Head of Small Relief Agency Blasts Red Cross “Money Pit”

StorySeptember 30, 2005
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We speak with Richard Walden, president and founder of Operation USA, a Los Angeles-based relief agency. In an Op-Ed in the Los Angeles Times this week titled “The Red Cross money pit,” Walden writes that despite, “Giving so high a percentage of all donations to one agency (The Red Cross) that defines itself only as a first-responder and not a rebuilder is not the wisest choice.” [includes rush transcript]

The American Red Cross is facing increasing complaints about its response to the victims of Hurricane Katrina. The criticism comes from many corners; African-American activists have charged that in New Orleans, the organization provided better services in white areas than black areas. Katrina survivors have complained that they tried in vain for hours to get through to the Red Cross telephone hot lines. And others have criticized the Red Cross” policy of not sharing funds with groups focusing on longer term recovery and re-building efforts. These charges come amid reports that The Red Cross has so far raised almost one billion dollars in private funds for Katrina victims which is about 70% of all donations made since the hurricane hit, devastating the Gulf Coast.

  • Richard Walden, President and founder of Operation USA, a Los Angeles-based nongovernmental organization specializing in disaster relief as well as international health and economic development projects.
    - Read Richard Walden’s Op-Ed in the Los Angeles Times.

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This is a rush transcript. Copy may not be in its final form.

AMY GOODMAN: We’re joined right now from a studio in Los Angeles by Richard Walden. He is the President and founder of Operation USA. His editorial in the Los Angeles Times is entitled, “The Red Cross Money Pit.” It was published earlier this week. We called the Red Cross repeatedly, both in New York, as well as nationally to ask for a response to what Richard Walden was saying. They refused to come on. So, well, Richard Walden, lay out your case. Welcome.

RICHARD WALDEN: Thanks so much. I wrote the piece because I’m hoping the Red Cross board of directors, who are the C.E.O.s in corporate America, will change their policy regarding rebuilding communities. They have said since this started the last month that they are there for the emergency, and that alone is enough to justify the kind of money that they’re spending and raising, but the fact is that these communities have to be rebuilt, and from the grassroots up, as well as the infrastructure.

Now, the federal government has allocated $62 billion so far, and they may triple that sum in the next year or two. They may have to. What’s happened is the technology of fundraising has changed since the tsunami of last December 26th. The internet, following the Democratic and Republican campaigns, the presidential campaigns, and Christmas shopping, people are no longer afraid to use their credit cards on the internet, and the Red Cross is by far and away the most sophisticated and efficient user of the internet on top of having all corporate media outlets behind them and promoting them. And what happened was, it went from 35% of all donations in the tsunami, where Americans were incredibly generous, to over 75% right now.

But since all of their money, by their own admission, is front-end money for the emergency, it’s not necessarily the wisest thing to ignore community groups, community foundations and the needs of rebuilding civil society. And it wasn’t so much that I’m getting into the gripes that you have just aired by individuals who have been turned away, or they face bureaucratic delays. I understand the Red Cross’s position totally. I grew up in a Red Cross family. My father was even President of a Los Angeles area chapter of the Red Cross over 50 years ago. I went to blood drives when I was a little kid. So, I’m not their enemy. What I’m trying to do is get them to change their policy and be more involved in their communities.

I know that their volunteers are salt of the earth Americans, and they’re out there working 24/7 for the last month in unbelievably difficult circumstances. It’s not that. It’s these unbelievably hide-bound policies and procedures that the National Red Cross imposes on them and on everyone. And when you take those procedures — which may be necessary in a mass disaster — I understand the need for some order, but when it combines that with so much of the public’s largess in one account.

And then the other cat was let out — there were two cats I let out of the bag that they’re very angry about. One was that blood donations are processed at great expense to the Red Cross and resold to hospitals to the tune of $2 billion. It’s not a lot of profit in it, it but it’s $2 billion out of $3 billion total revenue. And the other cat was that FEMA reimburses them for, not all, but some of their disaster services, and so do the states using FEMA money, as long as there’s a declared state or federal disaster. They are part of a first responder team that includes police, fire, emergency medical services, National Guard. Their job is to shelter people, comfort them, feed them, and give them some secondary housing in hotels and motels and do some tracing of missing persons, which they do very well.

