" they've constructed.

The fact that they are a "not-for-profit" foundation that survives on donations (2.9 Billion USD in 2014) yet wont disclose financials really turns me off. I can't help but feel there is corruption within the organization leading to purposeful waste of income as well as possible embezzlement by high ranking executives.

Agree wholeheartedly.

Something about non-profits seem to make them sacrosanct. If you criticize them among friends, it's almost certain that someone will rip into you for being miserly and not caring about the poor $VICTIMS.

Cynically, I think the root of this tendency is the fact that many people don't care about the efficacy of a donation, as such, but only about how it indicates the giver is a morally superior being, over all those non-givers. Whether the organization blows the money on coke and hookers (or, more plausibly, ineffective staffing and programs) is besides the point.

Especially organizations with powerful brands, like the Red Cross.

When people expect you to pay far below market rates for management (and sometimes expect it to be volunteer only), it is inevitable that you will suffer massive mismanagement. Even organizations with great management make massive expensive blunders.

ARC pays massive salaries

Compared to what the private industry would pay for the same set of skills? Massive doesn't mean much if it is still a fraction of what those skills would otherwise be valued.

The Red Cross is private industry...

If I were a "big bad charity" I'd much rather spend my millions hiring Blackwater to go bust a few corrupt heads than pay them off. If we're going down the conspiracy theory path, at least make it exciting!

Actually, a charity devoted to rooting out corruption in developing countries would probably end up being one of the most efficient and effective for raising living standards.

Hire someone to offer the bribe. Target a well-known corrupt official, and gather lots of evidence to make it obvious that a bribe has happened. Publish the results, get a scalp.

On top of punishing the individual corrupt official, if every official knows that any bribe offered might be a trap, they'd be much more likely to turn it down. Certainly makes the cost of bribery for bribers a lot more expensive to account for the extra risk.

Hell, you don't even need to hire someone. Just have an open offer that if someone can prove they successfully bribed an official, you'll pay them three times the bribe amount.

I doubt it. Right now, in Guatemala, they have an ex president in prison. And the current tax admin under investigation. And the vice president resigning because she was stealing all over. And on and on. Same thing every 4 years. It's no secret, nothing happens or changes.

Busting lower level folks probably won't fix anything. You'll just get mired in their terrible slowness and endless rules, pointless paperwork and so on. At least bribing folks, you can get stuff done.

Perhaps, but I have a friend who worked in water quality in Haiti after the earthquake, and it's possible to get things done even with corruption and graft present.

More likely, the Red Cross is one of many charitable organizations with low direct payout (combined with inexperience on the ground). This is a notorious problem, and was enabled by an earlier era of no-questions-asked donations. But in recent years, big investors have demanded much more accounting of the money, and some organizations aren't up to the increased scrutiny.

Check out http://www.charitynavigator.org/ for more.

No, don't go to Charity Navigator, go to Givewell (http://www.givewell.com). The quality of their research is much better, and they focus on the question that really matters: what effect your donation will have on the margin.

So now we need a Charity Navigator Navigator?

Charity Navigator Navigator is actually funded by Dow Chemical, FYI.

Great, as if I didn't need more excuses not to give money. I think I stick to the local community soup kitchen/churches even though I'm not religious.

It's good to do things where you can witness and verify what's going on, but soup kitchens are many orders of magnitude less effective than distributing insecticide-treated bednets to combat malaria, or Givewell's other recommended charities.

soup kitchens and bednet distribution programs are trying to solve two different sets of problems, so I am not sure what you mean when you say that one is 'orders of magnitude less effective' than the other

Wait, are you saying that soup kitchens are ineffective at combating malaria (which goes without saying)? Or are they simply ineffective at the problem they are trying to solve, hunger?

We're obviously Min/Maxing charitable giving. Why would you give to a local soup kitchen where you can see the effects, and even donate time and labor when the cost/benefit ratio is so much less than giving money to far away lands for cheap materials that protect against incredibly deadly diseases, which is obviously a better option?

