How the Red Cross Should Move Forward: Advice From Experts

Joshua Gotbaum, former head of the September 11th Fund, which served as a clearinghouse for donations after the

2001 terrorist attacks:

“Increasingly, the Red Cross is being held to national standards that transcend local chapters, and yet the local chapters seem to continue to dominate the national board.

At 50, the board is also so large that board relations are probably taking a disproportionate share of the president’s time. I would consider a reduction in number and an effort to rebalance the board with broader, national representation. I would also consider strengthening the president’s role in board appointments.

The current fad is to suggest that the Red Cross’s federal charter be revoked, and that the responsibilities should be allocated and shared by a group of nonprofits. This sounds sensible, but in practice it would be a serious mistake.

The notion that a group of historically uncoordinated and competing charities could organize either in advance of, or in the wake of, a major disaster is wishful thinking. It didn’t happen after Katrina and it didn’t happen after September 11. (After months of negotiations, we were able to establish a coordinating agency, the 9-11 United Services Group, but this took months and probably would not have happened at all in the absence of external pressure.)

The better approach would be to convert the charter into a contract.

The Federal Emergency Management Agency should negotiate a contract that outlines the responsibilities — and the funding — expected of the lead organization for assistance to individuals. That contract should be reviewed every five or seven years, at which time it could be awarded to another organization if it makes a superior proposal or if the Red Cross’s performance has been unsatisfactory. The result would be greater accountability, for FEMA, for the Red Cross, and for the nation as a whole.

Let’s be honest. Although the Red Cross had shortcomings in its response to Katrina and other disasters, it did a much better job than the federal government did — and a much, much better job than if the federal government had tried to do everything by itself.

This doesn’t mean there isn’t much that could be improved: I suspect the Red Cross and the nation would benefit from improved communications between the field and national, from better advance protocols for activities, and from better systems for solving problems in the field. Plenty needs cleaning up, but I wouldn’t throw the baby out with the bath water.

The American Red Cross is a national treasure, and I don’t think the right thing to do with a national treasure is to bury it.”

Emmett D. Carson, chief executive officer, Minneapolis Foundation; chairman, Council on Foundations (Washington):

“After nearly every large-scale disaster there are reports that the Red Cross’s largely homogeneous volunteers encounter difficulty with the racial, ethnic, and income diversity of the Americans that they are trying to help.

The next CEO must make this a priority issue by moving the organization beyond sensitivity training of existing volunteers to recruit and retain volunteers who fully reflect our country’s growing diversity. This is imperative if the Red Cross is to effectively deliver disaster relief in any and every community in the United States.

To be more accountable to donors and the public, the Red Cross must redesign its financial model. At present, the Red Cross often retains a portion of money raised from the current disaster to have the resources on hand to respond to the next disaster. This take from Paul to pay for Peter only serves to raise questions and suspicion.

One approach would be to set a constant dollar amount — not a percentage — that would be held as a contingency for the next disaster. This amount would be made public and the Red Cross could publicly document that all monies raised for the current disaster, with the exception of the withheld amount, were expended for the current disaster.

If the Red Cross continues to be the lead agency [with the federal government], it should have a responsibility of sharing resources with other nonprofit organizations that are also responding to the emergency. If not, they carry the responsibility to more clearly state that monies donated to the Red Cross will only be used to support Red Cross efforts.”

Renata J. Rafferty, a consultant in Indian Wells, Calif., and author of Don’t Just Give It Away: How to Make the Most of Your Charitable Giving:

“The most basic question that must be asked at this juncture has to do with why the Red Cross president’s office is fronted by a revolving door.

There are numerous qualities, experiences, and qualifications that could be outlined in drafting the ad for the Red Cross’s next president. But until the group’s board and senior executive team undertake and complete some serious soul-searching about why they can’t seem to hang onto a president for more than a few years, the next star recruit will also leave before the ink dries on their contract.

I would be curious to know exactly how much the Red Cross has spent in recruiting costs, legal fees, severance arrangements, and other funds that have gone toward hiring and firing their last few executives. If the board really wants to regain donor confidence, why doesn’t it offer to refund that amount to the organization’s coffers from their personal funds? Then they might be a little more careful as they head into this next round of hiring.”

George Penick, president, Foundation for the Mid South (Jackson, Miss.):

“The Red Cross needs reform, and that is both a board and staff responsibility. More than a manager, more than a politician, and more than a fund raiser, the Red Cross needs someone who can help the board frame a vision for the new demands and context that it will face in the future, and can help establish an atmosphere of trust, common cause, and shared responsibility to achieve that vision.

The Red Cross’s current setup is largely like a community foundation that is dominated by donor-advised funds that can only be used for specific disasters.

