Recovering From Controversy: Experts Offer Advice to the Red Cross

Anthony De Cristofaro, director of communications at the United Way in Washington, which provides funds to the American Red Cross and other groups.

He was spokesman for the United Way of America in 1992 when questions first surfaced about the management of William Aramony.

Problems American Red Cross faces: The Red Cross is taking some heat that’s not deserved, because they were on the scene first. To some degree the Red Cross didn’t get credit for the speed of its early response and what it was doing early for the direct victims as well as for the families. And it’s always hard, because 10 years ago the Red Cross was criticized for spending too much time early in a disaster on its PR and not enough on serving people. Now they didn’t tell that story early and they are getting kind of a backlash for it.

Nobody was prepared for September 11. One of the things in that very first week that President Bush really stressed to the nation was, we are going to respond to this and it’s not going to be done overnight. What he was really doing was asking Americans, as he pursued the diplomatic and the military and the economic fronts, for patience. While there was so much going on, we in the nonprofit sector probably needed to be doing the same thing.

Our culture right now is operating on Internet speed. Things have to be done before the end of the news cycle. So if it’s not ready to go on the 6 p.m. news, it’s history. We probably in the entire nonprofit sector — Red Cross, United Way, all of us — should have been making sure that the American public knew that it was going to take some time to put systems together that didn’t exist to serve quite this number of people. That may have helped us as we come now two months later and people are looking back saying, Hey, what’s happening?

I don’t think that the Red Cross issues that they are going through right now are anywhere close to the kinds of scandals that have hit organizations like the United Way and Covenant House and some others.

There is a fine line between appropriate management action and public relations. Sometimes in these scandals we’ve had bad management action. Clearly there was bad behavior in other cases. Bernadine Healy [who plans to step down as the Red Cross president in December] was right: Reasonable people can disagree on issues without it being illegal or scandalous. Usually we don’t see the disagreements all get aired publicly.

The Red Cross is not the first nonprofit that has ever changed its CEO. It is a huge time, and I don’t mean to gloss over the timing of this. But there have been many other organizations that have made big leadership changes.

What it should do now: The Red Cross and all of us have got to use as many tools as we can to educate people about how we work. So people who have known us for years can know that we are doing the best we can to turn their generosity into action as fast as we can. And we need to make sure they understand how we do that. When you are in the middle of a crisis response, it’s too late to start educating people about the process that your organization goes through.

The new leadership at the Red Cross will have to keep its antenna up and say, Here’s what the contributors are saying. Just like we have to do that at the United Way. What is the public saying to us and how do we react to it to respect their wishes?

On selecting its next leader: It’s ultimately the board’s responsibility to figure out which course to take. And clearly people need to have confidence in whomever the leaders of our trusted institutions are.

Maybe there’s an expert at the chapter level who is also a national leader. And maybe there’s a national leader who has experience as a Red Cross volunteer. You don’t necessarily need to be a celebrity. We shouldn’t mistake the cult of celebrity for good management.

James E. Lukaszewski, a crisis-communications consultant in White Plains, N.Y.

Problems American Red Cross faces: The Red Cross has so much respect and so much trust by the American public that nobody asked any questions. So all of a sudden it gets these questions, and for the Red Cross it’s business as usual because it has forgotten that it has never told anybody that this is what they do every day. It delivers people’s money to all kinds of purposes people do not know about, or understand, or approve of, or give permission for. The mistake is the latent noncommunication that most nonprofits undertake. Any nonprofit organization of any size faces this problem. For whatever reason, the Red Cross decided that it knows best about the money and therefore the public has no real right to ask questions seriously because, of course, it is the Red Cross doing this wonderful work.

I personally don’t think it’s been hurt too badly by this at all. And that’s because of this enormous level of trust we have for it, and actually we have nobody else [to do its work]. Only the Red Cross does this wonderful and unique work. But the fact is, if it wants to rebuild the trust it has and answer the media’s questions, it needs to go to a posture, which it should’ve done years ago, of frequent and full disclosure of all aspects of its operations.

What the Red Cross should have done, years ago, is be open and honest with the public who support it. It’s not so much what’s in the past; it cannot change that.

