The Red Cross money pit

When New York Atty. Gen. Eliot Spitzer asked for documentation of 9/11 expenditures, the Red Cross' response was that it is federally chartered and not answerable to state government regulators. The clamor rose, however, when the media began dissecting Red Cross activities in the 9/11 aftermath. This resulted in the resignation of the organization's president and chief executive, Dr. Bernadine Healy, and the appointment of ex-Sen. George Mitchell (D-Maine) to oversee its 9/11 fund and help clean up its image. Funds were then pushed out the door -- including millions to New York limo drivers who said they lost income after 9/11, and to upscale residents of lower Manhattan to help pay their utility bills.

The organization also ran into trouble after the 1989 San Francisco Bay Area earthquake when it was revealed that it planned to spend only a fraction of the millions of dollars it had collected in the area damaged by the earthquake. When the Bay Area's mayors found out, they insisted that these funds be spent on housing, homeless shelters and health clinics. The Red Cross had to waive, for one time only, its long-standing policy against funding non-Red Cross groups. (Spare change -- and there will be a lot of it this time -- stays in a Red Cross "national disaster account." This allows it to spend funds donated for one purpose on another.)

The Red Cross expects to raise more than $2 billion before Hurricane Katrina-related giving subsides. If it takes care of 300,000 people, that's $7,000 per victim. I doubt each victim under Red Cross care will see more than a doughnut, an interview with a social worker and a short-term voucher for a cheap motel, with a few miscellaneous items such as clothes and cooking pots thrown in.

The Red Cross' 3 million unpaid volunteers, 156,000 of whom it says are deployed in Hurricane Katrina, are salt-of-the-Earth Americans. But asking where all the privately collected money will go and how much Red Cross is billing FEMA and the affected states is a legitimate question -- even if posed by the president of a small relief agency.

As Hurricane Rita dissipates, let me answer my unpopular question like this: Giving so high a percentage of all donations to one agency that defines itself only as a first-responder and not a rebuilder is not the wisest choice. Americans ought to give a much larger share of their generous charity to community foundations, grass-roots nonprofit groups based in the affected communities and a large number of international "brand name" relief agencies with decades of expertise in rebuilding communities after disasters.