Tag Archives: Hurricane Sandy

N.Y. Attorney General Pressed Red Cross on Post-Sandy Spending, Then Retreated

(Photo: US Dept of Labor)

Last month we explored the role of the American Red Cross after Hurricane Sandy and the lack of transparency in how the charity spent more than $300 million raised after the storm. Experts criticized the group for not offering a detailed accounting of its post-Sandy efforts.

It turns out New York's attorney general had similar questions for the prominent charity, according to a previously unpublished letter the office sent to the Red Cross.

The office of Attorney General Eric Schneiderman last year asked the Red Cross for much of the same detailed financial information that we sought from the group. But no such information was released.

And when the attorney general's office later came to an agreement with the group about its reporting of financial information after disasters, there were no requirements for anything beyond summary data. That means that it will continue to be difficult to assess the response of the Red Cross to future disasters.

The attorney general's office requested information from the Red Cross starting soon after Sandy in late 2012 and managed to get some answers.

But in a June 2013 letter, which we obtained through a Freedom of Information Law request, the head of the attorney general's charities bureau expressed "continuing concerns about fundraising and relief efforts conducted by the American Red Cross in response to Hurricane Sandy."

The letter asked the Red Cross to:

  • detail its post-Sandy spending including "how much was spent on personnel, supplies, transportation, fuel, rental fees, professional fees, administrative costs, and any other relevant categories."
  • separate figures it commonly combines as "spent or committed," a practice that makes it impossible to determine how much aid has been distributed versus merely promised.

No such details have been released. The Red Cross didn't provide the breakdowns when we asked for them either. (Neither the Red Cross nor Attorney General's office would say whether the numbers were provided privately.)

Several months later, in October, Schneiderman announced an agreement with the Red Cross covering, among other things, how the group will release information after future disasters. But the deal does not specify how much detail the Red Cross must provide in its post-disaster financial reports. Instead, it simply requires the Red Cross to regularly report  summary financial information.

"The central question that drove the attorney general's correspondence with the Red Cross -- what's going on with the Sandy money? -- was thrown out the window in the final agreement," said Doug White, a nonprofit expert who directs the fundraising management program at Columbia University.

The Office of the Attorney General did not respond to requests for comment. When we originally reported on the lack of transparency, the Red Cross it issues "regular reports about our spending and programs for disasters such as Sandy."

They declined to comment this time.

While the agreement doesn't require the Red Cross to release much in terms of financial details, the organization did agree to stop referencing a particular disaster in fundraising appeals once it determines it has raised enough money to meet the need.

If you have experience with or information about the American Red Cross, including its operations after Sandy, email justin@propublica.org

Long After Sandy, Red Cross Post-Storm Spending Still a Black Box

Beach 92nd Street, Two Days After Sandy

Following Superstorm Sandy, donors gave $312 million to the American Red Cross. How did the aid organization spend that money?

A year and a half after the storm, it's surprisingly difficult to get a detailed answer.

Red Cross officials told ProPublica the organization has spent or committed $291 million on Sandy through the end of February 2014. But the organization has not given a breakdown showing how, where, and when the money was spent.

"The Red Cross is too big and too important to be allowed to be this secretive," said Doug White, a charity expert who has written extensively on nonprofit finances.

White said such a lack of transparency is common among charities. Like other non-profits, the Red Cross is required to disclose only top-line numbers on its fundraising and spending, which it publishes in an annual report and a standard tax filing.

But the Red Cross stands out both for the scale of its operations and the unique role it plays in domestic disasters.

It is the first call for many people moved by images of a tornado, flood, or fire ravaging a community. The organization is also a strange hybrid: a nonprofit charity, it also has a congressional charter. It gets little money from the federal government but it has an official role doing disaster relief in partnership with the Federal Emergency Management Agency. President Obama is its honorary chairman.

In contrast to the Red Cross, there is a wealth of information available about Sandy relief money that has flowed from the federal government to states and towns. (That has allowed for attendant media scrutiny.)

Despite its beloved name, the Red Cross has had a rocky decade and a half.

Allegations of mismanagement of funds and poor performance followed both Sept. 11 and Katrina.

A series of CEOs were forced out 2014 one after Sept. 11, another after Katrina, and a third following an affair with a subordinate. Congress in 2007 imposed a set of governance reforms, including reducing the size of the organization's 50-member board.

Appointed as CEO in 2008, former AT&T executive Gail McGovern has had a longer run than her predecessors and won praise as a competent manager. But the Red Cross faced familiar criticism after the 2010 Haiti earthquake.

