Red Cross refuses to disclose how it spent Hurricane Sandy money, says it's a 'trade secret'

One of the most well-known charities in the world is being intentionally elusive about how it spent more than $300 million in donations it received following Hurricane Sandy. The independent news group ProPublica says the American Red Cross has repeatedly denied requests to disclose details about how the Sandy money was spent, claiming that this information is a protected “trade secret.”

The Red Cross is so insistent about keeping this information private that it has reportedly hired posh New York law firm Gibson Dunn to fend off anyone who might try to hold the charity responsible for its donation spending. The Red Cross did, according to ProPublica, release some information about Sandy donations to New York Attorney General Eric Schneiderman. But the charity has thus far withheld this information from the public.

“[W]e filed a public records request for the information the Red Cross provided to the attorney general’s office,” wrote Justin Elliott for ProPublica. “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.”

In its defense, the Red Cross claims that disclosing this information would breach the “internal and proprietary methodology and procedures” for how it conducts its fundraising activities. Writing on behalf of the charity, Gibson Dunn’s Gabrielle Levin explained in a recent letter to the attorney general’s office that full disclosure would result in confidential financial information getting leaked, as well as other private information about how the Red Cross conducts its everyday business activities.

“[T]he 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,” added Levin, comparing the work of the Red Cross to a for-profit business.
 

Is the Red Cross a charity or a business?
One might expect this type of language to come from a business selling goods or services. But the Red Cross is supposed to be a non-profit charity, which makes its use of the word “competitor” in this context somewhat disconcerting. Is this well known charity actually using donation money for other purposes besides helping those in need? It is honestly difficult to say, since Red Cross officials refuse to be transparent about how funds are spent.

The whole “trade secret” shtick is also a bit dubious, and something that Doug White, a non-profit expert who directs the fundraising management program at Columbia University in New York, says makes little sense in the realm of what the Red Cross does on a daily basis. Withholding financial information from the public, in other words, especially when it involves a major disaster like Hurricane Sandy, demonstrates a disturbing lack of transparency and accountability at the Red Cross.

“Invoking a ‘trade secret’ exemption is not something you would expect from an organization that purports to be ‘transparent and accountable,’” added Ben Smilowitz from the watchdog group Disaster Accountability Project.

The attorney general’s office, however, has affirmed the Red Cross’s position. According to ProPublica, state officials have determined that key portions of the internal documents that the Red Cross has sought to redact contain proprietary information that would “put the Red Cross at an economic disadvantage.”

In response to questions about how the Red Cross is paying for representation by Gibson Dunn, the charity was quick to deny that Sandy money is in any way being used. Meanwhile, ProPublica is still seeking the swift release of all Red Cross documents not deemed to contain private “trade secrets.”