Durham Herald-Sun

Lawmakers Critical of Red Cross Fund By SHANNON McCAFFREY : Associated Press Writer Nov 6, 2001 : 7:29 pm ET

WASHINGTON (AP) -- Lawmakers sharply criticized outgoing American Red Cross President Bernadine Healy Thursday for not directing more of the money in a special terrorism response fund to the families of victims in the Sept. 11 attacks.

The charity set up the Liberty Fund, which has raised $564 million, to respond to the attacks on the World Trade Center and the Pentagon. Red Cross officials now say some of the money will be set aside in case of future terrorist acts and used to create a strategic blood reserve.

At a hearing of the House Energy and Commerce Committee's oversight panel, lawmakers said the American public responded so generously because they believed all of their donations would directly benefit those harmed in the terrorist attacks.

Healy said the Red Cross always made clear that was not the case -- that some of the money would be used for "future critical priorities."

Rep. Billy Tauzin, R-La., interrupted.

"What's at issue here is that a separate fund was established for these families," he said, pounding the table. "We are hearing from families that their needs are not being met."

Controversy over the fund was one factor in Healy's resignation.

Donations to the Red Cross usually go to a general disaster relief fund. But Healy took the unusual step of setting up a separate relief fund for the terrorist attacks.

Two widows who lost their husbands in the World Trade Center attacks described for lawmakers the bureaucratic maze they have faced in securing some of the $1.2 billion raised so far by various charities.

A tearful Elizabeth McLaughlin, of Pelham, N.Y., said she has had to construct an 18-page spreadsheet just to keep track of the different aid requirements as she cares for her nine-month-old son.

"I don't think contributors to the various September 11th funds thought that their donations would be caught up in so much red tape and become a source of frustration to families," McLaughlin said.

Both McLaughlin and New York Attorney General Eliot Spitzer told the panel that charities need to adopt a uniform application. Spitzer also urged Congress to pressure the charities to complete a computer database that will help coordinate donations and to better disclose fund-raising practices.

Earlier Tuesday, the Red Cross said it may extend cash assistance to help victims and their families pay bills beyond the customary three months -- to six months or possibly longer.

Since Sept. 11, 25,000 families have received those benefits, averaging about $25,000 per household. Some 500 households have turned down Red Cross aid, Red Cross vice president Bill Blaul said.

The Liberty Fund has paid out a total of $121 million in direct cash assistance to victims and their families. Red Cross officials said that was more than any other charity.

It also has spent $6 million on administrative costs and overhead and will spend $50 million from the fund to set up a strategic blood reserve. Another $14.7 million has been spent on community outreach, such as brochures on anthrax and mental health counseling available for children.

And the charity is establishing a $264 million reserve to pay for future terrorism-related response -- such as the ongoing anthrax threats -- once the needs of the World Trade Center and Pentagon victims are met, Blaul said.

-- Anonymous, November 06, 2001