Red Cross Testimony at W&M Hearing on Charitable Groups' Reaction to Terrorist Attacks

WRITTEN STATEMENT FROM THE AMERICAN RED CROSS

[1] Within moments of the first plane tearing into the World Trade Center on that terrible morning of September 11th, 2001, the tragic events that transformed this nation also began the largest disaster response in the history of the American Red Cross -- our nation's oldest, most experienced and most trusted humanitarian organization. None of us could have anticipated the scope of such an event, nor been fully prepared for the impact this would have on the lives and families of those affected. As always, the Red Cross immediately began providing emergency relief and emotional support to a nation stunned by the brutality of an unprecedented attack on American soil.

[2] Chartered by Congress in 1905 to maintain a system of national and international relief, it is the mission of the American Red Cross to help people prevent, prepare for and respond to emergencies. The Red Cross is an essential partner with federal response agencies during disasters through its lead role for mass care under the Federal Response Plan. Our primary focus is on the human needs of those affected, and we respond to both the physical and emotional devastation experienced by people during and after a disaster.

IMMEDIATE RESPONSE TO THE EVENTS OF SEPTEMBER 11TH, 2001

[3] In the initial hours following the attacks, we took the steps necessary to establish order out of chaos and support people whose world had just been torn apart -- those in New York running from the collapsing Trade Towers, those at the Pentagon fleeing from the intense heat and flames, and those families urgently wanting to hear about loved ones whose planes never arrived.

[4] We do not wait for people to come to us, but reach out to find those in need. We have searched buildings around the World Trade Center to reach the elderly afraid to leave their apartments or whose health care workers were unable to get to them because of the perimeter surrounding ground zero. Our Air Incident Response Teams, always on immediate alert, were dispatched to each departure site and every scheduled arrival site for the four flights hijacked that day to reach out to the families of the victims. At the three disaster sites, we found firemen, police, emergency medical crews and responders of all sorts who needed water, food, a change of clothes, and a place to rest as they stayed at the scene searching for survivors.

[5] Our foremost priority is to provide assistance for the victims and survivors of the disasters in New York, Pennsylvania and at the Pentagon -- for how ever long it takes. As of today, we have:

o Helped more than 25,000 families who were displaced, injured

[6] Just as this heinous act was unprecedented in its destruction, the response from the people of America is inspiring -- people waiting hours in long lines to donate blood, flooding phone lines to volunteer their time in any way that was needed, and personally delivering financial contributions. The generous financial and in-kind assistance that the American Red Cross has received from individuals, companies, and foundations is unprecedented. It must be handled with utmost openness, accountability and integrity.

[7] THEREFORE, WE ESTABLISHED THE LIBERTY RELIEF FUND, A SEPARATE, SEGREGATED ACCOUNT THAT WAS CREATED TO HOLD AND DISBURSE FUNDS TO HELP PEOPLE AFFECTED BY THE SEPTEMBER 11TH ATTACKS, ITS AFTERMATH, AND OTHER TERRORIST EVENTS THAT COULD OCCUR IN THE NEAR FUTURE. We believe the establishment of this account is the best way to assure absolute transparency, clear accountability and demonstrate our commitment to donor intent.

[8] Since September 11th, the Red Cross has received pledges and contributions totaling $564 million ($505 million received). To date, $154 million has been spent or committed, $120 million for direct assistance to 25,000 families in the form of cash and vouchered assistance to cover their emergency needs including food, clothing, and temporary shelter. Any remaining funds will be kept in the Liberty Relief Fund account to help victims as their needs arise in the weeks and months ahead. Newly appointed American Red Cross Interim CEO Harold Decker has asked for a top to bottom review of the Liberty Fund to ensure that the planned expenditures from these funds are consistent with donor intent.

[9] The American Red Cross has responsibly disbursed $120 million, to 25,000 families in less than 8 weeks, unprecedented in the nonprofit world. Through our newly established Family Gift Program, we have spent or committed $47.9 million to help more than 2,300 families through direct financial assistance. We will continue to work with these families beyond the initial period to evaluate longer-term support needs. Our financial assistance is provided expeditiously through a simple one-page gift form, which is processed, promptly with checks issued overnight. The forms can be done by fax, phone or electronically, and are available through the Family Assistance Center and at other family assistance sites in New York City, or any one of our 1,000 chapters located in communities nationwide.

[10] Again, we do not wait for families to contact us for assistance. Early in October, we placed advertisements in major newspapers appealing to families to come forward and receive assistance. We've also contacted employers of the World Trade Center, floor by floor, to reach out to their employees, searched hospital lists and the list of confirmed deceased. Forty Red Cross employees and volunteers are contacting families who might qualify for cash or other assistance. We've reached about 3,300 families, and the number grows daily.

[11] Because this tragic event also injured and killed foreign nationals, the Red Cross is assisting the families of these individuals. The Red Cross international aid package includes: financial assistance for travel to and from the United States, lodging, meals, local transportation, crisis counseling, advocacy and referral with U.S. agencies, repatriation of remains, funeral expenses, tracing services, and information about embassies and consulates. We are being assisted by our partner Red Cross and Red Crescent societies the world over.

