The American Red Cross Seeks Trade Secret Protection for Superstorm Sandy Spending

July 4, 2014

Hurricane SandyRecently, investigative organization ProPublica asked the American Red Cross to divulge some information on how it spent money in connection with “Superstorm Sandy,” the hurricane that became the second most-expensive storm in U.S. history when it made landfall in New Jersey and New York in October 2012.

The Red Cross declined.

So, ProPublica filed a Freedom of Information Act request (the Red Cross has a Congressional charter to perform certain responsibilities for the federal government, so FOIA would apply) but the Red Cross objected, saying that the details on how it spent the $312 million donated after Superstorm Sandy constituted “trade secrets.”

The Red Cross defended its concealment of how it distributed the funds by saying that if the information were to be disclosed, “the American Red Cross would suffer competitive harm because its competitors would be able to mimic the American Red Cross’ business model for an increased competitive advantage.”

At first, that made sense to me. But then I thought more about who we’re talking about here – the American Red Cross, which I always thought was supposed to help people after disasters.

So, first, who are the Red Cross’ competitors? No, seriously. What other organization does what it does on such a large scale? I can’t think of any.

Second, even if there were competitors, wouldn’t the end goal of their competition be helping people in need? I understand that there are probably nice deals with government agencies and cushy administrative jobs and the like at stake, but let’s not lose sight of the ultimate goal here.

Now, in defense of the American Red Cross, sometimes it seems like it can’t do anything right. The Superstorm Sandy criticism isn’t a new phenomenon; the organization took some flak for how it spent (or didn’t spend) money after Hurricane Katrina and the terrorist attacks of Sept. 11, too. To me, it also seems like people aren’t willing to give the organization credit for having experience and knowledge about disaster relief, despite its focus on this area for 130 years – if it doesn’t do exactly what they think it should, then it’d doing it all wrong.

That being noted, I can’t say the American Red Cross’ attempt to invoke trade secret protection speaks to its willingness to be transparent and accountable.  We can debate the merits of whether its disaster spending amounts to a trade secret, but in the end, I think it’s a moot point because we should be asking why a large, public nonprofit wants to be secretive in the first place.