Southern Brooklyn

Red Cross Staying Silent On How It Spent Sandy Money

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The American Red Cross is coming under fire for refusing to disclose how it spent more than $300 million in funds raised for Superstorm Sandy relief, claiming that the information is a “trade secret.”

Investigative news outlet ProPublica has been fighting to get the independent relief organization to reveal how it spent donated funds on Sandy between the storm and February 2014, but the organization refuses to give a breakdown.

But the organization did fork over information to New York Attorney General Eric Schneiderman, who is investigating this and other charities – so ProPublica filed a public records request with his office to see what was handed over.

The site reports what happened next:

That’s where the law firm Gibson Dunn comes in.

An attorney from the firm’s New York office appealed to the attorney general to block disclosure of some of the Sandy information, citing the state Freedom of Information Law’s trade secret exemption.

The documents include “internal and proprietary methodology and procedures for fundraising, confidential information about its internal operations, and confidential financial information,” wrote Gabrielle Levin of Gibson Dunn in a letter to the attorney general’s office.

If those details were disclosed, “the American Red Cross would suffer competitive harm because its competitors would be able to mimic the American Red Cross’s business model for an increased competitive advantage,” Levin wrote.

The letter doesn’t specify who the Red Cross’ “competitors” are.

The Red Cross is a public charity and occupies a unique place responding to disasters alongside the federal government.

Some of the organization’s redaction requests were trivial: lines that simple read “American Red Cross,” or sections of letter stating they were willing to meet with the attorney general.

Those requests were denied by Schneiderman’s office, but others included information that the attorney general agreed was “proprietary and constitutes trade secrets,” such as “business strategies, internal operational procedures and decisions, and the internal deliberations and decision-making processes that affect fundraising and the allocation of donations.”

ProPublica has not yet received the documents from the attorney general, but the outlet says it will report on them when they do.

UPDATE (6:00 p.m.): Councilmember Mark Treyger, chairman of the Committee on Recovery and Resiliency, asked us to tack this on to the article, following the introduction (with Councilmember Ulrich) of a bill to create a monitor to oversee Sandy relief funding to prevent fraud.

“Citizens who donate to disaster relief efforts, including in the aftermath of Superstorm Sandy, have a right to know that their money is being used to help victims recover and rebuild. With so much funding at stake, and residents still in need of so much assistance, I remain concerned about the potential for misuse of relief funds, including by government agencies, contractors and private organizations. That’s why I worked with my colleague Council Member Eric Ulrich to introduce legislation this week establishing an independent monitor to investigate instances of waste, fraud and abuse in order to maximize the amount of aid delivered to impacted neighborhoods across New York City. To be clear, I am not accusing the Red Cross of any improper activity, but rather am reiterating the need for openness and transparency as the recovery effort moves forward.”

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