Red Cross turns off money tap after PR disaster

ON WALL STREET/Conor O'Clery: Some nice people have been ringing doorbells in Tribeca, Soho and Battery Park City recently and trying to give money away to people like me. "We are here to help you in your time of need," they say, offering to write out cheques for anything from $2,000 to $30,000 to compensate for September 11th.

There are needy residents in these Manhattan districts close to Ground Zero, but we are not exactly the most deserving group in the world. The community is top heavy with professional people and contains quite a few well-heeled New Yorkers in converted Tribeca lofts and expensive duplex apartments.

But the callers from the American Red Cross have been quietly insistent that everyone should receive something from its 9/11 Liberty Disaster Relief Fund, with no proof of need or hardship requested.

Some people living near the disaster site did not lose out financially, and in all conscience could not accept charity (The Irish Times, for example, was dislocated for nine days but the cost of temporary accommodation was roughly balanced out by the landlord waiving a month's rent).

More than half the residents approached turned the Red Cross visitors away. Typical was the actress who did not have to leave her converted loft a mile from Ground Zero for a single day, but was offered mortgage and medical insurance payments for three months. She said "No thanks". Others took the money but with reservations, like a Tribeca clothes designer who accepted a substantial cheque to pass on to her own favourite charity.

But a number of well-to-do dwellers have reportedly accepted handouts of $20,000 and $30,000, and are doing up their kitchens or buying new designer clothes. This has led to furious arguments, pitting neighbours and even spouses against each other, over the morality of taking cash donated to relieve real hardship and suffering. To some it is obscene; to others a windfall not to be missed.

There are stories of neighbours no longer on speaking terms, accusing each other of being sanctimonious or greedy, or bitching about how little they got compared with less-deserving residents. A number of unnerved recipients have sent the money back (or some of it).

TO make matters more contentious, the Red Cross suddenly decided last week to turn off the tap, as a barrage of critical stories leaked out about "free money trumpery below Canal Street" as the New Yorker put it. Now it wants documentary proof of losses. This left some people seething with rage at missing out on a bonanza enjoyed by better-off neighbours.

In the beginning, the Red Cross took the attitude that "If people take our money and they don't need it, well shame on them", but it has been forced to change its policy, admitting that the programme "was providing more support than the needs really would justify". The contretemps has underlined how difficult it is to give away cash, and how corrosive the effects can be on a community once united in the face of a terrible event. It is also another public relations disaster for the American Red Cross.

Its original plan in the aftermath of the attacks was to reserve some of the vast sums flowing into its coffers for future disasters. This caused such an uproar that its president, Dr Bernadine Healy, was forced to resign. Former Senator George Mitchell was nominated in December to supervise a plan to give out the accumulated monies. But it hasn't proved easy.

The American Red Cross fund appeal reached a record $850 million (€971 million) in a nationwide outpouring of goodwill after September 11th. It has distributed $160 million to bereaved families and about $80 million in relief to disaster workers and others. It set aside $290 million for "extended maintenance assistance" for the 50,000 families living or working near the Trade Center site.

Of this, it is still trying to give away $60 million to the neighbourhood - nearly twice the sum the Red Cross provided for the 2.5 million victims of the Hurricane Mitch disaster in Central America.

The Red Cross is not the only organisation to encounter difficulties.

Dozens of other charities that have sprung up, bringing total donations to near $2 billion, are in a similar quandry. Among these is the National Association of Home Builders. It raised $10 million to distribute itself rather than give it to the Red Cross, but most of the money is still in a bank account as it struggles to identify real need and eliminate freeloaders.

Since September 11th, no less than 243 new charities have been authorised by the US Internal Revenue Service. Nine out of 10 are voluntary no-salary organisations, but Knight Ridder newspapers found a number with dubious motives. One was successfully registered by a Californian pensioner who named a board full of celebrities, none of whom he had approached, and who said he would pay himself a salary of $125,000 a year as chairman.

In the meantime, the money keeps rolling out. A notice appeared yesterday by the lift in my Battery Park City apartment block. From the New York "Safe Horizons" charity, it informs tenants that it will be in the lobby this week to receive applications for sums up to $5,000.

Maybe Dr Healy was right. Not only will excess Red Cross funds not be available for new disasters but, in future, people may be less inclined to give to a charity that pays the mortgage for wealthy Tribecers.