The American Red Cross Spends Only About Five Percent of Donations on Helping Victims of Disasters Because That's All Federal Law Requires of a Charity - The Red Cross Doesn't Want to Spend Any More Than That Because There is No Money to be Made in Helping Disaster Victims

The Red Cross says it spends an average of 91 cents of every dollar on "programs and services." This is the lie that they repeat over and over again. In fact, the truth is opposite of what they claim. The Red Cross spends about 91 cents of every dollar on operating expenses (indirect costs) and about 5 cents of every dollar on grants for its tax-exempt purposes (direct costs).

The Red Cross allocates operating costs under the category "program service expenses," giving donors the perception that this is the amount awarded in grants to help victims of disasters. However, operating expenses (overhead) are not costs for funding activities directly related to the organization's tax-exempt purposes. Operating expenses are indirect costs, which include management services, salaries and other compensation, fundraising events, advertising and promotion, office expenses, information technology, conferences, conventions, meetings, occupancy (mortgage/rent, utilities, etc.), lobbying, insurance, travel, and other expenses.

Scripps Howard News Service reported in May 2012 that chief executives of nonprofit organizations sign their annual Form 990s to the IRS promising “under penalties of perjury” that the information provided is “true, correct and complete.” However, legal action for a false filing is extremely rare.

“They are fudging the numbers, and there is great incentive to fudge the numbers,” said Christine Manor, a certified public accountant from Rockville, Md., who advises GuideStar and other nonprofits in how to report to the IRS. “Why does anyone think we are so stupid?”

Yet the problem has been known for many years, at least since the mid-1990s, when the IRS began compiling and publicly releasing data from the Form 990 income-tax statements that most large nonprofits are required by law to file annually.

“This has been a long-standing area of concern,” said Washington, D.C., attorney Marcus Owens who was director of the IRS’ Exempt Organizations Division for 10 years. 

The Journal of Academy of Business and Economics published a study in February 2003 on the intentional misreporting of "program expenses" by nonprofit organizations. The study examined the motivation of nonprofit organizations to use IRS Form 990 to manipulate financial results by allocating indirect costs as part of the expense composition of "program services" (as opposed to costs for funding activities directly related to the organization's mission).

Why would a nonprofit misreport "program service expenses"? When reviewing IRS Form 990s, donors judge organizations reporting a higher proportion of total expenses classified as "program services" or "program expenses" as more likely to use donations to fund activities directly related to the mission rather than on indirect costs associated with operating the charity. In other words, donors likely perceive high amounts of total expenses devoted to "program services" as indicative of an organization's use of contributions to support program service activities.

To make matters worse, online watchdogs like Charity Navigator use a nonprofit organization's "program expenses" to rate the charity, so the higher the "program expenses," the better the rating. On its website under "How Do We Rate Charities' Financial Health?," Charity Navigator states:

Charities exist to provide programs and services. They fulfill the expectations of givers when they allocate most of their budgets to providing programs. Charities fail givers expectations when their spending on programs is insufficient. To evaluate a charity's program expenses, we divide its program expenses by its total functional expenses. Charity Z spends $2.5 million on program expenses, compared with its overall operating budget of $3.5 million. Thus, Charity Z spends 71.4% on program expenses.

The following are excerpts from the February 2003 study, "Indirect cost allocations and the incentive to report high program service expenditures in Form 990: an examination of donors' perceptions":

As an overseer of the nonprofit sector, the government has sought to ensure that nonprofit organizations have not engaged in activities that have violated their tax-exempt status. To fulfill this duty, the federal government currently requires most tax-exempt nonprofit organizations (501(c)(3) organizations) to file a yearly informational return, the Form 990.

The Internet presence of Forms 990 has provided nonprofits with increased incentives to report high program service expenditures. Organizations can artificially inflate these expenditures by allocating large amounts of indirect costs to program services.

An experiment investigating donors' perceptions regarding program services and indirect cost allocations finds that nonprofits' attempts to mislead donors through cost allocations may succeed, even when signs of potentially manipulative allocations appear on functional expense statements. Donors possessing financial analysis skills may, however, detect these attempts, suggesting that web sites may need to emphasize a careful examination of the expense composition of program services.

