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Red Cross Says All Liberty Fund Donations Will Go to Terror Victims

Buckling under intense criticism, the American Red Cross said Wednesday it will now give every cent donated to its Liberty Fund to victims of the terrorist attacks instead of setting aside a large portion for other uses.

An outpouring of support for the victims netted a total of $543 million for the fund, but the tempers of givers and the prospective receivers flared when it was revealed the charity planned to put about $200 million aside for use in the event of future terrorist attacks.

"We deeply regret that our actions over the last eight weeks have not been as sharply focused as the American public wants or the victims of this tragedy deserve," Red Cross interim CEO Harold Decker said at a news conference.

The proposed division of donations sparked harsh words from critics, who said the money donated to the fund was given under the assumption only people affected by the Sept. 11 attacks would get it.

Donors to the Liberty Fund contributed as generously as they did because they thought their money would be channeled quickly and directly to the victims and families of the attacks, lawmakers from both parties said they believed.

Red Cross President Bernadine Healy is stepping down as head of the charity at the end of the year in part because of criticism of the fund. Healy took the unusual step of setting up the fund as a separate account to deal with the attacks, over the objections of some Red Cross board members.

Healy was blasted at a House hearing on charitable contributions last week after two widows who lost their husbands in the World Trade Center attack described how they have had to fight a maze of bureaucracy to obtain financial help.

Since Sept. 11, about 2,500 families have received Liberty Fund benefits, averaging about $25,000 per household. On Monday, the Red Cross said it would return donations to any contributor who requests a refund.

The Red Cross has stopped accepting donations to the fund, saying the amount collected so far is sufficient. The charity already has distributed about $121 million in direct aid to Sept. 11 victims and their families.

The 37,000-employee American Red Cross administers almost half the nation's blood supply and provides relief to victims of disasters.

The Associated Press contributed to this report.