What it should do now: Here are the steps it has to go through. It has to be candid. It has to describe what happened to some degree. It needs to explain what is it that it does or how it deals with these situations that caused this to happen. It has to seem genuinely concerned about this, that it made a mistake, and that the trust of the American people is the most important thing that it has. And because of that, that’s why it is looking into this and it is going to take appropriate steps to make certain it doesn’t happen again.

The next thing it has to do is make sure it puts in place an oversight process that is not responsible to it but oversees what it is doing and reports independently.

The last thing it has to do, it has to offer to anyone that gave it money the opportunity to get that money back and give that money to a charity that will use it in the way the donor intended. It needs to say, “We hear you, America, and we are going to change our ways. And we’re going to keep you in touch with this for the rest of our operational life.”

So [the Red Cross needs] candor, an explanation, a sense of remorse, oversight by outside independent people — not the government — and a public act of restitution. These five steps are crucial or it will always be questioned.

On selecting its next leader: [Red Cross should pick] someone who understands the need for public understanding and believes that half the success of its enterprise is in building and maintaining knowledge, public support, and trust. In most cases, that can only be done by disclosure. [The Red Cross] tends to do it by storytelling. While that’s interesting, and we get a warm heart for the Red Cross, the issue is that at some point in time it has to spend a certain amount of energy disclosing what it is doing in financial terms, to assure donors.

Bill O’Reilly, host of the Fox News show “The O’Reilly Factor.”

Problems American Red Cross faces: Tremendous and long-term damage. The suspicion that some Americans had after the United Way debacle has now been reinforced in spades. People will still give, but with the removal of Dr. Healy and all of the problems that the Red Cross has brought upon themselves by not being organized and upfront immediately, that’s going to stay with a lot of people.

It could have been upfront about the allocation of the funds. It should have said, “Look, this money is being raised to help the families, but it can also be used for other things too.” It needs full disclosure.

What it should do now: With this small allotment [going directly to families], it’s tough. If that’s the way the Red Cross is going, some people are going to object to that. I just know there’s a suspicion now that when you give to the Red Cross, if you want to earmark [money] for a certain charity or a certain cause, it ain’t going to get there. That’s entrenched.

I believe that’s the way the Red Cross wants to play the game. It basically wants to say, “Look, if you give money to us, we’re going to use it the way we see fit. We don’t want to have to be chained down by any specific donation.”

On selecting its next leader: The Red Cross is going to have to come out and say, “This is our philosophy, this is what we want to accomplish. We’re dedicated to X, Y, and Z.” So it’s going to need a communicator to do that, and someone to go around and get credibility back in the organization. Americans still admire the Red Cross because it does do very good things, and that’s a brand name that will always be attractive. But it’s in hard times now and to get out of hard times you need a good communicator.

Andy Burness, president of Burness Communications, in Bethesda, Md., which has numerous nonprofit clients.

Problems American Red Cross faces: There are two principles that ought to guide communications, particularly in this case. One is people need to know where their money is going in advance as they weigh decisions to make donations. And second, people need to know how the money was spent with regular reporting and specific reporting on what was accomplished. You should tell people in advance where their money is going with some specificity, as opposed to “We’re helping with disaster relief,” which is not very specific. If you tell people their money is going to go for one of several purposes, and then you report, in fact, that it has gone for these purposes and you can account for this — “We’ve helped this many people, we’ve collected this much blood, we’ve provided shelter” — then you’ve done all you can do.

In this case, the question is, did the Red Cross do it right or not? It’s clear the Red Cross ultimately is coming around to the point that it needs to do more explaining and assume that less of the public knows how the money is being spent.

My sense is that the Red Cross has been well branded for some time. People feel very positive about the Red Cross. There’s a fair amount of rope the public is willing to give an organization that’s been this strong and this credible for so long. The damage is short term, if indeed there’s damage at all. Openness and accountability are crucial because the questions are mounting and they can be answered by being open and giving out information.

What it should do now: More regular disclosures. It’s not something where you put out a report six months from now. People want to know in the interim six months where the money’s going. People want to know not that the money went to a blood drive, but that in fact the Red Cross was able to transfuse 500 firefighters. People can relate to that — “The blood I gave, the money I gave, did something specific.”

In terms of public relations, it’s important to anticipate what the public will want to know and tell it before it asks. You can preempt questions by telling the public what you know about the intent of the money and what you’ve learned in spending it.

