Charity Defense Council Steps Up For Red Cross

August 7, 2015       Mark Hrywna      

The Charity Defense Council (CDC) opened what appears to be its first major front in the war on overhead.

The Cambridge, Mass.-based nonprofit launched a 1,500-word “attack” on ProPublica and NPR for recent stories about American Red Cross efforts in Haiti which have spurred calls for a Congressional investigation. The advisory, titled “Media Malpractice – How the Press has Tried to Kill the Red Cross’ Haitian Relief Effort,” was issued yesterday by CDC Founder Dan Pallotta.

“Armed with nothing but distortion and phony metrics, the national media have created the latest victim in the U.S.’s philanthropy wars – the Red Cross,” the missive begins. The letter labels the report’s “conclusions entirely false” and concludes with a call to contact Congress, Red Cross as well as ProPublica and NPR. “By all accounts, the amounts raised and the work undertaken made the Red Cross a champion among on-site activists in the wake of the quake,” the council said.

The Red Cross raised $500 million for relief efforts, which included a pilot home building project, efforts to provide clean water and sanitation, and emergency housing, according to the council. It described parts of the report as “high on hype and low on facts.” The Red Cross has sparred with the news organizations since their initial reports last fall about the organization’s response to Hurricane Sandy.

The council shaped the stories as an attack on overhead, claiming the ProPublica report spotlighted the salary and expenses of a Red Cross project manager that totaled some $140,000. “Claims of over the top overhead are now – unfortunately – de rigueur when it comes to evaluating charities,” the CDC said, and then turned its attention to the nonprofit news organization itself. “Ironically, ProPublica itself is a charity that recognizes the importance of investing in staff and overhead. In 2014, it’s [sic] President made $376,782. Its top eight executives made over $2.04 million, or an average of $255,000 each.”

The CDC claims the Red Cross has had to divert program funds to “fend off false charges of mismanagement and manipulative messaging.” Congressman Rick Nolan (D-Minn.) has called for a congressional investigation into Red Cross appropriations in Haiti. U.S. Sen. Charles Grassley (R-Iowa) also has requested information from the federally chartered nonprofit following the ProPublica/NPR stories.

The council was established in 2012 and lists five functions on its website:

  • Serve as an anti-defamation force;
  • Conduct “brave and daring” public ad campaigns;
  • Serve as legal defense fund challenging regulations and laws that violate charities’ First Amendment rights;
  • Facilitate a national discussion on a civil rights act for charity and social enterprise; and,
  • Organize the nonprofit sector at a grassroots level.

As its primary exempt purpose, the council on its Form 990 explains: “To let people know that low overhead for charitable organizations is not the way the world gets changed, that poor executive compensation is not a strategic plan for ending hunger and poverty or curing disease, and that inadequate, donated resources are not the path to global transformation.”

To date, the organization has used donated billboards in the Boston, Mass. area to promote its message about using impact rather than overhead to measure nonprofits. Plans are under way to hire its first executive director. Pallotta has been the public face of the Charity Defense Council and is among its four directors.

In its most recent IRS Form 990, for the year ending 2013, the council reported revenue of a little more than $11,000. CDC plans for a $1-million fundraising walk this past summer were postponed. The council did receive a $150,000 grant from Wounded Warrior Project last year, according to that organization’s Form 990 for the year ending September 2014.

The council is looking for alternate funding streams and grants to scale quickly and support full-time staffing, according to Steven Nardizzi is CEO of Wounded Warrior Project and a member of CDC’s advisory board. He described the grant as preliminary funding to bring some momentum during the year. Full-time staff would be focused on pushing out the type of messaging the council wants as well as  more advisories and public education campaigns, he said during an interview last week.