In recent years many nations around the world have witnessed a boom in the development of civil society, posing enormous challenge to the existence of old-school non-governmental organizations (NGOs), whose bloated bureaucracy and high administrative costs have often come under ridicule.
An investigative report jointly published last month by Justin Elliott, a journalist from the independent non-profit newsroom ProPublica, and Laura Sullivan from the National Public Radio suggested that a significant portion of the donations raised by US Red Cross for the Haiti earthquake back in 2010 has gone missing, and that a lot of the money has been spent in the wrong place.
According to the report, the US Red Cross had raised a total of half a billion dollars in donations, and had promised that 91 percent of the money would be spent on rescue and relief efforts.
However, the two reporters found that only 60 percent of the money was actually spent on Haitian earthquake victims, a large amount of which had been wasted, while 9 percent was turned over to the International Red Cross, and another 24 percent was used for administrative expenses.
The US Red Cross once promised that it would build 700 homes in Haiti with independent toilets and bathrooms before the end of 2013. However, so far only 6 have been completed, and this “half a billion US dollars for 6 homes” saga has grabbed international headlines.
After the scandal was brought to light, the US Red Cross blamed the mistake on the “land problem” in Haiti, claiming that the local government had imposed various restrictions on land use, thereby causing severe delays in their home construction program. However, some suspected that the US Red Cross was lying as other international NGOs have already built 9000 homes in the disaster area.
So what is the true reason behind the US Red Cross’s failure to deliver its promise? Apart from its bureaucratic practices, its lack of trust in Haitian workers is another important and deep-rooted factor.
Judith St. Fort, director of the US Red Cross who oversees the building program, once openly cast doubts on the competence of Haitian construction workers. On the other hand, most of the staff of the US Red Cross don’t speak French nor Creole, and a lot of the construction works have to be outsourced through middlemen.
All this has not only led to a rise in costs, but also made oversight more difficult.
In fact the US Red Cross has a poor record in managing its donations. The ways it handled the relief efforts after Hurricane Katrina back in 2005 and Sandy in 2012 have drawn widespread criticism, and Congressional investigation is still underway.
Daniel Borochoff, chairman of the independent organization “Charity Watch”, recently described the books of most NGOs in the US as non-transparent, almost like a “black hole”. Professor Tobias Pfutze of the International University of Florida said the accounts of some NGOs are even less transparent than those of some government departments.
It wouldn’t be an exaggeration to say the traditional NGOs are on the brink of extinction, as internet technologies have given rise to revolutionizing concepts like the “O2O” and “P2P”, and people no longer need to make their donations to natural disaster victims through NGOs, where a lot of money goes to pay staff salaries.
If one day the operating models of Uber and GoGoVan can be effectively applied to relief efforts for natural disasters, it would definitely spell the end of the golden age of large international NGOs like the Red Cross.
This article appeared in the Hong Kong Economic Journal on July 30.
Translation by Alan Lee
[Chinese version 中文版]
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