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Red Cross Spends 92 Cents of Every Dollar on Salaries-Fiction!

Red Cross Spends 92 Cents of Every Dollar on Salaries-Fiction!

Summary of eRumor:

The Red Cross spends 92 percent of donations on salaries and other administrative expenses.

The Truth:

There’s no basis for the claim that the American Red Cross keeps 92 cents of every dollar donated. Legitimate questions have been raised, however, about how the organization uses donations, and how it reports its spending.
The American Red Cross has often stated that it spends 91 cents of every dollar on programming. Charity Navigator, an independent website that rates thousands of charities, largely back s that up. It reports that the Red Cross spends about 90 cents of every dollar on programming. Less than 10 cents goes to administrative costs.

There’s no proof that the American Red Cross keeps 92 cents of every donated dollar. But there are legitimate questions about its practices.

But again, there are legitimate questions about those figures. They first emerged in 2014, after an earthquake devastated Haiti. U.S. Sen Chuck Grassley, a Republican from Iowa, led a study that found the Red Cross spent  $124 million — a quarter of all donations for hurricane relief — on internal expenses. The study also found that the American Red Cross  (ARC) uses a confusing, potentially inaccurate, method to track its use of donations:

With respect to program costs, ARC does not track costs on a project by project basis; instead it uses a complex, yet inaccurate, process to track its spending. According to ARC, it separates projects by sector, weighs each sector’s spending against the others, and based upon that comparison, it estimates its own program costs. Thus, a $30 million grant to a partner, once “weighted,” may end up costing $32 million, but not even ARC is sure of the actual cost. Therefore, ARC is unable to inform Congress, or the public, of the exact cost of each project that it funded with donor dollars. ARC defends its lack of precision by relying on non-profit accounting standards, which allow for the use of estimates rather than actual numbers.

NPR and Pro Publica launched a joint investigation that same year. Pro Publica found that fundraising expenses alone have accounted for as much as 26 cents of every dollar donated. And the average amount spent on fundraising over the previous five years was 17 cents per donated dollar. But the 17 cent threshold was still below the ceiling set by nonprofit watchdog groups. But the investigation found that the Red Cross spends the bulk of its donations on its “blood business” — and just 14 percent went to disaster relief:

That is because of the unusual structure of the Red Cross. Most of what the Red Cross does is take donated blood and sell it to health care providers. Of the more than $3 billion that the Red Cross spent last year, two-thirds was spent not on disaster relief but rather on the group’s blood business.

The American Red Cross drew even more controversy after donations poured in for Hurricane Harvey in 2017. Asked on NPR’s “Morning Edition” how much of donated funds would support Hurricane Harvey survivors, Red Cross executive Brad Kieserman responded, “Yeah, I don’t think I know the answer to that any better than the chief fundraiser knows how many, how much it costs to put a volunteer downrange for a week and how many emergency response vehicles I have on the road today.”
So, there have been legitimate questions about how the American Red Cross uses donations. There have also been legitimate questions about whether the American Red Cross is best outfitted to lead large-scale disaster relief efforts. But claims that the Red Cross spends 92 cents of every dollar on salaries or administrative costs are “fiction.”