If only the American Red Cross was as efficient as the US Government...

Inspectors assessing the earthquake damage in a house in Port-au-Prince, Haiti

"I still have a lot more questions for the Red Cross," said Sen. Charles Grassley in a statement. "I have other questions about the spending numbers and how they add up and the overhead costs for both the Red Cross and the grantee organizations. Also, I'd like to see more details of the results achieved from each of the partner organizations."

Propublica and NPR have done an admirable job of trying to figure out what the American Red Cross (ARC) has done with the nearly half a billion dollars that they raised for the Haiti earthquake. However, I fear that Senator Charles Grassley will lead this in the wrong direction. The ARC should be encouraged to give out the money that it raises rather than trying to do it all themselves.

As we’ve seen with nearly every disaster, the ARC does a great job of raising money and a lousy job of using it. Even in domestic disasters like Katrina or Sandy, the ARC seems poor at delivering results. Imagine how much harder it is to set up a large organization in a foreign country in the middle of a disaster response. It is just a recipe for failure.

Instead, the ARC should follow the example of the US Government’s disaster response agency: the Office of Foreign Disaster Assistance (OFDA). As soon as a disaster hits, OFDA sends a small team of experts to help assess the situation and to review funding requests. They focus on working with organizations that are already on the ground with a solid track record of success. Because they are on the ground, they understand the situation and can work with their grantees to ensure that proposals make sense. The field team is senior enough that they can frequently review proposals on the spot.

This model allows OFDA to quickly get funds injected into where they are needed the most. They keep their overhead low by focusing on channeling money to those who can use it effectively. Their field teams are able to work with their partners to keep projects moving. By channeling money through other organizations, they build local capacity and make it easy to wrap up their work as quickly as possible.

The ARC’s problem is that it establishes a large bureaucracy that is unable to implement projects directly and very slow to issue subgrants. I did succeed in getting a large grant funded through the ARC, but it took nearly 10 months to get it worked out. Once awarded, we were micromanaged from beginning to end. I have worked with funding from a wide range of donors and found the ARC to be the most difficult. We did succeed in repairing 4,000 houses for the ARC and the work was of higher quality than what he had done for OFDA and others, but it was a soul-sucking process that left all of us exhausted.

I would love to be able to support the American Red Cross. With their incredible name recognition, they have enormous potential to help. Instead, their repeated and very public failures make it that much harder for everybody else to raise money and help out.