Despite Form 990's role as one of the most commonly used sources of nonprofit financial information today, many in the nonprofit field fear that the informational return may mislead donors.

One area of special concern lies in the reporting of program service expenditures and the use of cost allocations to artificially inflate their magnitude.

This paper discusses an experiment conducted to investigate donors' perceptions of potentially manipulative indirect cost allocations reported in Form 990. In providing a preliminary indication of the likely success or failure of organizations' attempts to mislead donors through cost allocations, the paper offers some practical suggestions for web sites housing Forms 990.

In its reporting of organizational expenses, Form 990 uses one of three categories to classify all expenses:

1. program services

2. management and general

3. fundraising

Because of the increased accessibility of Forms 990, nonprofit entities face incentives to disclose high program service expenses and low management and fundraising expenses (overhead) to ensure a donor's favorable impression of the organization. Organizations may respond to these incentives by allocating large amounts of indirect costs to the "program service expense" classification to inflate its magnitude, a practice that, according to critics, charitable organizations have committed in the past.

While the IRS encourages organizations to allocate indirect costs among the three expense classifications (program services, management and general, and fundraising), it fails to specify an appropriate allocation method. Further, professional accounting organizations offer only limited cost allocation guidance.

One professional website dedicated to Form 990 preparation advises nonprofit organizations: "If the percentages for either fundraising or management and general appear too high, go back and make sure that your organization used appropriate guidelines when classifying expenses."

A Statement of Functional Expenses included in Form 990 may provide assistance to donors in detecting an organization's efforts to manipulate program service results. This statement reveals the individual expenses, both direct and indirect—comprising total program service, management and general, and fundraising—and reports, in columnar format, the manner in which an organization allocated its indirect expenses among the three expense classifications. Some have maintained that this statement is the most important financial report of a nonprofit organization, since it may disclose unusual cost allocations.

[Editor's Note: The Statement of Functional Expenses was Part III of Form 990 but the IRS moved it to Part IX, essentially burying it near the end of the form—this statement reveals the actual expense composition of the totals appearing in Part I, and, in turn, how each organization allocated its major direct and indirect costs.]

When evaluating the performance of nonprofit organizations, donors and public service agencies rank the ratio of total program service expenditures to total organizational expenditures high in importance. Donors can calculate this ratio from data appearing in Part I of Form 990—this statement reports an organization's revenue sources and the total dollar amounts spent on program services, management and general, and fundraising. Donors likely perceive high amounts of total expenses devoted to program services as indicative of an organization's use of contributions to support program service activities.

The IRS grants nonprofit organizations considerable discretion in their determination of program service, management and general, and fundraising expenditures. It encourages these organizations to allocate its indirect costs among the three expense classifications, although it provides only limited guidance as to the allocation techniques or methods.

Regulators and oversight agencies have long considered the Statement of Functional Expenses of primary importance in revealing questionable cost allocations. However, evidence from this study suggests that disclosure on the functional expense statement of a nonprofit organization's potentially manipulative use of indirect cost allocations to inflate program service expenditures may go undetected, implying that organizations may find it relatively easy to mislead donors using Form 990.

A comment by James A. Day at Charity Navigator demonstrates how the website helps the American Red cross mislead donors:

"The American Red Cross, according to Charity Navigator, gives 92% of donations to programs that help people. That is commendable."

In 2011, the Red Cross awarded less than 1% of revenue in grants for its purpose, to help victims of disasters (it awarded $211 million of the $3.4 billion it received in contributions, transferring 5% from its endowment to meet the minimum required by law).

In 2012, the Red Cross awarded 6.56% of revenue in grants for its purpose, to help victims of disasters (it awarded $224 million of the $3.2 billion it received in contributions).

On IRS form 990 Part 1, line 13, you will find the amount of grants awarded by the Red Cross for the filing year; line 12 is the total revenue. Part IX gives you a breakdown of expenses. Just search "Red Cross form 990 year xxxx" to see what the organization reported for the year.