Or, every one of us could do something different, instead of loading all our eggs in one Red-Cross basket? Sorry. I don't see a reason for this disagreement. Anyone that donates time and/or money to help other people, whether they are on the corner of the street they are standing on right now, or literally thousands of miles away, is a good person in my book.

The problem with all the talk about 'effective charity' is that it invariably focuses on magnitude while ignoring sign. The great thing about donating to local soup kitchens as opposed to interfering in other people's countries thousands of miles away where we know little or nothing about what's really going on is that there is a much better chance of being able to verify that all the activity is doing more good than harm.

A priori, it seems quite plausible to me that Sub-Saharan Africans find insecticide-treated bed nets significantly helpful for guarding against malaria, and rather implausible that they find them significantly harmful. You can invent far-fetched stories about how anti-malaria nets are somehow harmful, but you can do the same for soup kitchens.

Apparently, they use them for fishing in some areas, which causes a lot of environmental damage given the insecticide-laden netting. You just can't win.

Some links about this:

http://blog.givewell.org/2015/02/05/putting-the-problem-of-b...

https://www.againstmalaria.com/NewsItem.aspx?newsitem=Net-us...

Unlikely. Far, far more likely, according to a friend who is very senior in the British Red Cross, when I asked her about how they use their money, is one of two scenarios:

1) They misreported how much they collected. Apparently they regularly say they've collected more than they have in order to encourage people to give yet more, and to appear to be "the big magnet charity".

2) They've lost it. This apparently happens with alarming frequency - money just kinda vanishes, and they find themselves deployed to some godforsaken corner of the planet with inadequate materials and funding, end up coming back, spend a month waiting back in blighty, go out there, still nothing ready, fly back... oh, we spent all the money on flights and meetings and figuring out how to spend the money.

Hi, can you confirm that the British Red Cross is a different organization and more transparent? Ideally they should confirm this on their webpage, but they don't.

The British Red Cross is a different organization which predates the American Red Cross by about a decade– both are roughly 150 years old.

You may be a bit too charitable to the ARC. This is not the first time that these kinds of questions have been raised about ARC disaster relief projects and gone unanswered.

>>$170 million providing shelter

>>the number of permanent homes the charity has built is six.

I know their primary mission is not housing, but that is a large number for some tents and a vanishingly small number of houses. Where did the rest of the money go?

They are just lining their pockets hence their reluctance to be fully transparent.

1)Set up a few small projects 2)Take a few pictures 3)Create a few press articles to appear as if all funds are being sent to the people in need

Rinse and repeat when the next disaster hits.

All charity based organizations should have no problem being fully transparent. Do not make excuses for them

And yet that doesn't speak to your parent's actual question, which is a good one: how does an organization balance transparency and the necessity to get things done despite potentially awful conditions on the ground? Certainly organizations doing longer-term work can afford to spend time finding ways to route around corruption, but that could be incredibly difficult in many emergency situations, and incredibly damaging for an organization's reputation when shady dealings come to light.

>>shady dealings come to light.

Most of the shady dealings that would come to light here will be within the organization. How much time have you spent in the Caribbean or the "third world"? Time and time again I see charities pop up but just to take advantage of donations.

Its always easier to point the finger in the opposite direction when time comes for accountability. Expose the shady dealings and set the truth free. Then you will see the "shady dealings" and yes if the organization is indeed corrupt exposing the truth should hurt them if not close them down all together. Let the donated funds go to a more effective and honest charity

DO NOT MAKE EXCUSES

All charity based organizations should have no problem being totally transparent. Failure to show the impact and details of what was done is indicative of an opportunistic organization that may be corrupt. “Money and funds without obligations and accountability?...Don’t mind if I do!" That is the apparent mindset

Sad but true for a large amount of charities

Possibly, but you can be sure the IRS and FBI will investigate.

If they need to bribe people, they could hide that in some "Administrative fees" budget item. They could still disclose how much they spend on projects and aid.

