Red Cross Seeks Money to Aid Hurricane Victims

By Elizabeth Schwinn

Tapping into the $20-million disaster-relief reserve fund, the American Red Cross has begun what it says is its largest response in history for a single U.S. natural disaster to help cope with the aftermath of Hurricane Katrina, a hurricane that cut across the tip of Florida late last week before battering states along the Gulf Coast Monday.

Far more money will be needed, the Red Cross estimates, and it has already started calling companies that have donated in the past. It has sent e-mail solicitations to 800,000 people who have previously given to the charity online. Office Depot has already committed $1-million, and the Anheuser-Busch brewing company is shipping 300,000 cans of water to the regions harmed by the hurricane. The Red Cross is also asking companies to set up employee and customer-giving programs, and is considering a direct-mail appeal -- something it rarely does to raise money for disaster aid.

Tsunami Gifts

The pleas for help come even as hundreds of millions of dollars that were designated for another relief effort sit untouched. As of June 30, the agency had spent just $110-million of the $556-million it received this year for relief tied to the South Asian tsunamis. Much of the remaining money will be spent on long-term relief efforts in the countries affected. But $77-million remain uncommitted.

The need in South Asia is huge, Red Cross officials say, and the extra money will be put to good use. But at the same time, it is important to have plenty of cash on hand in a crisis, says Kara Bunte, a Red Cross spokeswoman. "In disaster relief, you can't wait," for money to come in, she says.

Tsunami-relief donations continued to pour in even after the Red Cross announced it had collected enough money for the relief efforts. But the Red Cross cannot touch tsunami-relief money because donors earmarked their gifts for that disaster. Money in the disaster-relief fund, by contrast, can be spent on emergency aid as needed.

Until 2001, the organization's policy was to ask donors to give to its general disaster-relief fund so that money raised could go wherever it was needed. But after the 2001 terrorist attacks, donors, lawmakers, and others complained that that policy meant money they donated was not necessarily going to help the victims of the attacks. The Red Cross eventually announced that it would spend all the money donated for a specific cause on that cause. In 2002, it instituted a policy of announcing when it had received adequate donations for a particular disaster.

Storm Aid

The Red Cross says it can't yet estimate how much money it will need for recovery efforts this time. Last year, it spent $109-million coping with a tropical storm and four hurricanes that ravaged Florida and parts of the United States. Insurance companies estimate that they could face up to $9-billion in claims for this hurricane.

Even without access to the tsunami money, the Red Cross is far better off than at the same time last year. When Hurricane Charley cut a deadly swath across Florida in 2004, the charity's disaster-relief fund held a mere $800,000.

"We do have a little bit more of a cushion than we did last year, but as always, a catastrophic disaster like Katrina can totally wipe that out," says Ms. Bunte of the Red Cross. "There will be a very large sheltering operation for weeks, if not months."

In response to Hurricane Katrina, the Red Cross so far has opened 200 shelters for people escaping the path of the storm and sent more than 200 emergency vehicles to provide meals, bottled water, and other relief supplies.