Fact check: Does Red Cross really spend only 9% of its money on charity? – The Columbus Dispatch

The claim: American Red Cross pays its CEO nearly $652,000 while spending $0.09 of every dollar it collects on "people in need."

The claim has been floating around on social media and in forwarded emails for years, but it recently started gaining traction again on Facebook.

The viral post, shared in April 2018 by Mike Totman, shows a woman who is identified as Marsha Evans and says she is the president and CEO of the American Red Cross. It goes on to state her alleged salary and explain how the nonprofit spends its money.

This is not true.

Evans left the nonprofit in 2005. Gail McGovern is the Red Cross current CEO. Shes led the nonprofit since 2008. Her annual salary in 2018 was $694,000.

USA TODAY has reached out to Totman for comment.

Red Cross spending

So, how does the charity spend its money?

Nonprofit groups in the United States have to publicly report what they earn and where they spend it.

The most recent data for the Red Cross comes from its fiscal year ending June 30, 2019. It reported spending 88% (about $2.7 billion) of its $3 billion budget on "program services."

Most of that money, about $1.74 billion, went to what the Red Cross labeled "biomedical services." Thats the part of the charity that collects donated blood and sells it to hospitals and health-care providers. About $667 million went to disaster relief services, according to the annual report.

Selling donated blood is a standard practice, according to a Slate article called "The Business of Blood." Most charities that collect blood will sell it to cover some of their costs. The groups financial statements show more than half the biomedical dollars ($921 million) went to employee wages and benefits.

And what about McGovern? How is she paid?

"Red Cross President and CEO Gail McGoverns salary and benefits are paid from general operating funds," spokesperson Jenelle Eli said. "General operating funds include all revenue and contributions not restricted by donors, contracts or specific program costs."

Those funds amounted to about $103 million, according to the 2019 financial statements.

The American Red Cross also states on its website that "no portion of the compensation paid to McGovern comes from contributions by the public to help people affected by disasters."

What percentage of my donation goes to program services?

"That 0.09 cents statistic is not and has never been accurate," Eli said. "The American Red Cross is proud that an average of 90 cents of every dollar we spend is invested in delivering care and comfort to those in need."

Charity Navigator, a watchdog group that grades charities on their financial health, transparency and fundraising costs, estimated the Red Cross spends almost 90% of its "total expenses spent on the programs and services it delivers."

The Red Cross overall ranking on Charity Navigator is three out of four stars and an overall score of 89 out of 100.

A charity that spent 9 cents of every dollar raised on its programs wouldnt get a good score, Charity Navigator spokesman Kevin Scally said. The nonprofit is working on a new grading system that would automatically fail charities that dropped below 50 cents on the dollar.

"I think its been kind of a long-established golden rule of nonprofits that you want at least 70% going toward your stated cause," Scally said.

A 2014 investigation by NPR and ProPublica said the Red Cross' percentage could be closer to 70%.

The article called the claim by the Red Cross that "91 cents of every dollar that's donated goes to our services" misleading. Fundraising expenses over five years, according to documents reviewed by the news outlets, ranged from 14%-26% of every dollar the Red Cross raised.

Our ruling: False

The post gets both the name and annual salary of the CEO wrong. And though there is some evidence that the Red Cross has spent less than it says on program services over the years, there is no evidence to suggest its ratio is anywhere near as low as 9 cents on the dollar.

Our fact-check sources:

American Red Cross - "Red Cross Statement on Inaccurate Viral Email on Charity CEO Pay"

American Red Cross - "THE AMERICAN NATIONAL RED CROSS Consolidated Financial Statements June 30, 2019"

American Red Cross - How the Red Cross Spends Your Donations

ProPublica - "The Red Cross CEO Has Been Serially Misleading About Where Donors Dollars Are Going"

Slate - "The Business of Blood Does the Red Cross sell your frozen plasma?"

Charity Navigator - "American Red Cross"

Our fact check work is supported in part by a grant from Facebook.

astaver@dispatch.com

@annastaver

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Fact check: Does Red Cross really spend only 9% of its money on charity? - The Columbus Dispatch