Posted on September 17, 2008

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Red Cross Asks Congress for Millions to Replenish Disaster Relief Fund

The American Red Cross, which has plunged into debt as it works to provide relief to Gulf Coast residents affected by back-to-back hurricanes, has asked Congress for $150 million in emergency funding to replenish its disaster relief reserves, the Washington Post reports.

In its largest aid effort since Hurricane Katrina three years ago, the Red Cross anticipates spending as much as $70 million on Hurricane Gustav recovery efforts and as much or more on assistance for victims of Hurricane Ike, which devastated parts of Texas over the weekend. Last week, the agency launched a national campaign to recover those costs, which as of yesterday had brought in $10 million. Red Cross spokesperson Suzy C. DeFrancis said the federal request is a last resort and described the agency’s finances as dire, in part because of an "extraordinary" hurricane season.

With its reputation sullied by past management scandals and a botched response to Katrina, the Red Cross has struggled in recent years to raise money for disaster relief — a problem that has been exacerbated by the weakening economy. The 127-year-old agency last turned to the federal government for help in responding to disasters in 2004, when four hurricanes hit Florida. The agency sought and received $70 million in federal aid then, but eventually returned about half of that allocation. According to congressional appropriations staff members, lawmakers are reviewing the new request and have not decided whether to approve it. Under its congressional charter, the agency is required to respond to natural disasters, though it is independent from government and depends largely on private donations.

According to Paul C. Light, professor of nonprofits and the federal bureaucracy at New York University, the Red Cross, in seeking federal assistance, risks blurring its status as an independent charity and being seen as a quasi-governmental organization, which could make donors skeptical and less likely to support it in the future. "I understand it, and I think it may be the only way to deal with the current crisis," said Light. But "it’s a risky gamble....It’s a particularly difficult time to go to Congress for money because it sounds like a bailout. They don’t want to become the Bear Stearns of national charities."

Rucker, Philip. “Red Cross Asks Congress for Millions in Storm Aid.” Washington Post 9/16/08.

Primary Subject: Community Improvement/Development
Secondary Subject(s): Human Services, Hurricane Relief
Location(s): National

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