The American Red Cross, which has asked Americans to donate $2 billion to cover its costs of caring for the victims of Hurricane Katrina, will be reimbursed $100 million from the federal government for motel rooms housing storm victims.

The Red Cross has raised more than $800 million from private sources and indicated that some of the money would go to house hurricane evacuees in hotel rooms, an expense the organization expects to reach $95 million by mid-October. Yesterday, the agency acknowledged that, instead, the Federal Emergency Management Agency will pay for those rooms.

News of the federal government's role in bankrolling some of the Red Cross's work could potentially turn off donors who believe the 124-year-old charity operates independently of FEMA, which has been widely criticized for its handling of the disaster, charity monitors said.

"It's certainly not right to be taking credit for something that the government is already doing," said Daniel Borochoff, president of the American Institute of Philanthropy, a charity watchdog. "It is very serious for a charity to give the impression that it is doing what the government is doing."

Yesterday, Congress launched its first inquiry into the governmental response to Katrina, which destroyed most of New Orleans and coastal Mississippi and Alabama. FEMA's financial arrangements with private and faith-based charities are expected to be scrutinized as part of those hearings.

The Red Cross has received almost 80 percent of the private contributions to Hurricane Katrina relief, which have topped $1.2 billion. The charity has said it expects to spend $2 billion aiding about a million families.

Red Cross officials acknowledged yesterday that the charity's portrayal of its financial role in the motel program may have caused confusion.

"The bottom line is we will be clearer," said the charity's spokeswoman, Carrie Martin. "We will make every effort to explain that better. We will be absolutely clear that this is a reimbursement."

In a Sept. 10 article in The Washington Post, spokeswoman Stacey Grissom said the Red Cross was paying for motels out of private donations.

In a news release dated Sept. 16, the Red Cross announced that it "has launched a special housing program" allowing families from areas hit hard by Hurricane Katrina to stay in hotel rooms at no cost.

"The Red Cross will be picking up the tab by paying for the room and any applicable taxes," the news release said. The bottom of the release included the organization's standard statement: "All American Red Cross disaster assistance is free, made possible by voluntary donations of time and money from the American people."

A day later, a release announced an extension of the motel program, noting that "the Red Cross and FEMA will cover the cost."

In the aftermath of Sept. 11, 2001, the Red Cross came in for criticism when it decided to reserve some of the money for causes other than helping victims of the terrorist attacks and their families. In the end, the charity apologized and pledged to use the money, ultimately totaling $1 billion, solely for those affected by the attacks.

"If they're soliciting to people saying they're not receiving any federal reimbursement . . . that seems like we may have an issue with them being deceptive with donors," said Trent Stamp, director of Charity Navigator, a charity watchdog group. "But I don't want to criticize them for being successful in figuring out how the system works."

FEMA's effort to pay another agency to provide shelter, Stamp said, raises other questions. "Why is FEMA writing checks to the Red Cross? You either figure out how to provide disaster relief on your own or get out of the game completely."

The motel program for evacuees arose in the frantic days after the hurricane hit the Gulf Coast on Aug. 29, Red Cross officials said yesterday. Joe Becker, senior vice president for preparedness and response, said he asked FEMA to pay for motel rooms occupied by evacuees whose money was running out.

With more traditional shelters overflowing, "my concern was we had to expand the idea of what a shelter was," Becker said.

He said that FEMA and the Red Cross reached a verbal agreement whereby the federal agency would reimburse the cost of the motel rooms in eight states. The rooms average $59 a night, and the maximum stay is 45 days.

"We normally don't reimburse them," FEMA spokeswoman Mary-Margaret Walker said of the Red Cross. "On occasion, for things or an event above and beyond their capabilities, we step in from time to time."

Commentary:
Good grief.