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Red Cross: Victims will get all funds

The American Red Cross, humbled by weeks of scathing criticism, announced on Wednesday that it would use its $543-million Liberty Disaster Fund only to assist the people affected by the terrorist attacks of Sept. 11, a decision that guarantees families hundreds of millions of dollars in additional aid.

The announcement is a sharp departure from the organization's original plans to steer more than $200-million of the Liberty fund donations into a reserve fund for potential future terrorist attacks and to use millions more for programs aimed at improving its own readiness for such attacks.

The reserve fund had provoked intense criticism from victims' families and lawmakers, who accused the agency of misleading many of its donors about how their money would be spent. Only last weekend, the agency offered refunds to any disgruntled donors.

But on Wednesday, it went even further, promising not to use any of the Liberty fund for things like a $50-million blood reserve program and community outreach efforts. Instead, it vowed to spend at least half the fund, or $275-million, on cash grants and services to affected families by Dec. 31, and to announce its plans for the rest of the money in January.

"The people of this country have given the Red Cross their hard-earned dollars, their trust and very clear direction for our Sept. 11 relief efforts," said David T. McLaughlin, chairman of the agency's board of governors, at a news conference. "Regrettably, it took us too long to hear their message."

As part of the changes announced on Wednesday, the Red Cross will now cover a year's worth of living expenses for the affected families _ from the four terrorist-led airplane crashes, at the World Trade Center and the Pentagon and in western Pennsylvania _ through its "family gift" cash-grant program, which had been limited to three months. That program, which has distributed more than $47-million, will deliver an additional $111-million in cash to families by January, the agency said.

The Red Cross also said that it would use some of the Liberty donations to hire more than 200 caseworkers to help families navigate the maze of charities that are trying to assist them.

The agency also said that it would use the interest earned on the Liberty fund to cover as many of the administrative expenses as possible. Agency officials estimated that fewer than 10 cents of every donated dollar would be spent on overhead.

"We deeply regret that our activities over the past eight weeks have not been as sharply focused as America wants, nor as focused as the victims of this tragedy deserve," said Harold Decker, who replaced Dr. Bernadine Healy two weeks ago as chief executive of the disaster relief agency.

Decker also ended more than six weeks of confusion by committing the agency to cooperate with efforts to build a database of victims who have received charitable help, first proposed 10 days after the attacks by New York's attorney general, Eliot L. Spitzer, with the backing of most major charities responding to the attacks.

When the database first was announced, Healy rejected it as an invasion of privacy. Decker said he thought the database would help coordinate long-term help for families. Healy did not respond to a telephone message Wednesday.

Spitzer called today's announcement "a monumental step forward."

The attorney general's office regulates charities in New York, and Spitzer said he had been pressuring the Red Cross for weeks to change its plans for the Liberty fund. But at first, he said, officials seemed unmoved by his argument that the agency was effectively defying the wishes of donors.

He eventually told the relief agency that he was prepared to take legal action over its plans for the Liberty fund, Spitzer said.

The Liberty fund's new direction also was greeted enthusiastically by members of Congress, some of whom had been critical of the agency's previous plans.

Families of those killed on Sept. 11 approved of the announcement, too. "Now at least we know we're okay for a year," said Liz McLaughlin, a widow from Pelham, N.Y., who had offered emotional testimony on the subject before Congress last week.

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