The Red Cross weathered more criticism almost immediately after Sandy hit in October 2012. As donations poured in, partly on the strength of appeals from Obama and a star-studded televised benefit concert, residents on Staten Island and the Rockaways complained the Red Cross was missing in action.

When it comes to its Sandy spending, the Red Cross gives a dollar-figure breakdown in only the broadest of categories: Food and Shelter, Individual Casework, Housing and Community Assistance, and Relief Items are the four biggest.

The Red Cross also gives raw numbers of services provided in a different set of categories: emergency vehicles activated; relief items distributed; overnight stays in shelters provided; health and mental health contacts provided; meals and snacks served; and workers and volunteers mobilized.

Because the spending isn't categorized in the same way as the numbers of services provided, one can't calculate, for example, how much it cost for the Red Cross to provide 74,000 overnight shelter stays or what exactly it purchased for the $85 million it spent on individual casework.

Citing its finance tracking system, the Red Cross said it could not match up the categories for us.

"It would be helpful to know where people received assistance and how much, and when," said Ben Smilowitz, the founder of the Disaster Accountability Project, who has tracked the Red Cross since Hurricane Katrina. "You might actually see that some neighborhoods received more than others in equal need."

"Aggregate data does not tell you a whole lot," Smilowitz added. "If the data was open, they would be inviting a lot of scrutiny."

Red Cross spokeswoman Anne Marie Borrego said the group continually updates its website with stories about how it is spending disaster donations.

"The Red Cross issues regular reports about our spending and programs for disasters such as Sandy," she said.

Another obstacle to tracking Red Cross spending lies in the phrase "spent or committed." The Red Cross generally combines the two activities in its totals. The amount that it commits, rather than spends, can be considerable. When the Red Cross "commits" funds, that typically means it has made a decision to grant money to a smaller organization, such as a local soup kitchen. The Red Cross then usually parcels out the money over time. The money hasn't immediately been put to work helping victims.

Critics argued after Sandy the Red Cross wasn't spending donor dollars quickly enough. But the way the organization releases figures makes it impossible to judge how fast money has been getting out the door. The Red Cross declined to give a breakdown over time of money spent and committed versus money spent.

Among other new details in response to ProPublica questions:

    • The Red Cross counts as Sandy spending some amount of overhead -- specifically a portion of the annual cost of maintaining "permanent disaster response infrastructure." It wouldn't say how much money.
    • While the Red Cross says it spends an average of 91 cents of every dollar on programs and services, a bit less may go to actually help victims. That's because, the Red Cross told us, it keeps 9 percent of total Sandy donations for "general operations support" even on the $78 million it has passed on to other organizations, which in turn have their own overhead and other expenses.
    • The Red Cross said it limits a grantee's administrative costs to just 3 percent because the groups it gives money to are already up and running. The 3 percent allowance "is designed to account for the incremental cost" of particular Sandy projects, the Red Cross told us.
    • The Red Cross acknowledged that it produces after-action reports following disasters like Sandy to figure out what went well and what didn't. But the organization said they are for "internal use" and declined to provide copies.

If you have experience with or information about the American Red Cross, including its operations after Sandy, email justin@propublica.org

Sandy Survivors Heckle Corporate Shill Chris Christie, Christie Flips Out

(Original Photo via IowaPolitics.com)

Voters, furious over the corruption, greed and bullying of New Jersey Governor (and local Corporate Fanboy) Chris Christie, demanded answers of the patronage-peddling shame of the Garden State for his severe misappropriation and political manipulation of Sandy recovery funds.
As one angry resident yelled, Christie "spent two-and-a-half times as much money on advertisements with himself in them … than on small businesses affected by Hurricane Sandy." The governor, who has a widely-known reputation for bullying tactics that include harassing and belittling both local voters and media who question his runaway agenda of patronage and corporate favors, is shown scrambling in the video below to get back to his bully ways. Alas, there's nothing more sociopathic than a bully who's finally been called out on their bunk. David Edwards breaks down the action. --MJ

Occupy Sandy: Building Community and Worker Power in Far Rockaway

fuerza center worker co op far rockaway queens ny occupy sandy

“When the workers get together and decide how to distribute the income in such an enterprise, would they give the CEO $25 million in stock bonuses while everybody else can barely get by?”

