By Justin Elliott / ProPublica
Just how badly does the American Red Cross want to keep secret how it raised and spent over $300 million after Hurricane Sandy?
The charity has hired a fancy law firm to fight a public request we filed with New York state, arguing that information about its Sandy activities is a “trade secret.”
The Red Cross’ “trade secret” argument has persuaded the state to redact some material, though it’s not clear yet how much since the documents haven’t yet been released.
As we’ve reported, the Red Cross releases few details about how it spends money after big disasters. That makes it difficult to figure out whether donor dollars are well spent.
The Red Cross did give some information about Sandy spending to New York Attorney General Eric Schneiderman, who had been investigating the charity. But the Red Cross declined our request to disclose the details.
So we filed a public records request for the information the Red Cross provided to the attorney general’s office.
That’s where the law firm Gibson Dunn comes in.
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.
The documents include “internal and proprietary methodology and procedures for fundraising, confidential information about its internal operations, and confidential financial information,” wrote Gabrielle Levin of Gibson Dunn in a letter to the attorney general’s office.
If those details were disclosed, “the 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,” Levin wrote.
The letter doesn’t specify who the Red Cross’ “competitors” are.
The Red Cross is a public charity and occupies a unique place responding to disasters alongside the federal government.
Among the sections of the documents the Red Cross wanted redacted was “a two-line title” at the top of a page, one line of which was “American Red Cross.”
The attorney general’s office denied that redaction, writing that it “can not find disclosure of this two line title will cause the Red Cross any economic injury.”
Asked about the effort to have Sandy materials kept secret, Red Cross spokeswoman Anne Marie Borrego told ProPublica: “We sought to keep confidential a small part of the letter [sent to the AG] that provided proprietary information important to maintaining our ability to raise funds and fulfill our mission.”
Doug White, a nonprofit expert who directs the fundraising management program at Columbia University, said that it’s possible for nonprofits to have trade interests 2014 the logo of a university, for example 2014 but it’s not clear what a “trade secret” would be in the case of the Red Cross. He called the lawyer’s letter an apparent “delaying tactic.”
Ben Smilowitz of the Disaster Accountability Project, a watchdog group, said,
“Invoking a ‘trade secret’ exemption is not something you would expect from an organization that purports to be ‘transparent and accountable.'”
In agreeing to withhold some details, the attorney general’s office found that portions of the documents the charity wanted to redact “describe business strategies, internal operational procedures and decisions, and the internal deliberations and decision-making processes that affect fundraising and the allocation of donations.”
The attorney general’s office also found “that this information is proprietary and constitutes trade secrets, and that its disclosure would cause the Red Cross economic injury and put the Red Cross at an economic disadvantage.”
Another section the Red Cross wanted redacted was a paragraph that noted the charity’s “willingness to meet with the [Office of the Attorney General.]” The attorney general’s office denied that part of the request
Borrego, the Red Cross spokeswoman, declined to say how much the charity is paying Gibson Dunn but said, “we do not use funds restricted to Superstorm Sandy to cover those expenses.”
We’ll let you know when we get the documents we asked for 2014 at least the parts that aren’t trade secrets.
If you have experience with or information about the American Red Cross, including its operations after Sandy, email justin@propublica.org
Related articles: Read our other coverage about how the Red Cross’ post-storm spending on Sandy is a black box.
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The American Red Cross has always had an allergic reaction to the terms ” Openness and Transparency.”
Their governance excludes meaningful local control of local Chapters. Hiring and firing of Local Chapter Executive Directors is done nationally, not locally. That ensures blind loyalty of the local directors to the National Board, not to local voices and needs.
Locally ,funds raised for local fire victims famously were not used for that purpose. The Red Cross refused for several month to disclose the numbers. Rather than being honest–and a saying they try to establish priorities nationally and base funding on a national needs model [nothing wrong with that at all] they use local disasters like Jerry Lewis used individual MS victims as Poster Children for fundraising.
Nothing like a good fire or tornado for fundraising. While the national need may be for a less-popular but objectively more needed project.
I get that—but honesty works much better in the long haul. And the Red Cross never gets that message. TONE DEAF in every way at the national level.
I refuse to support the Red Cross for these reasons.
Our local Red Cross has also provided a soft landing for local politicos in between gigs- Tony Young and Ronne Froman both put in time as CEO’s. Young went from a $75K city council salary to a base pay of $190K at Red Cross. He succeeded Joe Craver whose base salary was $208,000 after two 3 percent cost-of-living increases since coming on board as chief executive in 2007.
And in addition to all these, Red Cross has a long-standing history of discrimination in who they chose to help.
But, Mr. Lundin, you seem to be painting Jerry Lewis with the same brush by using him as an example. I think that’s not quite fair; to my knowledge, MS never had the kinds of scandals as ARC.