If you find that distressing, consider donating to https://givedirectly.org/ instead. They keep their admin costs very low, they're remarkably transparent, and all they do is hand your money over to the extremely poor - a tactic with a growing amount of empirical evidence supporting its efficacy.

While it never provides as much information as one might like, I've found it extremely instructive to look up the 'form 990' of any nonprofit I deal with (including if I am considering applying for a grant or something). You can find out how much the executives are paid, and something about their major relationships with both donors and receivers.

You can also learn about relationships with other nonprofits, which can be particularly interesting in the political sphere. For example, if you look up the 990s of some conservative immigration organizations, you quickly find that what seem like 10 or 12 independent advocacy groups representing a broad swell of public opinion are actually all financed and managed by the same small set of people. Or that quite a few nonprofits don't actually do very much beyond draw down the bequest left by some dead rich person who cared about a particular issue. It'll make you view the charitable tax deduction ver y differently - there's a lot of people making a nice living and effectively getting a 20% subsidy from taxpayers.

> the Red Cross provides almost zero information about how it spends its money.

If that is true, how can Charity Navigator rate it 80.5/100?

http://www.charitynavigator.org/index.cfm?bay=search.summary...

I don't know, perhaps they're particularly opaque about Haiti or other "big" disaster relief efforts, or perhaps other charities are just as bad.

I'm just summarizing what I took from the article, in particular skip ahead to around 4m50s. The audio is much clearer than the transcript on this issue.

The article basically implies they use exceedingly broad categories, and don't exactly characterize everything the way they should. See also this Propublical article:

https://www.propublica.org/article/how-the-red-cross-raised-...

There's a chart half way through that shows, by NPR and Propublica's estimates that instead of 90% spent on actual charity, they only spend 60%. This would tank their rankings in places like Charity Navigator and Givewell.

So the short answer to your question, is that they are vague as hell about how they spend the money, and they probably cook the books.

Looks like they're on a CN watchlist, as a result of this reporting.

http://www.charitynavigator.org/index.cfm?bay=search.news&or...

Have a look at RC's "Annual Report" from 2014 ... http://www.redcross.org/images/MEDIA_CustomProductCatalog/m4...

This is a fluff piece full of pictures and words. No numbers or financial statements. On page 26 there are a couple pie charts that vaguely outline some general categories of outflows and inflows. No details. If a NYSE company (or even a private company) tried to put out an Annual Report with this kind of glossed-over detail, they...well, they couldn't get away with that.

Guidestar.org is not quite as nice, rating it 3 out of 5 stars: http://www.guidestar.org/organizations/53-0196605/american-n...

People who run these 'not-for-profit' 501(C)(3) institutions are ironically not held quite as "accountable" as people running normal businesses who have to report to shareholders. In the N4P world, where the "shareholders" are reduced to the general public or generic taxpayers or even to the disaster victims themselves -- it's a lot more difficult to get them to own up accountable to the people they serve.

Most of the time the donors are just happy to get their tax write-off and they leave it there.

They do publish their financial statements and tax returns, see here:

http://www.redcross.org/about-us/publications

This seems to be a common pattern with non profits, to separately issue their financials and annual reports. I'm not sure why.

The report is advertising. They don't want donors to see the financials.

>This is a fluff piece full of pictures and words

That's because it's for benefactors, and not the publicly-available IRS-990 form that details what you're looking for.

If you want major financials, you can see them here: http://990s.foundationcenter.org/990_pdf_archive/530/5301966...

It also gives salaries of the execs too (president makes $550k/yr)

That, and the incompetence they have in spending it. I will not donate to red cross disaster relief again.

This is actually a common issue with charities; there are few sources of data on their effectiveness and no one wants to poke the dragon so to speak because there are hundreds of thousands transferred each day to charities.

most charities appears to use up the money given to them for purposes other then their stated primary goal... it is always better to donate directly to the people who needs help (unless maybe if you are only doing it for a tax break)

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