Red Cross Changes Aid Pitches After Sept 11 Uproar

Wed Jun 5, 3:59 PM ET
By Lisa Richwine

WASHINGTON (Reuters) - Following an uproar over its handling of donations for Sept. 11 victims, the American Red Cross (news - web sites) on Wednesday announced steps to ensure that donors understand how the organization will spend contributions.

The nonprofit group, one of the largest charities in the United States, said it was changing solicitations for aid to make clear that funds may be used to help victims of any of the thousands of disasters it responds to each year.

Donors, lawmakers and others criticized the American Red Cross last year for planning to use some of the hundreds of millions of dollars given to a special fund set up after Sept. 11 for purposes unrelated to that day's attacks in New York and Washington. Bernadine Healy, the organization's former president and chief executive, resigned in part due to the controversy over how the donations were distributed. The group later reversed course.

"We are taking bold steps today to do what is right and necessary to honor the intent of the donors," American Red Cross Chairman David McLaughlin said at a news conference.

The organization is changing its advertisements and mailed solicitations to avoid giving the impression that donations will benefit victims of a specific disaster.

New materials will say that donors can help the victims of a current disaster "and thousands of other disasters across the country each year" by donating to the Red Cross. Money will go into the organization's general Disaster Relief Fund except in cases where a donor requests a particular use.

McLaughlin said the organization, which helps victims of disasters ranging from single-home fires to earthquakes (news - web sites) and hurricanes, needs to have flexibility to apply funds to cases that do not draw widespread media attention and massive donations.

In addition to changing solicitations, the American Red Cross will ask donors questions to confirm that they understand how their money may be used. The group also pledged to inform the public when it has received enough money to meet needs of an immediate disaster.

The new steps are expected to fully take effect by July 31, McLaughlin said.

The Red Cross effort is a "step in the right direction," said Ken Johnson, a spokesman for House Energy and Commerce Committee Chairman Billy Tauzin, a critic of the Red Cross' handling of the Sept. 11 donations.

"The Red Cross made a mistake, acknowledged it and has now built safeguards into its fund-raising policy, which hopefully will prevent these types of problems from occurring again," Johnson said.