To increase flexibility, it would seem that fund raising that is similar to what are called “field of interest” funds — where the funds would be raised for broader purposes, such as for types of disasters rather than for specific ones — would be viable.

There are many organizations and churches, especially at the local level, that are often at the scene of a disaster both before and after the Red Cross, and these organizations should be seen as true and valued partners with a critical role to play.

Bureaucracy is bad, but bureaucracy in an emergency is dangerous, and the Red Cross needs to have established relationships where funds, personnel, facilities, and supplies can be used and shared quickly to the best benefit to those who are suffering at the local level.

Brian A. Gallagher, president, United Way of America (Alexandria, Va.):

“It is important that the [next leader] have experience in the core business areas of the organization, such as disaster preparedness and response and blood services. I would list board management and affiliate-relationship management as critically important as well. The person must have outstanding leadership and communications skills, and should be a collaborative leader. It may be time for the board to select the best-of-the-best from within the Red Cross system versus looking outside the organization.

The greatest leadership challenge for large national organizations with significant affiliate or chapter systems is the balance between providing strong, assertive national leadership that is most often seen as in the best interest of the entire system, and providing concrete support to local chapters. National leaders must create a decision-making process that acts in the best interest of the entire organization, informed by, but not dictated by, local leadership.

[In fund raising], I have learned — having been through some tough times in terms of winning back or keeping donor trust — that there are two overarching principles that must be met. First, nothing drives confidence more than donors’ knowing specifically how their money is being used and the results they have helped make possible. Secondly, the communication with donors has to be direct and ongoing, not event-driven.

The Red Cross has a real opportunity to raise money outside of disasters by utilizing its local chapters even more effectively, by aggressively sharing fund-raising best practices among chapters, and providing more support for local fund raising.”

Bernadine P. Healy, a cardiologist and former chief executive officer of the Red Cross who is now a columnist for U.S. News & World Report, in addition to serving on corporate and government boards:

“Part of the problem is that there has not been adequate oversight. You have an organization that has a governance problem. It doesn’t have an independent board. [Board members] are from the chapters, and they feel their role is to protect the chapters. They don’t understand that they are governed by a Congressional charter. They have a statutory obligation to prepare for future disasters, to assist the military, to have blood and make it available to the military in time of war, to provide medical assistance and even mortuary support, and to man shelters that are set up by state and federal agencies.

They’ve let all of these specialized functions atrophy. Now it’s cots and blankets and handing out food. It’s not preparing a skilled volunteer work force to meet charter obligations. No organization, in terms of governance, can function well if it doesn’t know why it’s there, if it doesn’t honor its fundamental obligations to the people it is serving.

And you have a financial problem. The Red Cross operates as if it’s a franchise rather than a single corporation. The chapters as a rule run their own systems. National [headquarters] just does the national audit, and accepts audit results from all of the other chapters, although it periodically will audit selected chapters.

This is an organization that is secretive, that does not feel any obligations for full disclosure. Corporations disclose more. [It] does not disclose its audit reports, doesn’t disclose information freely that the American public is entitled to have.”

Deborah S. Hechinger, chief executive officer of BoardSource, an organization in Washington that seeks to make nonprofit boards more effective:

“One of the first tasks the board and the new chief executive have ahead of them is assessing the Red Cross’s vision and strategies.

To forge a trusting, working relationship, the board and the chief executive will need to agree on the organization’s distinct mission and contribution to society, its current and future priorities, and the internal and external strategies for meeting those demands.

Any change in leadership offers the board an opportunity to step back and assess its past efforts before it launches a new national search.

Is its role clear and appropriate vis a vis the chief executive’s? What did it expect from chief executives and how did it communicate those expectations? What opportunities and challenges does the organization face now and in the future that should inform the CEO search? Are there lessons from previous experiences that the board should take to heart in assessing its own performance or in identifying important characteristics in a new CEO? Is the board clear on what it is looking for in the new chief executive?

In any organization, the board needs to be ready to delegate the agreed-upon job. A new chief executive should clearly understand not only his or her duties and expectations, but also how to work with the board.

An open relationship is the key — both sides need to feel comfortable communicating both concerns and accolades.”

James Lee Witt, former head of the Federal Emergency Management Agency who now works as a crisis-management consultant in Washington:

“It will be very important for the next CEO of the American Red Cross to have an understanding of emergency management and how FEMA, as well as state and local emergency-management organizations, function. The next CEO should have name recognition and be a leader in their field.

When the American Red Cross raises money for catastrophic events, it is important that the money get to the people who need it as quickly as possible. They should make sure people know that at FEMA there is cost per capita. They need to develop cost per capita so that donors have a comfortable feeling that what they are donating will help victims in both the short- and long-term recovery effort.

