Behind the largest response to a disaster in Canadian history

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It is the largest response to a disaster in Canadian history: $86-million in 10 days has poured into the Canadian Red Cross for relief in Fort McMurray, a figure that will skyrocket once government matching contributions are included.

As the money continues to roll in, the unprecedented deluge puts a spotlight on the Red Cross as the agency in control of the lion's share of the public giving to help the victims of the wildfires in the northern Alberta city. The organization has already moved more quickly than ever before to distribute large up-front sums to help residents cover some of their evacuation costs, but the majority of the Red Cross's spending is yet to come.

Once the emergency relief phase passes, charity watchers are questioning who should decide where all that money is spent. And, critically, how will the Red Cross ensure its funding decisions mesh with the priorities of the community and the work of dozens of other major players who will guide the rebuilding, including governments, insurers, other charities and corporations with big donation plans of their own?

Little has been decided yet about who will pay for what in the rebuilding process – or even what the needs will be once residents return to the city. But what is clear already is that organizations based in Fort McMurray must be key players in directing contributions because their knowledge of the community will prove essential in the rebuilding effort, said Bob Wyatt, executive director of the Muttart Foundation, an Edmonton-based private charitable group.

"Nobody has an absolute right to be the lead agency in this. We all need to work together to figure out how this is going to happen and the best way to make it happen, and that includes the people who are most directly affected," he said.

With its national network and decades of experience, the Red Cross has become an institution in Canada's disaster-response system, attracting the vast majority of all individual donations during a crisis and receiving the powerful stamp of government approval through partnerships.

The federal and Alberta governments have both pledged to match individual donations to the Red Cross – a commitment that does not apply to any other charities. In addition, the Alberta government is giving the Red Cross, which is responsible for registering evacuees, $2-million in seed money to kickstart operations. As well, the Ontario government is donating $500,000 toward the Red Cross's relief efforts.

In the past, the Red Cross has faced questions for moving slowly on some of its spending, but it appears to have learned from recent experience.

The agency took many by surprise when CEO Conrad Sauvé announced on Wednesday that the charity will immediately distribute $50-million to evacuees – $600 per adult and $300 per child – through e-mail transfers.

The payment is "the most important cash transfer we have done in our history, and the fastest one," Mr. Sauvé told reporters.

For those working in the charitable sector, it was a welcome show of nimbleness from Canada's disaster-response behemoth.

After the Lac-Mégantic train explosion in 2013, the Red Cross issued a two-month update report saying it distributed just $300,000 on an emergency basis to local residents in the first month after the disaster, accounting for a tiny fraction of the $14.8-million the agency ultimately collected in donations. Within six months, the Red Cross said it had spent or committed $5-million of the total.

Kate Bahen said she was alarmed when she first saw the Red Cross's early reports on its Lac-Mégantic spending. As managing director of Charity Intelligence Canada, a watchdog group that analyzes charities' financial activities on behalf of large donors, she believes a rapid response to distributing large sums of cash is critical, noting studies of disasters have shown that having a sense of financial security quickly after a crisis is the single largest determinant in how well people bounce back emotionally from disasters.

"When it comes to speed, the Red Cross have taken a longer-term approach compared to the front-line charities, and I do believe speed matters," she said.

Ms. Bahen is recommending that would-be donors support local community charities in Fort McMurray and Edmonton, saying local groups were the most impressive in their quick response in both Lac-Mégantic and the Alberta floods.

Less than three weeks before the 2013 train derailment, the Red Cross had moved more quickly when floods swept through Calgary and southern Alberta. Canadians ultimately donated a total of $45-million, $5.9-million of which was distributed within the first three weeks. The Fort McMurray distribution is moving even faster.

"We know that long-term recovery is more effective and is lessened in its complexity if individuals and households have the support they need, and that is our primary focus right now and will be in the next coming months," said Jenn McManus, the Canadian Red Cross's vice-president in Alberta and the Northwest Territories.

Disaster response by charitable organizations is different in wealthy, modern countries such as Canada, than in poor countries. Canada has highly functioning governments that can quickly take charge, ensuring, for example, that people are not spending nights outdoors or under cardboard boxes.

