Report: Red Cross wrongly says 91 percent of donations go to services

WASHINGTON, Dec. 4 (UPI) -- The American Red Cross's claim that 91 percent of its donations are used for services is exaggerated, a report Thursday said.

The Red Cross, in a statement, called the story by Pro Publica and National Public Radio "unequivocally false."

"An average of 91 cents of every dollar the Red Cross spends is invested in humanitarian services and programs," the agency said. "We firmly stand by that. As we have always said, this percentage is calculated on overall spending each year of the entire organization, and spending on management, general and fundraising."

ProPublica said its investigation found that the Red Cross leaves its blood business out of its calculations. Blood is typically donated to the Red Cross and then sold to hospitals and other with the organization spending large sums on overhead.

The Red Cross is both the leading first responder to disasters in the United States and responsible for about half the country's blood supply.

Under Internal Revenue Service guidelines, blood donations are not considered deductible contributions. ProPublica said that in Red Cross tax filings, they are accounted for as revenue.

The report said that tax filings also show that in some years the Red Cross reported that as much as 26 percent of its revenue went to overhead.

ProPublica said it asked the Red Cross about the discrepancy between its tax filings nd its citing of blood donations as "contributions" in its response.

"It was not our intention to use the term 'contribution' in its accounting sense," a spokeswoman, Suzy DeFrancis, said in an email.

Rob Reich, a charity expert who teaches at Stanford University in California, told NPR the consistency of the Red Cross's public statements that only 9 percent of donations go to overhead suggest something is amiss.

"It seems like a very strange thing that the number has remained constant for nearly 20 years when different amounts of money are raised in different years," Reich said. "Different disasters happen in different years -- which means there should be peaks and valleys in disaster relief spending."