[The federal government] should continue to rely heavily on the Red Cross. But it should make sure the Red Cross can meet its needs. An important part of disaster recovery is working nationally with chapters to make sure they can meet needs faster, and working closely with states and the federal government.”

Vernon Jones, chief executive officer of DeKalb County, Ga., where the Red Cross ran a relief center for people displaced by Hurricane Katrina:

“There’s a management issue with the Red Cross. It spends 99 percent of its time raising money, and when there is an emergency, 1 percent of the people on site are Red Cross employees. The rest were well-meaning volunteers without previous experience.

Congress sanctioned the Red Cross 100 years ago to be responsible for disaster. But how can you put a nonprofit organization in charge of an emergency that’s 99 percent volunteer-based?

Is it time to see what the Red Cross doesn’t do so well and maybe restructure what it does? If the Red Cross had to compete against a private company to manage disaster relief, would it win the bid?

[The next chief executive] needs to have some experience in crisis management and the area of public safety, either fire/rescue or police background, or emergency-management background and experience, or have run a local government where you’re responsible for police, fire rescue, and emergency situations.”

Janet Murguia, president, National Council of La Raza (Washington):

“Clearly the head of such a major institution needs to be at the highest level in terms of talent, expertise, and experience. Yet one qualification that has risen to the level of a business necessity is for that person to have experience dealing with a wide range of communities and to have a deep knowledge of, and appreciation for, the changing demographics of this nation.

Lack of knowledge and experience with diverse communities is what led to the organization’s missteps during the relief-response phase following Katrina. Unfortunately, in past conversations with the Red Cross, it has demonstrated a clear lack of understanding of the serious cultural-competency and language issues that hindered, and at times prevented, Spanish-language-dominant persons from accessing shelter or other needed relief services

Until the Red Cross diversifies its senior management and governing body, the culture and responsiveness, or lack thereof, of the organization will remain unchanged. We have also recommended to the Red Cross that they designate someone in senior management who would be responsible and accountable for serving diverse populations on a consistent basis and not just during the response phase of a disaster. Finally, the next president needs to establish stronger ties to national and local ethnic organizations that have relationships in diverse communities that are not traditional disaster-relief organizations.

Like many others, we saw many other organizations step up [after the hurricanes], including several organizations that do not normally work in the United States, and do a superior job of reaching many communities and responding more quickly and effectively.

In the end, we must learn the lessons of Katrina, and Congress needs to carefully re-examine the Red Cross’s role in disaster response and modify it accordingly, should it no longer serve in the public’s best interest.”

George W. Kessinger, president, Goodwill Industries International (Rockville, Md.):

“Running a nonprofit organization as large as the American Red Cross is as complicated as running a multimillion-dollar for-profit corporation. The CEO must be experienced and skilled in many areas, including financial- and human-resource management; fund raising; member, community, and government relations; as well as crisis planning and management.

Clearly defining the values, vision, and mission of the organization will help focus the leadership on the important work of the American Red Cross. At the same time, the role of the office in Washington, D.C., should be well defined. Is it an association office representing the many Red Cross chapters, a headquarters office, or an agent of the government? Other national nonprofits with similar structures have benefited from similar reviews.

Transparency and a well-defined mission help the public understand how donations are spent now, and will be spent in the future.

All nonprofits share the same challenge of ensuring that the public understands that funds are not raised “free” and that 100 percent of funds raised cannot bededicated to any cause. Any efficient organization the size of the American Red Cross has overhead expenses that are necessary to maintain its infrastructure and meet community needs as they emerge.

The government’s expectations for the Red Cross need to match the organization’s financial and human resources.

A thorough planning process can ensure that expectations match financial and human resources and create the most efficient and flexible strategies when disaster strikes.”

James M. Ferris, director of the University of Southern California’s Center on Philanthropy (Los Angeles):

I often think, what happens if there’s a large earthquake in Southern California? It’s only a matter of time. I wonder, will all the money go to the Red Cross? What about local organizations?

You can give large sums that don’t have to go to the Red Cross. Not that the Red Cross shouldn’t get donations, but they’re not the only game in town. That’s the public’s impression. But in instances like Katrina, when the devastation is so great, there’s really a need for long-term rebuilding. It’s really the local groups that have the networks and ties. They’re not going to go away. A lot of organizations are not robust fiscally. They’re the ones on the cusp when it comes to disaster. They’re the ones that will try to weather the storm no matter what. It would be nice to channel some of that philanthropy into those organizations. That could be a role [acting as a conduit for funds to local groups] the Red Cross might consider.

Daniel L. Kurtz, a former New York charity regulator who is now in private practice:

[The Red Cross is] the kind of organization where you say we need a really strong leader, and yet it’s very difficult for a strong leader to thrive, because there are too many powerful constituencies. It’s very different from the CEO of a business. With the shareholders behind him, he can pretty much do what he wants. That’s not so here.