Canadian governments also have money to restore basic infrastructure, such as electricity services or water supplies, which means charitable agencies are not typically asked to use their funds for those pressing needs. And most Canadian property owners have insurance, which will ultimately help with at least a portion of their personal rebuilding on a longer-term basis.

The result is that charitable donations are often best spent in the initial phase, when people are struggling to pay for accommodation and other costs while out of their homes. But money is also needed to fill gaps in the longer-term phase, helping individuals with the uninsured costs and communities fund infrastructure and programs that are not first priorities for stretched government spending.

Karen Young, a former City of Calgary manager who co-ordinated emergency social-services planning during the 2013 flooding, said a key aspect of the necessary planning after a disaster includes working closely with other key players to avoid duplicating efforts, including insurers and corporations.

"Part of it is figuring out exactly what the insurance companies are able to do, what the different levels of government are able to do, and what the role is for corporations and charities like ourselves," Ms. Young, who is now chief operating officer of the United Way in Calgary, said. "It's really a holistic community response and it needs to be integrated."

The Community Foundations of Canada, which represents charitable groups across the country, is planning to make a contribution to help Fort McMurray and wants the money to be directed by a local group, said Eva Friesen, president and CEO of the Calgary Foundation.

"It may well be United Way is the most logical place, but they'll tell us who it is and where it is," she said. "I think it will give Fort Mac people a sense of control over their own destiny of community rebuilding."

Malcolm Burrows, head of philanthropic advisory services at Scotia Wealth Management, who helps large private donors direct their charitable giving, said many large donors he is speaking to are still assessing where to give. Some are reasoning that the Red Cross has already gathered plenty of money, he said, so they are looking at other options that will help over the longer term.

Mr. Burrows has been directing clients to look at groups such as the United Way in Edmonton and Fort McMurray because they are umbrella groups that distribute funds to member agencies, connecting donors to food banks, shelters, crisis lines, after-school programs and other services spread throughout a city.

"I'm a huge believer in local organizations," he said.

The donation focus on the Red Cross means local charities do not have the lead role in allocating funds, however.

The Red Cross typically funnels some money to other groups – it reported that it gave 26 per cent of contributions to local organizations after the southern Alberta flooding – but the donation totals are still wildly tilted toward a single organization.

The United Way of Fort McMurray, for example, has collected $250,000 to date after setting up a website last weekend to raise money to help the community get back on its feet, said communications director Russell Thomas.

Despite being evacuees themselves, staff from the United Way of Fort McMurray have set up a temporary base in the organization's Edmonton offices to begin planning for rebuilding. To boost their fundraising efforts, the United Way would like to convince governments to also match their donations, Mr. Thomas said.

"If they do that, that would be the game-changer for sure," he said.

The federal government says its Red Cross matching program, which ends on May 31, supports "Canadians' generosity right away," according to Scott Bardsley, spokesman for Public Safety Minister Ralph Goodale.

"Over the long term, there will [be an] opportunity to consider the support required for recovery and the partners to provide it," he said in an e-mail.

Ms. Behan from Charity Intelligence says her organization and others will scrutinize the Canadian Red Cross to ensure it does the most good possible for the record donations for Fort McMurray.

"We're going to watch it very closely – this is a big responsibility they've been given," she said. "I'd be very sad if three years from now we still see lots of money sitting around that hasn't yet been put to good use."

For its part, the Red Cross is well aware that it must be accountable to donors, and is "absolutely transparent" on how the money is spent after major disasters, including Fort McMurray, said Jean-Philippe Tizi, the agency's vice-president of disaster management. The organization says 93.5 per cent of funds will go to the wildfire response, with up to 5 per cent spent on fundraising costs and no more than 1.5 per cent saved for future disasters.

"Obviously we will be communicating a lot on what we are doing now, what we will be doing and reporting to the public and the donors. That's very important to us," he said. "Pressure is what we experience all the time but it doesn't really matter. We're there to deliver those services to the most vulnerable."