LEGAL STATUS AND OVERSIGHT

[12] The American Red Cross is a federal instrumentality chartered by Congress in 1905 to meet international treaty obligations of the United States government under the Geneva Conventions. The Congressional Charter has mandated a procedure for Congressional and federal oversight of the activities and finances of the American Red Cross. The Department of Defense U.S. Army Audit Agency audits the work of the principal auditors, KPMG. DoD then transmits its annual report to Congress, along with Red Cross' audited financial statements, including KPMG's opinion. Consistent with its policy of transparency and full public accountability, the American Red Cross publishes an annual report, along with its audited financial statements, and posts these documents on its public website.

[13] In order to fulfill our responsibilities under the Geneva Conventions, we are considered a federal instrumentality, and in many respects treated like a federal entity. As such, the American Red Cross is exempted from various state and local laws, including state and local taxation and state charitable registration requirements. The American Red Cross is also exempt from federal income tax under Section 501(c)(3). As a tax-exempt charitable organization, the American Red Cross is regulated by the Internal Revenue Service and files an annual IRS Form 990, which is also subject to public disclosure.

[14] Following the September 11th attacks, the American people rushed to support our efforts with an UNPRECEDENTED surge of generosity. In response, the Red Cross has put in place stringent accounting measures at both the National Headquarters and throughout our chapters to ensure stewardship of these funds. Our internal audit staff and KPMG, our external auditors, began reviewing and testing control processes and procedures for donations and disbursements the week following the terrorist attack. That testing continues. National Headquarters is engaging the corporate external auditor, KPMG, to begin testing immediately those contributions remitted to Headquarters, and have directed chapters to require the same of their auditors and independent CPAs.

FINANCIAL STEWARDSHIP

[15] In order to ensure that all donations collected on behalf of the Red Cross are received and properly acknowledged for tax purposes, we have established formal agreements with groups and businesses that have helped to raise funds. A third-party group can conduct a fundraiser provided their local Red Cross chapter approves it and a signed letter of agreement has been received.

[16] The American Red Cross and its online partners (aol.com, yahoo.com, paypal.com, libertyunites.com, and wellsfargo.com) accept credit card information only through a secure portal on a Web site, not through an e-mail message. When Internet scams have been detected, we have worked closely with the Federal Trade Commission and the Department of Justice, and taken aggressive steps taken to shut them down.

[17] Symantec, an information technology security firm, retained by Red Cross notified us on October 17, 2001, about the Septer.Trojan computer virus for potential credit card donors. The virus came in the form of an executable file attached to an e-mail message that appears to come from the American Red Cross, United Way and the September 11th Fund. The American Red Cross Office of General Counsel contacted law enforcement authorities immediately about this fraudulent act.

COORDINATION OF RELIEF EFFORTS

[18] We typically lead and champion cooperation with other relief agencies to insure we don't duplicate efforts and to protect against any gaps in services. The Red Cross leadership and the Attorney General of New York, Eliot Spitzer, have been engaged in a constructive dialogue on a means of improving access to the vast disaster relief resources now marshaled to help the victims of the September 11th attacks. We are hopeful that a system will be established to enable disaster relief recipients to maximize the relief resources available to them. In addition, Mr. Decker has requested a review of potential steps to improve coordination between the Red Cross and other relief agencies that would benefit the individuals and victims' families.

THE ROAD AHEAD

[19] THE AMERICAN RED CROSS WILL BE WITH THE SURVIVORS AND FAMILIES AFFECTED BY THIS TRAGEDY FOR AS LONG AS IT TAKES. Our decades of experience with disaster victims tell us that assistance will be needed for years to come. We need to ensure that the resources entrusted to us by the American people will be available to meet these future needs.

[20] Family Assistance Centers were established for the loved ones of those lost in the World Trade Center and the Pentagon. The Center remains operating at full strength in New York City. A one- stop relief center, families can avail themselves of the fall breadth of Red Cross services in an environment where confidentiality, dignity and compassion are the hallmark attributes. We are committed to this outreach, and will work with those affected for years after this event.

[21] In other ways, our work has just begun. The site of the World Trade Center, now called "The Pile", is emblematic of the work ahead and the human needs we will serve. There, work that is physically arduous, always dangerous and emotionally draining will continue for the next 9 to 12 months. Construction workers, firemen, police, and emergency medical technicians are not forgotten. We are operating special respite centers on-site. It is a place away from the noise and the dirt, where workers can come to find food, shelter, a change of clothes, a place to sleep, or to read a card written with special care from a child. This is a place to refresh the body and the spirit in order to go back, once again, to their work. This is another example of a new service for us, a service we adapted to the needs of those involved in this disaster.

[22] We now find ourselves in the grip of a biological attack. We are assisting the families of those directly affected from anthrax exposure. We have offered immediate financial assistance through our Family Gift Program, and we are contacting 16 victims who are or have been hospitalized for anthrax. Further, because the current attack has understandably created public anxiety, we are reaching out to communities with public awareness and education materials. We will continue to develop these materials to address the community education requirements regarding biological and chemical agents.

CONCLUSION

[23] The American Red Cross today is helping TENS OF THOUSANDS of people affected by acts of terrorism in the United States. We were among the first on the scene and we will be helping people for as long as it takes. We thank you Chairman Houghton and Representative Coyne for holding this timely and important hearing.