The Red Cross on Hurricane Sandy Funding: It's A 'Trade Secret'

A year and a half after Hurricane Sandy killed 117 East Coast residents and caused tens of thousands to become homeless, people are still asking the American Red Cross where the money went.

The investigative reporting team at ProPublica recently filed a Freedom of Information Act (FOIA) request with the state of New York to find out exactly how the Red Cross spent the $311.5 million the organization raised for Sandy relief efforts.

Earlier this week, ProPublica reported that the Red Cross had hired the Gibson Dunn law firm to try and block the FOIA request, and that New York Assistant Attorney General Bruce D. Feldman had partially acquiesced to the block.

Why? Because the Red Cross’s financial records constitute a “trade secret,” according to Feldman’s June 23 letter to the law firm.

Red Cross spokeswoman Melanie Kozel told VICE News that the vast majority organization's 25-page July 29, 2013 letter to the New York Attorney General is being released and details their response efforts following Superstorm Sandy.

"We sought to keep confidential a small part of the letter that provided proprietary information important to maintaining our ability to raise funds and fulfill our mission," said Kozel.

Ben Smilowitz of the Disaster Accountability Project explained how a public non-profit charity can argue that their spending records are a trade secret.

“They’re using the term ‘trade secret’ pretty liberally,” Smilowitz said. “They even said the term Red Cross is a trade secret, which is like throwing ‘trade secret’ around as if you don’t know what it means.”

Smilowitz started the watchdog group after his volunteer job managing a Red Cross center in Mississippi in the aftermath of Hurricane Katrina left him frustrated.

Gibson Dunn had submitted 108 pages of documents in response to the Attorney General’s request, but argued that public release of the documents “could cause substantial competitive and other injury to the American Red Cross.” The law firm highlighted portions of the documents they said needed to remain confidential.

In response, the Attorney General’s office agreed to redact some portions, but not others. One of the things Gibson Dunn wanted hidden, bizarrely, was a header at the top of the page reading “American Red Cross.”

“I find that the Red Cross has not demonstrated why this two line title is entitled to trade secret protection; without more, I cannot find that disclosure of this two line title will cause the Red Cross any economic injury,” Feldman wrote in the letter.

The Red Cross has seven business days to appeal the Attorney General’s plan to publish the redacted documents. ProPublica, which requested the records, can also appeal the redactions.

Where Did the Money Go?
Red Cross spokeswoman Kozel told VICE News, “As of May 31, the Red Cross has spent or made commitments to spend $301 million, which is nearly 97 percent of the $311.5 million in donations we have received for our Sandy work.”

The Red Cross published its breakdown of the funds as of May 2014 on its website.

According to a pie chart of “Sandy Expenses and Commitments,” Red Cross has allocated around $98 million for casework and individual assistance, $94 million for food and shelter, $50 million for housing, $33 million for relief items, and an additional $25 million for things like healthcare services and emergency vehicles.

That adds up to about $300 million, which is just slightly less than the $311 million they raised.

But Smilowitz is skeptical about what the term “has spent or made commitments to spend” actually means.

“The Red Cross could say they’ve “spent or made commitments to spend” the entire $312 million, but they could have only cut checks for $100 million. We wouldn’t know,” Smilowitz said.

The Red Cross did not respond to VICE News’ question about further details on its “commitments to spend.”

Smilowitz has strong reasons for being suspicious of the charity.

He says that in May 2013, the Red Cross suddenly revoked some of the move-in assistance grants of $10,000 each that it had promised to more than 1,000 homeless Sandy victims.

Some Red Cross employees were so outraged, they came to his Disaster Accountability Project with the names of 700 people that had mysteriously been declared “ineligible” after being promised the grants.

Smilowitz then filed a complaint with the Attorney General’s office, which began investigating the Red Cross’s financial management.

A Red Cross whistleblower, on conditions of anonymity, told Al Jazeera America in a November 2013 interview that Red Cross caseworkers were confused and upset.

“There were clients who had received commitments from the Red Cross for money to assist them with the storm, but were then deemed ineligible,” the still-employed whistleblower said. “That’s not assisting clients. That’s not directing the donor dollar where it should be. That’s lying to victims of the storm and survivors of the storm.”

But Kozel said that the Red Cross's Move-in Assistance Program has provided tens of millions of dollars to help thousands of families impacted by Superstorm Sandy.

"We have issued more than $27 million to more than 4,450 households as of June 13. Since January 2013, the Move-in Assistance Program has awarded assistance at an average of $1.5 million per month," Kozel told VICE News. "The program has been highly successful in providing financial assistance to people whose homes were destroyed and who have no resources to meet their housing-related needs. To ensure that we connected with people who might need assistance, Red Cross staff conducted outreach to almost 8,000 households to discuss their need for additional assistance and explain the case management and financial supports available to them."

Kozel said to date, the "Red Cross has committed $13.8 million to these sources of long-term recovery related financial assistance"and that it was "important to know that if people do not meet the criteria for Move-in Assistance Program, Red Cross case managers help them apply for other sources of financial assistance, such as the community-based Unmet Needs Roundtables."

Who Really Helped Sandy Victims?
Shortly after Sandy, news reports began stating that the most prevalent force of relief workers on the frontlines of the damage weren’t from the Red Cross, the Salvation Army, or FEMA. Instead, the largest group of volunteers were coordinated by Occupy Wall Street.

In a November 2012 New York Times article, Occupy volunteer Sofia Gallisa said the lack of official response at the time was “crazy.”

“For a long time, we were the only people out here,” Gallisa told the Times of Occupy’s aid work in the Rockaways.

According to Occupy Sandy, about 6,000 volunteers served 85,000 meals during the first week after the hurricane. Occupy Sandy had raised just over $1 million by September 2013 — pennies compared to the Red Cross.

Occupy Sandy volunteer Sam Corbin spent the winter doing relief work at Occupy’s Brooklyn hubs and in the Rockaways.

“Sometimes you would see the Red Cross truck, which would roll around the neighborhood with someone yelling out of a loudspeaker ‘Go to this place to get food,’ or whatever,” Corbin told VICE News. “You didn’t see a lot of people interacting with the truck, and I don’t remember really seeing anyone ever getting out of the truck.”

Corbin said she didn’t fault the Red Cross.

“It was an enormous disaster and it was really hard to manage anything,” Corbin said.

The problem, Corbin said, was in the manner of approach.

“A lot of these organizations would get a map and find the most densely populated area, and then drive there and just dump all these blankets and stuff there and wait for people to come to them. But people who lived a block away didn’t have any idea that was there,” said Corbin.

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Occupy Sandy used a mixed approach: running community “hubs” at churches and other centers where people could go for consistent services, and sending doctors and relief volunteers to canvass door-to-door.

Disaster Accountability Project is developing a tool to help disaster donors make informed decisions. That website should launch at the end of this summer.

“The public gives to the biggest names but not necessarily the right organizations,” said Smilowitz. “People are giving millions of dollars after disasters to groups that may not have the capacity to deliver services, and organizations that are misleading in their solicitations.”

Follow Mary Emily O’Hara on Twitter: @maryemilyohara

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