March 23, 2006 | Read Time: 5 minutes
Eight of the 50 trustees who oversee the American Red Cross are appointed by the White House, but six of the presidential appointees never attended any of the 23 board meetings held from October 2000 through May 2005, while another showed up just once, according to documents submitted by the organization to the Senate Finance Committee.
Most of the trustees who didn’t attend meetings are cabinet-level officials, such as Tommy Thompson, the former secretary of health and human services, and the former secretary of commerce, Donald Evans.
The board-attendance records show that it does not matter which administration is in office, since the record submitted to the Senate committee covered four years of President Bush’s term and one year of President Clinton’s.
The Red Cross’s governance system has come under scrutiny in the wake of Hurricane Katrina, in large part because lawmakers and others say that a weak board hobbled the organization’s ability to respond effectively to that crisis and other natural disasters.
The Red Cross’s charter, which was first passed by Congress in 1905 and has been amended 10 times since, requires that eight of the members be named by the White House.
The charter establishes the Red Cross as the organization officially charged with handling the nation’s response to natural disasters and providing aid to the wounded of the nation’s armed forces.
The charter does not specify who should be appointed, but most presidents have placed cabinet-level officials on the board.
Most of the cabinet officials appoint subordinates who can attend in their place, but those officials cannot cast votes on policies that require board approval, under both the Red Cross bylaws and laws that cover trustee liability.
In the five years of board meetings, the trustees appointed by the White House sent somebody to represent them less than half the time, according to Red Cross records.
Sen. Charles Grassley, the Iowa Republican who chairs the Senate Finance Committee, said he was concerned to see that the White House appointees rarely showed up at board sessions.
“Charitable board members need to attend meetings to be effective,” Mr. Grassley said. “That’s common sense. If cabinet secretaries are too busy to attend Red Cross board meetings, there’s no need to have them on the board. It may be a long tradition to appoint them, but it could be a pointless tradition. Board governance is at the root of a lot of charities’ problems.”
The senator added that while he is “not ready” to propose that Congress prohibit the president from naming cabinet members to the Red Cross board, “I’m looking at ways to make sure the Red Cross board does its job and exerts oversight over the major operations of the charity. Without that oversight, the wheels can fall off.”
Leaders of the Board
The one exception in the attendance patterns of the presidential appointees was the people the president appointed to serve as head of the Red Cross board.
Neither Bonnie McElveen Hunter, who is now the chairman of the Red Cross board, nor her predecessor, David McLaughlin, missed any of the meetings.
Both presidents also named the nation’s highest military officer, the chairman of the Joint Chiefs of Staff, to the board. While neither General Richard Myers nor General Henry Shelton, who held that position during the time period covered by the documents, attended the meetings, they did send a representative to nearly every one.
The White House did not respond to numerous requests for comment about the attendance of its appointees and Senator Grassley’s comments.
The Red Cross did not comment directly on the attendance issue, but issued a statement saying the organization is examining its operation with the aim of becoming “a model of best practices for corporate governance.”
To help achieve that goal, it added, the board is sponsoring a conference March 21 with the National Association of Corporate Directors to get advice on how it might better structure itself. The Red Cross has also commissioned an independent audit of its governance practices.
Peter Dobkin Hall, who teaches nonprofit management at Harvard University’s John F. Kennedy School of Government, said, “I don’t think it makes any sense at all to appoint cabinet members who never show up at the meetings.”
Mr. Hall, who participated in a discussion of Red Cross management held this month by Senator Grassley’s staff, added, “There are obvious things about the structure of the Red Cross board that are no-brainers about how not to do a board.”
He and other nonprofit experts said the attendance records demonstrate that most of the presidential appointees do not take the position seriously.
Sheldon Cohen, a Washington lawyer and former commissioner of the Internal Revenue Service, said a better approach would be for the president to appoint less-senior administration officials for whom the job would be more important.
“What you need is a board member who’s going to ask questions and not be ashamed to admit he doesn’t know something,” said Mr. Cohen, who also was asked to present his ideas at the Senate meeting. “If they sent the assistant secretary for administrative affairs or some such title, he would take the job seriously and do a good job.”
Conflict of Interest
Donna Shalala, the secretary of health and human services in the Clinton administration who was a Red Cross board appointee, said that lack of time to go to board meetings was not the only problem with appointing high-level cabinet officials to the board.
Ms. Shalala said she deliberately did not go to the meetings because she was worried about the potential for conflict of interest. The Food and Drug Administration, which regulates blood banks, is part of the Department of Health and Human Services — and the Red Cross runs the largest blood bank operation in the country, she noted.
Ms. Shalala said she believed that neither she nor her successor, President Bush’s first secretary of health and human services — Tommy Thompson — should have been named to the board, although both were.
Ms. Shalala, now the president of the University of Miami, said she told Senator Grassley “that in my judgment the secretary’s in a conflict-of-interest situation.”
She added that her legal counsel at the Department of Health and Human Services advised her that serving on the board was indeed a problem. “We actually made the decision that I should not go to the meetings. The secretary must not be a member of the board. I feel that very strongly.”