On selecting its next leader: The Red Cross should choose someone who has strong management skills and is very comfortable with public interaction in terms of donors, the public, the media, and policy makers; the person must also understand the medical piece of the Red Cross.

Arianna Huffington, columnist and author who serves on the boards of several charitable organizations, including the Points of Light Foundation and Do Something.

Problems American Red Cross faces: My greatest concern is about the way the large amounts of money are raised. The Red Cross’s intention from the beginning seems to be that not all of it would be disbursed the way the fund-raising drive made it appear it would be disbursed.

My more long-term concern, with organizations like the Red Cross, is their relationships with smaller groups that are doing great work but have a much harder time fund raising. These groups are local, and very small, very connected to the needs of the communities that they serve, groups that deal with domestic disasters. Disasters don’t have to be hurricanes or terrorism, but hunger, or abuse, or domestic violence, all these sources of suffering in the community. There are many local groups who are finding it really hard to raise money right now, at the very moment when hunger is on the increase. There’s a dramatic increase in unemployment figures. People are coming off welfare with no jobs. You can’t stop [big organizations] from raising money, but I would like to see them partnering with the smaller groups so that we don’t have this competitive situation now where there’s a lot of legitimate resentment. Forgetting the politics of that and the resentment of that, a lot of needs remain unmet, which could be met if there were a more cooperative relationship between incredibly successful, multinational organizations like the Red Cross and small, incredibly effective community groups. After all, this is all in the spirit of what we’re talking about [after September 11]: more cooperation, more unity, more coming together.

People who give donations should be more demanding about how their money is going to be spent. If I’m Julia Roberts and I’m giving $2-million, I should ask, “How are you going to spend it? I’d like to know.” I don’t want to squash anyone’s generosity, but certainly if donors ask more questions, they would be less likely to have similar problems in the future.

What it should do now: I would like the Red Cross to use every penny of the money that it has raised to directly help the victims in whatever way it plans, but also use the rest of it to distribute among small groups around the country that are dealing with the issues I mentioned previously. Instead of putting [extra money aside], which inevitably will be used for its own institutional purposes, the Red Cross should disburse it to meet the demands and the needs that are urgent right now.

On selecting its next leader: I would like to see a leader who really understands local groups and local communities, a leader who may not be a national name but who understands what it’s like to work in the trenches because that’s where the tough work is going to have to be done in this country.

Larry L. Smith, president of the Institute for Crisis Management, in Louisville, Ky, and former board member of three Indiana chapters of the American Red Cross. Mr. Smith also recently served as a communications adviser for the Louisville Red Cross chapter.

Problems American Red Cross faces: What the Red Cross has been through is what we call smoldering crises. There were issues that were going on at the board level internally with Dr. Healy that the general public wasn’t paying much attention to. My sense is that the general public perception is that the Red Cross has done an outstanding job and continues to do an outstanding job.

It doesn’t matter whether you’re the president of the Ford Motor Company and you’ve been ousted by the board or if you’re the head of the Red Cross and you’ve been pressured to resign. Those are always awkward [situations]. But those management shake-ups have a little burst of attention. If new management comes in in a reasonable amount of time and takes control and starts doing a good job, there’s no long-term harm or damage done to the organization. Many times, if the right person is selected, things get better quicker than they might have had [the organization] tried to work with whoever left for whatever reason.

There’s probably been no serious damage done to the Red Cross, but there could be if it doesn’t respond to some of the questions about how the donations are being disbursed.

What it should do now: Reassure supporters of the Red Cross that the money is being used in the best possible way, that the people who need it, who are expecting it, and to whom it was donated to help are going to get it, and here’s when and how.

On selecting its next leader: I’ve been at the mid- to lower levels of the Red Cross, and I know how difficult it is for local chapters and state organizations to get good communication and support from the national office. I favor the argument that the CEO should be someone out there representing the Red Cross, not running the day-to-day operation. Elizabeth Dole was a great spokesperson for Red Cross. She had her own goodwill that she carried that worked to the advantage of the Red Cross. It looked like Elizabeth Dole was selling Red Cross, encouraging volunteers, building relationships with chapters, volunteers, and supporters, and there were other people back in the office that were doing the operational stuff. That’s probably what the Red Cross needs still. It does need someone who is a good manager, but I’m not so sure that one person can do both of those things and do them effectively.

