Four years on

In the 4th year of disaster response, Canadian Red Cross had a big push, spending $1.8 million. This leaves $940,000 to finish off

After a languid Year 3 during which it spent $555,000, Canadian Red Cross (CRC) had a big push in Year 4. In Year 4 ending July 2017, it spent $1.8 million on Lac Megantic’s disaster recovery. As of July 2017, this brings total spending to $14.0 million – 94% of the $14.9 million in donations raised.

Plans for the remaining $940,000 in donated funds will be decided upon by a 15-member local advisory committee. Canadian Red Cross says this money will go to Lac Megantic’s most pressing needs. Jean-Guy Cloutier, Lac Megantic’s Mayor, and Pascal Mathieu, Vice President of CRC’s Quebec operations, led CRC’s recovery efforts and granting.

The biggest areas of spending during Year 4: 

  • $1.1 million on community recovery and reconstruction adding 2 new projects. Over the disaster response, Canadian Red Cross has spent $1.6 million on 9 recovery and reconstruction projects. Canadian Red Cross’s 4-year report did not provide more details on these projects.
  • $400,000 spent on health-care projects. Since the disaster, Canadian Red Cross has supported 9 health-care projects in partnership with Le Granit healthcare and social services centre. It has spent $2 million in total. No specific details found.
  • $240,000 spent on small businesses. In the Lac Megantic recovery, Canadian Red Cross has put a lot of support behind small businesses. Canadian Red Cross has spent a total of $2.5 million funding 10 economic recovery projects. In addition, it spent $1.5 million on business owners. In total, Canadian Red Cross has spent 27% of donations supporting small businesses. Funding small businesses is just slightly lower than the $4.3 million (28% of total funds) spent on Canadian Red Cross’s traditional focus, assisting people.

Lac Megantic’s local charities got no additional support in Year 4. To date, Canadian Red Cross has granted local charities a total of $1.1 million, 7% of total donations. Canadian Red Cross has supported 51 local charities and projects, with grants averaging $21,000 in size. These grants were all made in previous years. Charity Intelligence is particularly interested in how local charities share in donations and are supported following a disaster recovery.

Canadian Red Cross reports its results on a cumulative basis. Backing out previously reported figures, in Year 4 Canadian Red Cross assisted 63 new people (total 3,299 people), distributed 392 cash cards and vouchers (total 62,800), and supported one new non-profit (total 52). In reviewing the dollars spent, this grant to the local charity of $45,000 was removed from Year 4 and will be spent in the future.

Canadian Red Cross restated spending in previous years. Canadian Red Cross has reduced the fundraising costs allocated to Lac Megantic’s disaster response. Previously, fundraising costs were 5% of donations, representing $677,000. Canadian Red Cross is now using a fundraising cost allocation of 2.4%. With the lower fundraising allocation, fundraising costs in Year 1 are restated to $360,000. This would suggest Canadian Red Cross will reimburse Lac Megantic’s fund by $376,000.

Low fundraising costs are a marketing loss leader to attract donations. Donors should be far more concerned about when donations are spent and how well.

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To read this report in a pdf

Prior Charity Intelligence reports on Lac Megantic: Lac Megantic 3-Year Update

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This will likely be the final report on Lac Megantic, unless Canadian Red Cross provides further updates.

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Sources: Canadian Red Cross, “Lac Megantic Four Years Later”

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