Abandoned by the city's elite, some residents in the Far Rockaway section of Queens are building a daring new alternative. Above: Community members in Far Rockaway gather for one of the early meetings about cooperatives. (Photo: WNV/Peter Rugh)

Abandoned by the city's elite, some residents in the Far Rockaway section of Queens are building a daring new alternative. Above: Community members in Far Rockaway gather for one of the early meetings about cooperatives. (Photo: WNV/Peter Rugh)

Three and a half months ago, the walls upstairs at the Church of the Prophecy in Far Rockaway, a low-income coastal neighborhood of New York City, were covered with maps of where help was most needed. The church was a hub for the Occupy Sandy relief effort after Hurricane Sandy. Now, nearly five months after the hurricane struck, the maps have been replaced by posters extolling the virtues of collective struggle and art made by neighborhood children enrolled in Occupy Sandy’s twice-weekly after-school program.

“The kids missed a month and a half of school,” explained Luis Casco, a member of the church’s congregation who pulled strings to help move Occupy into Far Rockaway. The after-school program was, in part, his brainchild. “We figured we’d start helping the kids and we could win over their parents. Then we could actually start bigger projects,” he said.

One of those bigger projects is a worker-run cooperative initiative, organized by Occupy Sandy and supported by the Working World, an organization that specializes in incubating collectively owned businesses.

The initiative is well suited to Far Rockaway because worker-run enterprises have a history of flourishing in environments of economic distress or political upheaval. In 2001, when Argentina defaulted on its international loans and the country’s ownership class fled, Argentines took over abandoned factories and established networks of producers and distributors. In Venezuela, worker-run cooperatives were at the heart of the vision for 21st-century socialism, and Hugo Chavez’s administration helped create tens of thousands of collectively owned businesses over the last 14 years. Most notably, Spanish workers in the Basque region created the Mondragon Corporation, the world’s largest federation of cooperatives, during the Franco dictatorship in the 1950s. Today more than 250 enterprises operate under the Mondragon banner, and the federation, which spans 77 countries and employs 83,000 workers, has been widely praised.

“Collective approach pays big dividends,” read a headline about Mondragon in The Financial Times last year, while the New York Times noted the “use of workers’ share capital and loans” has enabled the federation to remain stable through vacillations in global markets, including the ongoing financial crisis.

While Mondragon shows what is possible down the line, Far Rockaway residents are at the very beginning of the process. At one of the crowded early meetings of the cooperative initiative, children and adults buzzed about, fraternizing with disposable plates of food in their hands as extra folding chairs were arranged. Several parents whose children attended the after-school program arrived, bringing their friends and neighbors along. Most were Spanish-speaking immigrants who, having spent their lives working for someone else, were eager to learn more about cooperatives.

Many in Far Rockaway lost their jobs when Hurricane Sandy rendered commutes impossible for flooded local businesses. For those without U.S. work papers, finding new employment has been difficult.

“It’s really hard to find a new job when you don’t have papers,” Casco explained. “Their homes were destroyed, they don’t have the resources to go to welfare and FEMA ain’t helping them.”

Luis Casco, a resident of Far Rockaway, has been one of the main organizers of community initiatives post-Sandy. (Peter Rugh / WNV)

Luis Casco, a resident of Far Rockaway, has been one of the main organizers of community initiatives post-Sandy. (WNV/Peter Rugh)

Others, such as Olga Lezama, managed to keep their jobs after the storm, but the prospect of holding on to the profits of their labor has piqued their interest. Lezama currently works as an upholsterer for a high-end furniture company. By Lezama’s calculations, her boss makes approximately $500 every hour off the furniture that she and her co-workersupholster, while she earns roughly $100 a day.

“It hurts my feelings and my pockets,” she said. “My job and my efforts and my everything goes to them.”

By her side was her husband, Carlos Lezama, a carpenter who specialized in cabinets. The pair hope to work with others in the community to form a home-design cooperative, a service in high demand after the storm, which ruined the ground floors of most of the region’s low-lying bungalows.

“We go to stores and buy cheap furniture, cabinets and stuff, and we’re wasting our money,” Lezama said. “In two months, the cabinet is no good. So we have go buy it again. Our people deserve good stuff.” 

Workers controlling capital

Occupy Sandy has allocated $60,000 of the $900,000 it raised in the initial flood of generosity following the storm toward forming cooperatives, an initiative they hope to spread across storm-affected areas if it proves successful in Far Rockaway. The Working World, an organization that provides zero-debt micro-finance loans to new cooperatives, has offered to provide monetary support, but for now the organization is mostly lending advice and training. At one of the early meetings, Brandon Martin, The Working World’s founder, showed the crowd a slideshow of other projects the organization has helped launch. Images of a beekeepers’ cooperative in the countryside of Nicaragua and a shoe factory in Buenos Aires glowed on the wall behind Martin as he outlined the benefits of workers sharing resources and making decisions democratically.

