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Charitable Contributions for September 11: Protecting against Fraud, Waste, and Abuse.
Subcommittee on Oversight and Investigations
Dr. Bernadine Healy
Life
in America changed forever on the morning of September 11, 2001. We realized
that what has taken place is extraordinary, and the American Red Cross was
called upon to respond in an
extraordinary way, and in a way we had not been called on to serve for many
decades. The immediate and emerging efforts of the American Red Cross to
alleviate human suffering brought on by the attacks of September 11 required
activation of many lines of service -disaster relief and recovery, blood
services, international, armed services emergency services -- and
we sought contributions of blood and financial donations to meet those
needs. The generous contributions
of blood and money came in for
vicitms: victims of the opening salvo of this new kind of war, victims
fearing and grieving across America, and victims yet to come. Early
on and in lockstep with the Board we defined those response requirements
and created an entirely new fund, the Liberty Fund, as a separate and
segregated account to hold and disburse funds related to this ongoing new kind
of disaster. Why did we believe it necessary to establish a new fund? For many
reasons. This is a disaster unlike any other in U.S. history. This is not a
"regional" disaster; it is not only about the hideous events that
occurred in New York City, Pennsylvania and at the Pentagon. Rather this is a
disaster that continues to affect our entire nation, at this time and as we look
ahead. This account from the outset
has been open to public review. We
want it to stay that way and we believe the American public wants it as well. Proper
stewardship of the Liberty fund was our highest priority.
Strict allocation of money raised nationally and across the country into
this separate account with clearly defined categories of use was placed under
the oversight of a special team of external auditors, KPMG. The team included
prominently one partner who was skilled in fraud and forensic auditing. (They
also reviewed disbursement methods for the large cash gift program.) The
discrete categories of use of these funds was articulated in our earliest
telephonic meetings with the Board, fund raising directives throughout our
nearly 1100 chapter and blood units across the country, through personal and
written contacts with major donors,
on our fund raising web site, through PSA's, and numerous TV appearances,
press releases, during a press conference and through full page ads in three
major newspapers. Our activities
were communicated in formal and informal meetings with the United Way and the
Salvation Army. The
American Red Cross has come through a time of heroic service to our country.
The outpouring of support by the public has been unprecedented, and a
statement of their support for the work we have been doing.
When one is dependent on contributions for support of that work, no one
ever knows whether the blood or financial donations will be adequate to meet the
task. We believed we needed over
300 million dollars for our immediate response and have laid out details for
that use. We estimated that roughly 200 million dollars would likely be
needed over the next year to eighteen months beyond that to prepare the
organization for readiness for an ongoing new kind of war. Those investments -
in volunteer mobilization, chapter development for response to weapons of mass
destruction, expanded blood security, and continuity of operations efforts-are
still under discussion. Also, we
have not decided as to how large a reserve of funds the Liberty Fund should hold
to assure the same kind of response to another attack that could involve as many
or more victims. In
the world of charitable contributions one never knows how fast and how large
donations will be. I can assure you that the level and rapidity of contributions
has far surpassed any persons imagination. Already we have 500 million dollars
contributed and some additional pledged. Donations
that have been specifically pledged for families, for blood, for help with
international victims, or for other uses have been applied accordingly.
Donors must be fully aware of the work of the
organization they donate to and the range of their services, and the challenge
for all charities - service organizations like the Red Cross or grant makers
like United Way - is to find the perfect vehicle so that ever donor making
spontaneous gifts are know the purposes for which their gift might be used.
This
new kind of war engulfing America that
started on 9/11 is evolving; the responsibilities of the American Red Cross to
the communities we serve is evolving. As
long as we keep the public fully aware of our work to the best of our ability,
the trust with the American pubic will be secure. **** National
Obligations and Historical Responses: The
American Red Cross draws its authority from a Congressional charter, functions
as an auxiliary to the government in times of great national calamity, and has
defined and broad based responsibilities to this nation as part of the Federal
response plan in times of national
mobilization such as war or weapons of mass destruction preparation and response
at the local and federal level. In
recent time most of our disaster responses have been one dimensional self-
limited responses within the silo of our disaster operations group. The vast
majority of the 60,000 disaster responses are single family fires within local
communities. The large hurricanes or floods that require a national
coordination and a national appeal are still local disasters with a self limited
group of victims and a definable time line. They virtually never require the
mobilization of other Red Cross established lines of service such as Blood,
Armed Forces Emergency Service, or International services.
The
events of September 11th and its aftermath is a true national disaster with no
clear end in sight. The present yet unfolding bioterrorist attacks on innocent
civilians occurring now, and the reported threats of further biological,
explosive, nuclear and chemical
attacks that convulse our TV
screens follow that first series of events of 9/11.
Most horrifically, Americans wherever they live face an uncertainty and
vulnerability that was simply not perceived as real two months ago. In this
context, the American Red Cross under its mission draws heavy responsibility. Many
have described the attacks on the World Trade Center, the Pentagon and the
downing of an airplane in Pennsylvania as the opening battle in a new kind of
war. For us, our response today does more closely mimics our responses during
World War 1 and World War II . During those times our American Red Cross
mobilization also involved multiple lines of service at both the local and
national level. We oversaw major
volunteer mobilization of nurses to serve in the theaters of war, nurses and
health aids visiting families at home; physiatrists, ambulance drivers, and
family assistance workers. We carried out extensive armed forces emergency
services, and worked internationally with our allies and civilian populations
displaced or harmed by battle. In
World War II we also took on the vital and new effort of providing blood
services, blood drawn from American volunteers which was sent overseas for our
own military those of our allies ("Blood for Britain" program).
