Facebook post repeats unsubstantiated claims on Red Cross CEO pay, donations

Over its 138-year history, the American Red Cross built a reputation for helping people in times of need. But the organization has come under intense scrutiny in recent years over its emergency response efforts and fiscal management. Questions of propriety have dogged the $2.7 billion charity following Hurricane Katrina in 2005, the Haitian earthquake in 2010 and Hurricane Sandy in 2012.

A popular social media post draws on some of that scrutiny, while managing to spread its own inaccuracies.

The post, which has been shared on Facebook more than 242,000 times since April 2018, reads: "Marsha J. Evans president and CEO of the American Red Cross. Salary of $651,957 plus expenses. Only 9 cents of every dollar donated to the American Red Cross goes to helping people in need."

The post was flagged as part of Facebook’s efforts to combat false news and misinformation on its News Feed. (Read more about our partnership with Facebook.)

There are a few issues here.

First, Marsha J. Evans has not been the president and CEO of the Red Cross since she stepped down in 2005. The current CEO — Gail McGovern — does not make quite that much per year. More importantly, there's no evidence that only 9 cents per dollar goes toward helping people in need.

This claim derives from an outdated rumor that surfaced over 10 years ago, in one form or another. After it started getting shared again as a chain email around 2012, the Red Cross issued a statement addressing it. The charity said that McGovern’s base salary was $500,000 and has been since she joined the organization in 2008.

Since the statement was released several years ago, we looked at more recent records and reached out to the organization to get their updated figures.

In the organization’s 2017 Form 990 filing, the most recent available, McGovern was reported as making a base salary of $500,000 but her total reportable compensation came in at $603,564, which includes bonuses and incentives ($100,000) and expenses and other allowances ($3,564). An additional $18,392 accounts for her retirement and benefits.

"This is considered in the middle range for executives of large nonprofits like the Red Cross, an organization with an overall budget of more than $2.7 billion a year," Red Cross spokesperson Greta Gustafson said of the $500,000 base salary, which she said has been unchanged. "McGovern has personally given more than $500,000 in charitable donations to the American Red Cross since becoming CEO in 2008."

The post claims the Red Cross only uses 9 cents out of every dollar toward helping people, and that is simply not true.

In a response to the claim, Gustafson said that the organization keeps its expenses low and "an average of 91 cents of every dollar the American Red Cross spends is invested in humanitarian services and programs."

But that 91-cent figure has been called into question, too.

In 2014, ProPublica and NPR challenged the Red Cross over the validity of its then-frequent claim that "91 cents of every dollar that's donated" goes to services. According to the NPR and ProPublica analysis, fundraising expenses cost the organization between 14 and 26 cents on every donated dollar. And that doesn’t account for additional overhead. Following that reporting, the Red Cross changed its wording to say, as Gustafson told us, that 91 cents of every dollar "spent" goes toward humanitarian services and programs.

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But NPR and ProPublica called that claim misleading as well because of the billions Red Cross spends selling blood to health care providers: "Of the more than $3 billion that the Red Cross spent last year," reporters Jesse Eisinger and Justin Elliott wrote at the time, "two-thirds was spent not on disaster relief but rather on the group's blood business."

Charity Navigator, which evaluates the financial health, accountability and transparency of more than 9,000 charities, reports that the Red Cross spends about 89.3 percent of its total expenses on its programs and services, 4.2 percent on administrative expenses and 6.4 percent on fundraising expenses. Over its three most recent fiscal years, the website calculated, the Red Cross spent 27 cents on fundraising efforts for every dollar donated.

Red Cross fundraising expenses also meet the standards set by nonprofit watchdogs. The Better Business Bureau Wise Giving Alliance says that fundraising expenses should not exceed 35 percent of related contributions.

A Facebook post shares an outdated rumor about the American Red Cross, claiming that CEO Marsha Evans makes "$651,957 plus expenses" and "only 9 cents of every dollar donated" actually goes to helping people in need.

Marsha Evans is no longer the Red Cross CEO, and the current CEO and president, Gail McGovern, made $603,564 in 2017, with benefits, allowances and expenses factored in.

When it comes to the percentage of donor dollars that go toward helping people in need, it is a little more murky. The organization has long touted that an average of 91 cents of every dollar donated is spent on humanitarian efforts, but that number has been challenged before, with different reports estimating it may be as low as 73 cents on every dollar.

Still, we found no evidence or any report that puts that number as low as 9 cents, as the post claims.

We rate it False.

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2019-02-08 17:31:17 UTC

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Says Red Cross President and CEO Marsha J. Evans makes "$651,957 plus expenses" a year and "only 9 cents of every dollar" donated to the organization goes to helping people in need

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