The Red Cross is a Racket

By Ken Adachi
October 18, 2013

The American Red Cross or the International Red Cross, like the International Monetary Fund (IMF) or the World Bank, is an Illuminati-controlled front organization whose true purpose is completely opposite from their stated purpose.

The IMF tells the world that they are there to "help" counties recover from economic difficulties (which the IMF and World Bank helped to create in the first place), but in reality, the IMF breaks counties and ruins their economies. The same could be said of the Red Cross.

The moment a 'natural' disaster like Hurricane Katrina roars through the southeast, radio and TV spots flood the airwaves seeking monetary donations to be sent to the Red Cross. With heartstring music playing in the background, the radio announcer tells us that the Red Cross is "always there in time of need" and now that the "poor victims of Hurricane Katrina are suffering" with this terrible tragedy, "won't you open your heart" and make a "generous" donation?

Oh Brother, these guys have the science of bilking people down to a fine art!

I can't take the time to get into a long essay about the Dark Side of the Red Cross, but just try to recall what happened after 9-11:

The dust from the World Trade Center collapses hadn't even settled before the call went out immediately from the Red Cross to give blood and money to help the victims and the families of the 'terrorist' attack. Thousands of people gave blood and even more gave millions upon millions of dollars to the Red Cross. The first question that occurred to me when the Red Cross started asking for blood was: "Blood for whom?". Everyone was dead! We knew everyone was dead from the very beginning, so why is the Red Cross asking for blood donations day and night for about a week or more?

The answer is reflective of the true purpose of the the Red Cross: the Red Cross is a disaster racket which is in the business of making money from disasters-especially from engineered disasters. They sell the blood, of course, but they apparently also use the blood for other things which the public is generally not privy to.

And what do they do with the money? For the most part, they keep it for themselves! Recall how the families of the victims of 911 had to badger, harass, and threaten the Red Cross in an attempt to get some 11 million dollars that they would not release to the families-even a year later? And that's what we were told in the media, but how much money did the Red Cross really rake in from 9-11?

The CEO of the Red Cross and other corporate celebrities receive obscene salaries and other big buck perks, while other charities operate on much leaner budgets for use by the charity itself. As I type this short article, I now check my e-mail and find 4 or 5 articles devoted to precisely the same topic, so in order to save time, I'll let others finish the story for me:


To: Editor

Sent: Saturday, September 03, 2005 7:07 AM
Subject: Fw: Red Cross CEO Pulled Down $651,957 in Comp Pkg

American National Red Cross
Top Person: Red Cross President Marsha Evans
Top Salary:* $651,957


"...One charity has stayed above all this for 137 years. The Salvation Army is unique among all U.S. charities for many reasons. Let,s start at the top. Commissioner Todd Bassett receives a salary just $13,000 per year (plus housing) for managing this $2 Billion dollar organization. By comparison, Brian Gallagher, President of the United Way receives a $375,000 base salary (plus numerous expensive benefits) and the Red Cross President Marsha Evans receives $450,000 plus benefits..."

full article:

http://rense.com/general67/redcr.htm

The Red Cross Scam

The Red Cross is a disaster 'racket' in the business of making money from people's misery, especially with totally engineered disasters such as 9/11.

So-called 'charities' are nothing more than a means of extracting even more money from the masses to swell the already overflowing coffers of the mega-rich.

(Editor's Note: This excerpt from John Hamer's book, The Falsification of History: Our Distorted Reality (2012), presents a disturbing image of the Red Cross. I suspect there is much more to be revealed about this outfit.)

By Henry Makow
October 15, 2013

The International Red Cross is an Elite-controlled front organization whose true purpose is the complete opposite from its stated purpose.



KATRINA AND 9-11

In Sept. 2005, Paul Joseph Watson and Alex Jones wrote, "As the aftermath of hurricane Katrina continues to wreak mayhem and havoc amid reports of mass looting, shooting at rescue helicopters, rapes and murders, establishment media organs are promoting the Red Cross as a worthy organization to give donations to. The biggest website in the world, Yahoo.com, displays a Red Cross donation link prominently on its front page. Every time there is a major catastrophe the Red Cross and similar organizations like United Way are given all the media attention while other charities are left in the shadows. This is not to say that the vast majority of Red Cross workers are not decent people who simply want to help those in need".