Rodney Ferguson, executive vice president of Lipman Hearne, in Washington, a marketing and communications company that specializes in working with nonprofit organizations.

Problems American Red Cross faces: The Red Cross is in a Catch-22. Its profile was raised because it was out raising money for the Liberty Fund [which was created after the September 11 attacks], and at the same time there was a disagreement over whether and how those donations should be coupled or not coupled with other funds. In some ways its success became the source of the conflict, which led to the unfortunate situation it finds itself in. But planning for success is part of what any organization must do. And also reaching assurance among all parties that a conflict or disagreement is not going to boil over into the public realm is also an important part of what any organization, including a nonprofit organization, should do.

It’s easy for all of us to be armchair quarterbacks in this situation. I wouldn’t put so much blame on the American Red Cross for not having meticulously laid out the conditions under which the money could be distributed before the money was raised, because it was happening very much in real time. On the other hand, there was some unnecessary delay in making decisions and being clear about how those monies would be coupled or not coupled and how they would be distributed.

What it should do now: The Red Cross should say it is moving forward and that this unfortunate situation is behind it. The [public-relations] damage is not irreparable.

On selecting its next leader: The Red Cross should look for someone who has a deep and substantive résumé and an impeccable reputation in providing services in the philanthropic community, and probably with a health-care background. It doesn’t need to be someone chosen for their star status. That is part of the problem that the American Red Cross finds itself dealing with: The institution has been seen as a vehicle for its executive. I think now the executive needs to be seen as a leader of the institution. If that person resides in the Red Cross, that’s fine; if the right person does not and the organization needs to go outside, then you go outside.

Lester M. Salamon, director of the Institute for Policy Studies at John Hopkins University, in Baltimore.

Problems American Red Cross faces: I don’t think it’s clear in the public’s mind that it is the Red Cross as opposed to other charities that may be running into difficulties. There’s a growing concern that the unprecedented levels of private resources that came pouring out in response to the September 11 event may not be managed as well as they could be. It is such a visible event that the stakes are very high for the charitable sector. It’s got to get this right, and it does not appear it is getting it right. I would hate the reaction to be that the charitable sector [in the future] does not respond aggressively and actively to this type of event. That seems to be one interpretation of the Red Cross’s decision.

I have drawn a parallel between what happened with the [1995] Kobe earthquake [in Japan] and what happened in reaction to the September 11 event. They are opposite poles of similar phenomena. [Japan] is a society that traditionally turns to government in reaction to a crisis, and Kobe was such an overwhelming event that it somehow threw the government for a loop. It couldn’t respond. And into that vacuum rushed the charitable sector. It was a turning point for the nonprofit sector in Japan, because it demonstrated that volunteer groups could move in and do things that government simply couldn’t do. The story here is just the reverse. We have been a society that assumes that government is incapable of doing anything, and if anything important is going to be done, it’s going to be done by the private sector.

The basic message of September 11 is that we cannot function without government. The question then for nonprofits is how to forge an appropriate collaborative alliance with the government in the face of this kind of overwhelming crisis. The charitable sector needs to find a way to reconcile its strengths with the enormity of the task. I don’t know anybody who thought that through as they rushed into the breach. But the message isn’t don’t rush into the breach. The message is do it in a sensible way that takes account of the scale of the undertaking and the need therefore to alter some of the traditional ways of operating.

What it should do now: Develop a set of guidelines and policies and a procedure to streamline the [grant] process, with the help of the government. It should be an active partnership. There’s a very significant role that needs to be played by public-sector organizations.

In general, there is need for a coordination mechanism, in some sense, hand in hand with government, to sort out how [relief agencies] respond to these terrible events. The go-it-alone strategy, both on the part of individual organizations and between the voluntary sector on the one side and government on the other, is not an ideal solution to this kind of problem.

On selecting its next leader: The Red Cross should continue to be a very active responder to crises in our life and operate in a collaborative fashion wherever it can. A director who is able to articulate that conception and who is good at building bridges and is able to muster the resources of the Red Cross in collaboration with other institutions in response to major crises is what it needs.