But, you know, as we have seen through the San Francisco earthquake and then 9/11, most notably, too much money is not necessarily a good thing when it’s placed with a group that will not share. And I don’t mean with little groups like mine or other relief agencies. It’s not a matter of envy or jealousy at all. It’s sharing it with the communities in which their own chapters work and have to rebuild.

And you would think that I was Benedict Arnold. It’s quite amazing, the vitriol. There’s even two pages on their website about my piece, but it’s gone all over the blogosphere, as well, and I’ve read hundreds and hundreds of comments about the piece, almost none of them negative about what I wrote, but most of them with grievances about Red Cross treatment that go back to World War II when people had to pay a nickel for a cup of coffee that the Salvation Army would give them for free. I understand that, and I understand the communities’ anger in many cases because there are a lot of places they didn’t show up.

These — they pre-select these shelters. I’m in California. I used to be the hospital commissioner, California Health Facilities Commissioner for five years back in the 1970’s and early 1980’s. I understand that there are pre-positioned and sometimes pre-provisioned shelters that have been chosen long ago in the event of a disaster, whatever disaster type is indigenous to a particular region of the country.

The Red Cross does a good job of getting out there and getting their people mobilized and doing mass care. I take their word that this disaster is so overwhelming that even their 150,000 volunteers they mobilized face a daunting challenge, but I think it’s an extremely unhealthy happenstance that the media and C.E.O.s and movie stars have had this primal need, it seems, to pay forward, in case their own community is hit by a similar disaster, and put all of their eggs in one basket.

JUAN GONZALEZ: Richard Walden, I’d like to ask you, because they have refused to debate you, but they did, as you mentioned, take the unprecedented step of, on their website, rebutting all of your allegations or several of them. And I’d like to ask you about some of those rebuttals. One, of course —


JUAN GONZALEZ: Let me just ask you. First, one of them, obviously, is over the issue of this reimbursement by the federal government. They claim — they say that your claims are false, that there are, quote, “no pre-existing contracts to reimburse the Red Cross for shelter operations.” They also take issue with the fact that you reveal that they have spent — that they spend $111 million on fundraising for their operations. And they claim that you’re overstating that, because you’re including all of their local chapters, as well as the national. And your response to their rebuttals?

RICHARD WALDEN: Well, I had a point by point response, which I provided the Los Angeles Times, because they asked for it, because they were under serious pressure to try to retract that. Unfortunately for them, their rebuttals were drafted by P.R. people, not lawyers. I’m a lawyer, and it wasn’t very difficult knocking all of them down. The Washington Post and USA Today reported just two days ago, they have — they had a contract to get their hotel and motel vouchers reimbursed to the tune of over $100 million.

They are part of — since 1927 — part of the response team. It’s not an annual type of contract. It’s part of the first responder system. So that if a local police department or fire department is mobilized in a declared disaster — not any disaster, but a declared disaster — they are reimbursed for the core services they provide. There’s not an individual contract only for sheltering. It’s a customary thing where they get reimbursed and they bill — there are billing forms that they submit for reimbursement. You can’t do that unless there’s a contractual obligation on part of the government to reimburse them.

AMY GOODMAN: I just want to —

RICHARD WALDEN: They don’t want that out. They don’t want that out because —

AMY GOODMAN: I just want to understand something, Richard Walden, and that is that you’re saying that people pay to the tune of $1 billion. They got more than they have gotten after 9/11, but then they are reimbursed by the federal government. You’re saying they’re part of the first responder system. Did they — were they there at very beginning with Hurricane Katrina? Did they go in?

RICHARD WALDEN: Well, they weren’t in New Orleans, because they pulled their local chapter out. That was the worst, because what happened was their response to this was — I know on Larry King, who asked the the C.E.O. of the Red Cross, Marcia Evans, “We didn’t see any Red Cross insignias at the Superdome or at the Convention Center. What was that about?” She said, “We were tasked” — I think I’m pretty accurate on this quote — “We were tasked by FEMA to open our pre-designated shelters and not to go into New Orleans. We would have wanted to, but we were told not to.” But what happened to the New Orleans chapter of the Red Cross? If I were running it, I would have defied my own national office and say, 'Sorry, this is my community. We'll help to the extent we’re able to.’ They might not have had any supplies, but they should have stayed in New Orleans and been near the last to evacuate when it was necessary to.