The board ought to take a really hard look at the job. Maybe they have to redefine what the CEO ought to be doing. The people who’ve been in that job aren’t all out of the same mold. It’s not like they’re all making the same mistake. Elizabeth Dole, Bernadine Healy, and Marty Evans are very different. If none of them worked out, maybe it’s the job.

[With the board], it’s nice to have term limits, but frankly, in an organization that size, it’s a recipe for having an uninformed and not very strong board. You’re barely going to know what’s going on at the end of a term. That’s the kind of place where you want people to stay for two terms and maybe even three. You want a staggered board, where a third of the board turns over every two or three years. Then you’d have some real continuity. But they’re Congressionally chartered — they may have to go to Congress for those changes.

Gregg Cebulski, executive vice president for strategic development, Benenson Janson, an advertising and marketing company in Studio City, Calif.:

From a communications perspective, this really is your father’s Oldsmobile. This organization does not touch the contemporary culture. It feels old, it feels slow, it doesn’t feel contemporary.

On the other side, I saw a commercial for the Salvation Army starring Antonio Banderas. I mean, they realize the way you talk to people is maybe a little different than it was 50 years ago, when this was blood drives, or after World War II when they helped out the bombing victims.

There isn’t that touch that you see, for example, in Bono’s One.org, where literally celebrity and contemporary culture has intersected with the need to do good, all the time, not just in a disaster mode but all the time. There’s a connection there. And I don’t see it with the Red Cross. I don’t see them talking to us the way we talk to each other anymore. It just seems disconnected with the audience.

[Donors are] touched when something happens, but then they’re disconnected. They don’t know where the money’s going and they don’t necessarily give when things aren’t terrible out there.

[The Red Cross should] make it something you want to belong to, make it something that’s important in your life: I need to give, I know these people are going to do it right because they talk to me about it, they communicate with me, they connect with my sensibilities. I don’t see this organization doing that.

The next leader should be someone who could put a face on the group, a Jack Welch or Ted Turner or Michael Jordan.

Robert Egger, author of Begging for Change and president, D.C. Central Kitchen (Washington):

The Red Cross faces two huge obstacles right now.

For all the right reasons, the public has chosen the worst possible barometer to measure an organization’s efficiency and impact: low administrative overhead.

Because of this, the average donor has been led to believe that the Red Cross (or any of us) can embark on Herculean efforts without encountering and paying for transportation, insurance, phone, additional staff, IT [information technology], or a myriad of other costs associated with making folks or communities whole again.

Simply put, the fiction that 100 percent of any donation can go directly to the people must be addressed. We all must be willing to stand up for our shared interests.

Secondly, I believe that the board of the Red Cross has become hypersensitive to anything that they feel will conjure up public wrath.

They are stuck between a real rock and a hard place. Even if the offense is perceived (and the public has been trained to now think the worst when they see the name Red Cross), it will have dramatic impact on their national and local efforts, as well as on the image of the sector at large. And because of that, I worry that the board is now into micromanaging the organization, which is the bane of any CEO’s life, particularly when the organization is in full swing.

The only way forward is for the sector to find a unified voice to speak to the public, honestly, about how we do our work, and how much it costs to move from charity to change. Only then will we enter into an era in which the public’s generosity and our sector’s professionalism will be in sync.

John Bridgeland, former director of the White House’s USA Freedom Corps who is now a consultant to nonprofit groups in Washington:

[The next leader should be] a consensus-builder and strong leader who is as comfortable working with members of local chapters as he or she is working with the national board, Congress, and the administration. Also, it should be someone who has some vision to move the Red Cross into the 21st century, using the latest technology, and anticipating trends that are relevant to disaster response.

All disaster response is eventually local, and I believe the ARC should spend substantial time strengthening its local chapters (e.g., ensuring that top leaders in local communities serve in some capacity so that the very best resources can be mobilized and sustained to respond to disasters.

Local Red Cross chapters need to form stronger alliances with United Way, Citizen Corps, volunteer centers, faith-based groups.

Katrina illustrated that there is no “plan” to coordinate across these groups to meet the needs of the evacuees and rebuilding. Katrina and an earthquake site should each be the subject of year-long case studies that the Red Cross commissions, with specific recommendations and a plan to implement them, and subject to Congressional and administration review.

If the Red Cross wants funds to remain flexible for general purposes, there needs to be a feedback mechanism of some type to ensure donors know this upfront and have some information on how their funds were eventually spent.

Compiled by Brennen Jensen, Elizabeth Schwinn, Nicole Wallace, and Ian Wilhelm.