Disaster Relief Fund Runs Dry

June 17, 2008       Mark Hrywna      

“Silent disasters” have taken their toll on the American Red Cross, depleting its Disaster Relief Fund and forcing it to borrow more than $15 million to respond to a series of events in the Midwest.

Mid-sized disasters like tornados, floods and wildfires that don’t garner the media attention of a single, large-scale disaster – and subsequently the outpouring of public donations – have had a cumulative effect on the Red Cross, said Suzanne DeFrancis, chief public affairs officer.

“We go out and help people, whether we have the money or not,” DeFrancis said. There’s been quite a significant response in the Midwest over the last six weeks, she said, with the Red Cross opening more than 100 shelters and serving more than 100,000 meals.

The Red Cross has spent in excess of $15 million responding to disasters in May and June, all of it borrowed since the Disaster Relief Fund has been depleted, DeFrancis said. As the Midwest continues to deal with flooding, the cost could climb to about $20 million – which would rival last year’s wildfires in southern California – or as much as $40 million if flooding gets as severe as it did in 1993, when it cost the Red Cross $37 million, she said.

“The American people have seen one after another, but not one single, major event that people give money to. Nonetheless, the impact of them have been very significant,” said DeFrancis, adding that there were about 30 significant disaster operations still going on as of June 17.

“In situations like this, where there are a number of events, but none of them rising to that big media attention makes it very difficult to raise money,” DeFrancis said. The weakening economy and rising food and gas prices also factor into people’s ability to give, she added. “Charitable dollars are sometimes the first to have to be cut, but we’re still confident that when the public understands the impact of the disasters, that they will contribute as they have in the past, in good times and in bad,” she said.

DeFrancis did not have details on the organization’s borrowing rates or comparative fundraising data from the same time last year. “We’ve been very candid in telling people that we’ve been borrowing, and we’re going to do whatever it takes to ensure we’re on the ground and responding,” she said.

The last time the Red Cross was forced to borrow money was during Hurricane Katrina, when it borrowed $430 million, DeFrancis said, but that was quickly paid back after the Disaster Relief Fund was replenished with the public’s contributions.

The level of the Disaster Relief Fund generally fluctuates but has been very low to depleted for the past year, DeFrancis said, partly because of the lack of large-scale disasters like Katrina. Donations to the Disaster Relief Fund are less restricted than those designated for a specific disaster, she said, allowing the Red Cross to use the funds where most needed.

DeFrancis said the Red Cross will continue to borrow and redouble fundraising efforts until it can replenish the Disaster Relief Fund.

To view an interactive map of the current Red Cross response, visit http://redcrossmidwestflooding.wordpress.com/maps/

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