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Why the Red Cross still hasn't spent much of its Hurricane Sandy relief fund

By Matthew Klickstein , May 28, 2013 09:35 AM EDT

After the destructive "superstorm" known as Hurricane Sandy ravaged much of the Northeastern region of the U.S. last November, there was a comparably powerful torrent of volunteerism, compassion and aid that swelled in to assist the victims, many of whom were left homeless, injured or rendered financially insolvent.

Founded in 1919 by Henry Dunant and Gustave Moynier and headquartered in Geneva, Switzerland, the Red Cross (an NGO that boasts nearly 100 million volunteers worldwide) raised more than $300 million dollars in aid funds for the victims of Hurricane Sandy ... and yet only about $100 million of that fund has yet been spent (nearly seven months later).

The Red Cross' rationale behind having only spent a third of the funds raised for Hurricane Sandy victims is that of the belief that these remaining funds can be used to help victims whose damages weren't immediately apparent after the natural disaster reared its ugly head.

According to a new report by the Associated Press, there are those disaster relief experts who believe this strategy on the part of the Red Cross is a viable one.

Then there are the dissenters, however, who believe that the prime directive of the Red Cross is and should be acting as swiftly as possible in arriving on the scene of a disaster such as Sandy, ready to rush victims to shelter and assist with food and other necessities ... with more long-term considerations being left to other entities.

"The Red Cross has never been a recovery operation," Executive Director of the Disaster Accountability Project Ben Smilowitz said, according to AP. "Their responsibility has always been mass care."

"Stick with what you're good at," Smilowitz, whose DAP is a nonprofit organization that monitors aid groups, said.

Unfortunately for the Red Cross -- and perhaps for the thousands affected by what turned out to be both the most destructive hurricane in the 2012 Atlantic hurricane season and the second-costliest in American history -- Smilowitz is not alone in his skepticism about the organization's strategy of holding off on as much as two-thirds of the funds it raised to help victims of the storm.

"People were cold. Homes mildewed. There wasn't enough decent housing," Director of the Center for the Study of Philanthropy and Civil Society at the City University of New York Kathleen McCarthy said. "Given the lingering despair, it's hard to understand the argument that 'We are setting that money aside.'"

"We are waiting to see where the greatest need is going to be over time," the Red Cross Greater New York Region CEO Josh Lockwood said in defense of its organization's strategy. "We are more concerned with spending our resources wisely rather than quickly."

The Red Cross does have its supporters in this strategy of holding off on the use of relief funds until more long-term effects can be better assessed. These opinions are bolstered by recent events that prove holding back on funds until some time has past might not be a bad idea.

After a tornado in Joplin, Mo. left behind in its destructive wake the deaths of 158 people, the Red Cross needed to provide new mental health services to survivors ... an entire year later. Subsequent to a massive earthquake in Haiti, it again took a year for a terrible cholera epidemic to take effect and leave many needing support from the Red Cross.

"It would be splashier, perhaps, to spend the money right away while the media is still there and the donors are still looking," Associate Dean at the Indiana University Lilly Family School of Philanthropy Patrick Rooney said. "But the important needs, from the cost perspective and the recipient perspective, take place after the headlines are gone and after the cameras are gone."  

It's worth noting that the Red Cross, which has already been acquiring significant financial aid for victims of the recent Oklahoma tornado, was the top recipient of donations received after Hurricane Sandy. Yet it still has nearly $110 million of the $303 million raised, according to numbers revealed as recently as mid-April.

The organization has "pledged" to spend the money it has raised for Sandy on the victims of that disaster alone and to not divert these funds to those affected by other disasters.

One such way the Red Cross is working with its remaining relief funds is by investing $27 million into a program that will support those who are in need of what the AP calls "move-in assistance." There have already been 2,000 families who have been assisted by this program already with 4,000 more awaiting eligibility.

The Red Cross has also said that it is and has been awarding substantial grants to other nonprofit groups working to assist victims of Hurricane Sandy, and that it has been collaborating with "charitable partners with local ties," according to AP.

"Our experience shows that as the recovery goes on, the needs of survivors will evolve," Roger Lowe, Red Cross senior vice president, said. "It's important to make sure some money is available for those needs no one can predict right now."

What do you think about the Red Cross holding back on much of the funds it raised for Hurricane Sandy victims? Let us know your opinion in the comments below!

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