AMY GOODMAN: We’re talking to Richard Walden, President and founder of Operation USA, a Los Angeles-based non-governmental organization which specializes in disaster relief, as well as international health and economic development projects. I mean, couldn’t people who are listening to you, Richard, today say, ’You’re just a competing organization that wants the funds, and you’re jealous that they’re getting 70% of the generosity of people in this country and around the world?’

RICHARD WALDEN: No. I really — well, I mean, they’ve tried to say that, but really, in reality we don’t do — we hardly overlap anything that the Red Cross does. And we appreciate and respect the fact that they have a responsibility as a first responder that none of the other relief agencies, except possibly Salvation Army, has. So it’s not about that. It’s not about money, although there have been some unbelievably unsavory groups that were put out on the FEMA list. See, FEMA is partly to blame for the imbalance, not the Red Cross.

I mean, their sophisticated fundraising techniques are the motor that drives the public to them, but FEMA put out a list of only faith-based groups, the Red Cross, and I believe Second Harvest, and it included Pat Robertson’s group, Operation Blessing, and Reverend Larry Jones’s group, Feed the Children, that are pretty much outside the mainstream of American relief agencies here or abroad.

And when we asked — all of us asked FEMA — I mean, just think of the groups that are not on the list: C.A.R.E., Oxfam, World Vision, Save the Children, Mercy Corps, the gold standard of American relief groups who work in mass disasters. They have decades of experience. They rebuild communities. I mean, these are groups that have invaluable knowledge. And those groups have come to the hurricane — to both hurricanes late and with just a smattering of the resources that they get, and they are not government reimbursed in this case.

AMY GOODMAN: Juan, I have a quick question —

RICHARD WALDEN: They are not FEMA contractors.

AMY GOODMAN: Juan, you did a lot after 9/11, investigating what was going on. I mean, the amount of money that Red Cross got for 9/11 ended up toppling, then the head, Bernadine Healey.


AMY GOODMAN: For mismanagement.

JUAN GONZALEZ: And there were major questions then about how the money was being used. And you get into some of that in your opinion piece in the L.A. Times. Could you talk about that?

RICHARD WALDEN: Yeah. They were very angry. Part of their attempt at rebuttal, they cite 57,000 people helped, and people in 35 countries. A lot of those people were helped when Senator George Mitchell came in after their president was let go and ordered the money out the door, basically, and so $30 million of it was given to limousine drivers who said that the World Trade Center was their chief source of income. Tens of millions, and we’ll never know how many tens of millions, because they won’t say, were given back to powerful Red Cross chapters all over the country, because they had to forego their own fundraising for a couple of months. There were things like that.

There was very little, in fact, on 9/11 and for the following week that Red Cross was able to do. They opened their shelters like they should have, but hardly anybody came, so they closed them up. They do excellent jobs, usually, in tracing missing persons, but that was a crime scene at the World Trade Center. So, the F.B.I. and the police said, ’We’ll find — we’ll figure out who’s missing.’ And they brought catering trucks to the gates of the World Trade Center, and they were criticized for charging a buck for a cup of coffee.

And so they —- so when George Mitchell came in, they signed catering contracts with restaurants. They did stuff like that, and they paid people’s utility bills. Not poor people. They paid people in Tribeca and Soho, who were, quote, “affected by it,” because they were nearby, and the air was thick with pollution, but they set up tables in apartment buildings where there were exceedingly upscale people and asked them, “Can we pay your phone bill this month? We have extra money.” That is not a good way to give aid. And if they had been able to share that money like the New York Community Trust, like the Robin Hood Foundation, with local community groups, it would have been much better -—

AMY GOODMAN: Richard Walden, we have to —

RICHARD WALDEN: It’s because they don’t share, they get in trouble.

AMY GOODMAN: We have to leave it there. Thank you very much for being with us, Richard Walden, President and C.E.O. of Operation USA.

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