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Red Cross closes Liberty Fund, names interim head

WASHINGTON -- The American Red Cross, under heavy criticism for its handling of fundraising since September 11, announced Tuesday that it is ceasing "active solicitations" of donations to its special Liberty Fund, which had raised over $500 million since the attacks.

"Red Cross board members and management believe the Liberty Fund as it now stands will be sufficient to address immediate, near-term and long-range needs relating to the September 11 tragedies as well as necessary public education and terrorism preparedness actions," the organization said in a press release.

The Red Cross said it has engaged KPMG to audit the Liberty Fund, "with results to be made public later this year."

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Red Cross President Dr. Bernadine Healy resigned last week under heavy criticism of her aggressive fundraising and the relatively small portion of the Liberty Fund that was making its way to victims' families.

The organization named Harold Decker as its interim president on Tuesday. Decker, 56, has served as its general counsel. A search is under way for a new president and CEO to replace Healy.

The Red Cross said the Liberty Fund has attracted $547 million in pledges, of which more than $140 million has been spent on disaster relief, including $43.8 million in direct financial aid to 2,296 families of victims. More than $66.9 million has been spent, the Red Cross said, "on immediate disaster relief needs."

The Red Cross had decided only $100 million was needed for direct financial aid to victims and victims' families, but continued raising money for other Red Cross activities, angering some donors and some local Red Cross chapters.

Soon after the terrorist attacks, Healy created the Liberty Fund as a special account specifically targeted for attack victims. Donations to the Red Cross typically go into its Disaster Relief Fund for general use.

Philanthropic watchdogs say by establishing the fund, the Red Cross may have created unrealistic expectations that all donations would go directly to the terror victims.

Red Cross spokesman Mitch Hibbs said the organization is doing the best it can considering the size of the relief undertaking.

"It takes a lot of money to do a lot of work. We believe very much that we are honoring donor intent," Hibbs said. "Yes, we are helping the families, but we're also helping everyone else."

The Associated Press contributed to this report.