“A cooperative is workers controlling capital, instead of capital controlling workers,” said Martin. “It’s about reorganizing the economy around who’s really in control.”

The Working World finances itself by collecting a small percentage of the profits that member collectives generate, money that the organization reinvests in establishing new enterprises. Martin explained that the idea originated in ancient Sumeria where the word for interest was the same as the word for calf.

“If the cow I lent you has babies,” explained Martin, “I loaned you my cow, so I can have some the babies. That would be the interest.”

But if the cow was sterile, the Sumerians didn’t collect interest. The same works for Working World’s loans today. The organization only collects once a cooperative generates a steady profit, a model that avoids forcing people into debt if their business fails.

Interest grows

The Sumerians, for their part, eventually altered their lending practices such that they collected interest regardless of the outcome. The legacy of that shift is still with us today; few in Far Rockaway can call their surroundings their own. Walk through the neighborhood in the middle of a business day and you’ll see iron grating pulled down over storefronts and plywood covering the windows of large shopping complexes. Those stores that are open often bear the insignias of chain outlets that carry money out of the neighborhood and into the coffers of large corporations. Worker-run cooperatives, in contrast, could offer a way for community members to sell the products of their labor without selling their labor itself — a shift that would keep capital within the community and cash in the pockets of workers.

A handmade sign advertises the cooperative workshops in the window of Church of the Prophecy. (Peter Rugh / WNV)

A handmade sign advertises the cooperative workshops in the window of Church of the Prophecy. (WNV/Peter Rugh)

At the following cooperative meeting a week later, the crowd had grown. People discussed plans for a scrap metal business and a cleaning-workers’ collective. One man pulled a citizens’ band radio out of his winter coat, explaining that drivers in the taxi cooperative he hoped to form could use it to communicate. He’d been doing research; nine other drivers were needed to secure an operating license from the city.

There is obvious enthusiasm in the neighborhood for worker-run enterprises. But are there limits to what these businesses can achieve while embedded in a broader economic framework of competition and exploitation? And does the focus on cooperatives represent a shift in direction for Occupy, one that veers away from a direct fight for systemic transformation?

“We can’t fight the city,” one Occupy Sandy organizer confided. “But we can build co-ops.”

Building an alternative

Richard Wolff, professor of economics at the New School and author of Democracy at Work, a study of cooperative businesses, argues that forming cooperatives can be the first step in enacting a sweeping social and economic shift. Wolff envisions a transformation, similar to the social shift from feudalism to capitalism, in which cooperatives replace corporations and goods are distributed through a democratically planned economy.

The cooperatives that Wolff talks about, and the ones that Occupy Sandy is aiming to establish, are more accurately known as worker self-directed enterprises: businesses that organize democratically collective ownership at the point of production.

“When the workers get together and decide how to distribute the income in such an enterprise, would they give the CEO $25 million in stock bonuses while everybody else can barely get by?” Wolff asks rhetorically.

He stresses the difference between the productive and distributive side of economies, explaining that worker-run cooperatives are the often-overlooked prerequisite for achieving an egalitarian distribution of wealth and resources. “There is the question of what exactly an alternative to capitalism is,” he explains. “I’ve stressed worker-self-directed enterprises as a different way of organizing production.” On the other hand are markets, which distribute the fruits of production. Wolff believes that the mistake of many 20th-century socialists was to imagine that the elimination of markets would create social egalitarianism, even though production had not yet been reorganized into a democratic model.

Given the pull between the productive and distributive side of economies, cooperatives must form networks to survive. Collaboration between networked enterprises allows these businesses to curb market pressures and, if the network manages to spread, to gain political power.

As Brandon Martin emphasizes, also, workers in new cooperatives must labor long hours to meet production quotas, just like with any other business, since their enterprise still has to compete for a market share. “Can one cooperative change that?” asks Martin. “No. But a cooperative economy might.”

Olga Lazema, however, isn’t thinking about the theoretical potential for cooperatives to challenge capitalism. She’s imagining the positive possibilities for her own neighborhood.

“A lot of people, their houses went like nothing,” she said, referring to Sandy’s destruction. “They have nothing. We could go there, build a small kitchen or whatever they need. Why not?”

--Peter Rugh--

This article was originally published by Waging Nonviolence.

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