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Is it true that the American Red Cross is only allowed 5%?

I've heard that from the proceeds that the Red Cross collects, they are only legally allowed to use 5% of the donations towards helping people such as in the case of Japan. Is this true? I need evidence against it or towards it being a fact.

I trust the Red Cross and want to believe that the money everyone donates is really being used to help the people that need it.

Thanks!

Public Comments

1. No it is not true, the red cross is the best Charity in the World. Who ever told you this is deluded. http://www.redcross.org/

2. Not sure where you got this idea.

I know that in California nonprofit foundations are required to give away at least 6% of their endowment assets every year. I'm not sure of the exact details.

This seems to be just the opposite of what you're suggesting.

The American Red Cross may have some policy about diversifying their distribution of benefits that prevents them from spending more than a certain percentage of their assets on a single beneficiary, but that's pure conjecture, and I presume their board of directors would be able to waive any such guidelines during a major emergency if necessary.

The Internal Revenue Service has 20%, 30% or 50% of taxpayer's adjusted gross assets limit on deductible donations to certain categories charitable organizations, but that applies to individual and institutional taxpayers.