We served as part of America's civil defense effort and almost every
family had a Red Cross volunteer. Fund
raising during that time was the largest in the history of any charitable
organization and in today's dollars exceeded several billions of dollars.
The
Liberty Fund in support of September 11th and its aftemath: The
Liberty fund was borne out of a strong and
immediate recognition that the victims of 9/11 were those lost, their
families, the relief workers, those displaced from their homes,
and those victims of terrorist attacks yet to come. The victims were
citizens grieving and healing and in search of preparedness.
The victims wereour military and their families suddenly called to serve
in a new theater of war. Immediate
Disaster Response
Our
first priority was to the immediate disaster response in three different cities;
and that work continues. Early on
we estimated that we needed at least $200 million to meet those obligations to
victims and their families and made commitments before even a quarter of that
amount was in hand. As it turns we
have already carried out the largest response we have ever made directly to
victims in the recent history of the organization, with over 120 million dollars
of the 200 million estimated already spent or in process. Our
response also included emotional and spiritual counseling contacts that exceeded
100,000 carried out by thousands of volunteers; over 10 million meals and
snacks; manning respite centers for rescue workers and compassion centers for
social service support for the
grieving families. Ground zero
labor included help with evacuation and mass care.
Early on we developed program to get cash gifts quickly into the hands of
families who had just lost breadwinners and who confronted cash flow short
falls. These gifts, on behalf of the American people, are intended to tide
families through until other resources such as life insurance or longer term
assistance would become available. So
far more than 25,000 people have received some kind of help, and. the work
continues. Our relief efforts extend to victims of anthrax, and must be there as
well to others who might suffer in the uncertain time ahead.
The latter costs which are not factored in the 200 million dollars should
be covered by reserves in the Liberty fund after other designated distributions
are made. Blood
Services
Blood
service and preparedness is another vital responsibility of the American Red
Cross that has been challenged by the unfolding events of 9/11.
For over a year we had been developing plans for our response to weapons
of mass destruction attack, attacks which we had previously designated the
"disasters of tomorrow" In
our planning for response to a WMD attack we determined that we would need a
strategic reserve of frozen blood, the universal O type, screened and tested and
available for transfusion within a matter of hours. Frozen blood is good for ten
years, and can be stored at depots throughout the country. After the 9/11
terrorist attacks, we not only positioned existing blood products near the
attack sites, but also responded to the thousands of additional volunteers that
came forward to give blood
donations - even when they knew that there were almost no survivors who needed
it. In the long waiting lines we suggested a return at a later time but most
wanted to give then. They did it to "do something" and they did it for needs
of tomorrow. Working closely with the FDA we quickly scaled up our plans
to freeze the extra O blood which was now becoming available to be ready for the
period of uncertainty in which other WMD events were being threatened. During
peacetime our inventory of blood is razor thin: on average 2 days, roughly
40,000 units. This level so quickly fluctuates that it is not even
adequate for peace time. I can assure you such inventory levels are woefully
inadequate in times of uncertainty and this new kind of war. Were there a sudden
need for 50,000 units of blood, our customary inventory would be more than wiped
out - and its diversion would essentially shut down medical care for the
thousands of other Americans needing blood for elective operations, trauma,
cancer therapy, transplants, chronic anemia, and other life threatening
illnesses. It
takes roughly 2 days or more to obtain, screen and test blood for use, too late
for those who need blood now. We cannot afford for this nation to face a
shortage of ready safe blood as some fear we might face now with supplies of
certain antibiotics or vaccines. Recovery
and Preparedness in our Communities: American
Red Cross work includes preparedness within our communities: grieving and
healing services; information about weapons of mass destruction, including
bioterrorism; and about family preparedness. To be ready for the uncertainties
of weapons of mass destruction we have to mobilize a new kind of volunteer. This
would include what we have termed the Mercy Battalion of trained medical
personnel skilled and willing to respond under our Federal Response Plan as
auxiliary to the federal government in such settings as quarantined mass care
shelters, immunization settings or caring for patients in a hospital overflow
shelter. Our Armed Forces Emergency service work has expanded nationally and at
the chapter level as reservists were called up and our troops deployed for a
possible ground war. **** In
the setting of the huge outpouring of donations for the September 11th
terrorist attacks, it is essential that there be strong public review. With so
many different charities receiving donations for very specific purposes and in
some cases more limited designation than our Liberty Fund - such as those
solely for rescue workers, or those solely for families of victims or for
college scholarship programs for children of those lost - it is not surprising
that confusion develop in the minds of the public over exactly what each group
is doing. For this reason
coordination among charities is important, as is
public clarification of the different efforts. Let
me address a few issues that have come up recently:
After the attacks of September 11th we worked tirelessly to respond to these hideous attacks and their aftermath, and set about raising the blood, the money and the volunteers necessary to respond. We laid out the work we needed to do and the resources we needed to accomplish them in as precise a way as we could as the emergencies were evolving. Our responsibility throughout has been to see that the resources marshaled are being spent wisely and caringly. I believe they have been and will continue to be used wisely and caringly. This is what the American Red Cross Liberty Fund is all about.
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