In fact, the Red Cross has been caught 'red-handed' withholding money in the wake of terrible disasters that require immediate funds. In the name of the 'Liberty Fund' for 9/11 family relief, the Red Cross collected $564 million in donations yet only actually distributed around $150 million.

The then Red Cross President Dr. Bernadine Healy arrogantly proclaimed, "The Liberty Fund is a war fund. It has evolved into a war fund. We must have blood readiness. We must have the ability to help our troops if we go into a ground war. We must have the ability to help the victims of tomorrow." (She resigned under fire in Dec. 2001, and died in 2011. )

On Jan 3, 2005, CNN reported: "Charities swung into action after the September 11 terrorist attacks, raising more than $1 billion. But questions are being raised about where and how and how much of that money is being distributed. Bearing the brunt Tuesday during a hearing of the House Energy and Commerce Committee's oversight panel was outgoing Red Cross President Dr. Bernadine Healy. Healy was hammered by one New York official for the Red Cross' decision to put aside nearly half of the money raised for future needs that may include terrorist attacks. 'I see the Red Cross, which has raised hundreds of millions of dollars that was intended by the donating public to be used for the victims of September 11 -- I see those funds being sequestered into long-term plans for an organization,' New York Attorney general Eliot Spitzer testified. "

LEGACY OF CORRUPTION

In fact the Red Cross has a long, long sordid history of stealing cash donations intended for disaster relief. Following the disastrous San Francisco earthquake in 1989, the Red Cross donated only $10 million of the $50 million that had been raised, and kept the rest.

Similarly, following the Oklahoma City bombing in 1995 and the Red River flooding in 1997 many donations were also withheld. Even as far back as the Korean War, the Red Cross was plundering soldiers' relief packages, the famous 'Red Cross Parcels' from home.

The Red Cross is very adept at stealing money and looting mail and has been exposed in this respect many times but it has been allowed to escape sanctions, punishment or exposure because the organization is so closely allied with and indeed is inextricably linked with the Elite establishment. It is without doubt an organization run by Elite insiders whose purpose is to gather intelligence and steal from the poor, underprivileged and needy to further line the pockets of the rich.

indonesia.jpgSeveral minor charities that were involved with the 2004 Tsunami relief project expressed outrage in public to say that large charities like Red Cross and Oxfam were engaged in secret negotiations that resulted in a large amount of the public-donated money being withheld from those most affected by the disaster. See Red Cross Hasn't Spent $200 million Raised for S. Asian Tsunami

The message here should be clear to all. Under no circumstances donate money to major charitable organizations unless you would like your money to go to benefit the Elite's expansion of their empires and the fast-developing police state in your own backyards. Find smaller independent charitable organizations that you know to be reliable and make your donations to them.

John Hamer is a British geo-political researcher. He is the author of the book 'The Falsification of History'

Related - Red Cross was a front for Wall Street Bankers in Bolshevik Revolution /Chapter Five (thanks Leland)
http://www.voltairenet.org/IMG/pdf/Sutton_Wall_Street_and_the_bolshevik_revolution-3.pdf

Red Cross in Haiti - Where did the Money Go?
http://www.globalresearch.ca/haiti-where-did-the-money-go/29137

Joan Price - Don't Donate to Illuminati Charities
http://www.henrymakow.com/do_the_illuminati_control_char.html

Less than 10% of NFL Pink Merchandise Sales Go to "Cancer Research"
http://www.businessinsider.com/small-amount-of-money-from-pink-nfl-merchandise-goes-to-breast-cancer-research-2013-10#ixzz2htO75NtJ

Ken Adachi writes: The Red Cross Racket i
http://educate-yourself.org/cn/redcrossracket03spe05.shtml
September 3, 2005

Avoid the Red Cross (Sep 16, 2009)
http://educate-yourself.org/lte/redcross16sep09.shtml
September 16, 2009

"I believe over 1 billion was collected by the Red Cross for the false flag 3/11 attack on Japan. The Japanese people received next to nothing of that money. The same could be said for the Haiti engineered quake of 2009." - Ken Adachi