Red Cross Revelations

The board of the American Red Cross took 16 months to find Mark W. Everson — and just over a week to fire him.

In the six months that Mr. Everson served as the charity’s chief executive officer, the Red Cross was by most accounts making good progress at moving beyond controversies that have bedeviled the organization in recent years.

But when the charity’s board learned last month that Mr. Everson had had an affair with the head of a Red Cross chapter in Mississippi, it asked him to resign just 10 days later.

The Red Cross named Mary S. Elcano, the charity’s general counsel, interim president while it searches for a permanent replacement.

Elaine M. Lyerly, the vice chair of the charity’s board of governors, says the board will use the same executive-search firm, Heidrick & Struggles, that helped the charity decide to appoint Mr. Everson.

“We’re already gathering names, and we will be vetting those names very quickly and coming up with an interview list,” says Ms. Lyerly, chief executive of a marketing company in Charlotte, N.C.

‘Acting Strongly’

As with any crisis involving the Red Cross — which is arguably the most closely watched charity in the United States — the announcement of Mr. Everson’s forced resignation immediately set off a round of pontificating by outsiders. While a few charity experts fretted that the decision was rash and would leave a leadership void at an organization that helps coordinate the response to natural catastrophes and terrorist attacks, most agreed that the handling of the incident marked a bright spot for the charity’s board, which for years was criticized as being ineffective and meddling.

“When bad things happen, it’s important not to run from them,” says Linda C. Crompton, president of BoardSource, an organization in Washington that works with charities to strengthen their governance. “Instead, you need to be open and honest, and be seen as acting strongly and decisively, and I think that’s what the Red Cross has done.”

The American Red Cross, which has its headquarters in Washington, has been plagued by controversy in recent years — ranging from its handling of funds raised for the families of victims of the September 11 attacks, to its disorganized response to Hurricane Katrina, to a board whose spats with chief executives has contributed to a revolving door in that office. Mr. Everson, formerly the commissioner of the Internal Revenue Service, is the fourth Red Cross chief executive to step down since 1999. The Red Cross also projects a $150-million operating deficit for the 2008 fiscal year.

No Severance Pay

The Red Cross has not identified the local chapter leader who had the affair with Mr. Everson, but The Mississippi Press, in Pascagoula, first identified her as Paige Roberts, executive director of the Southeast Mississippi Chapter of the Red Cross. Mr. Everson apparently traveled to the region in an effort to improve the Red Cross’s reputation following its criticized response to Katrina.

Both Mr. Everson and Ms. Roberts are married with children. (Mr. Everson’s children are grown.) Neither responded to calls requesting comment. In a short statement issued on the day he resigned, Mr. Everson expressed regret that “it is impossible for me to continue in a job so recently undertaken.”

Mr. Everson received no severance pay from the Red Cross, although he will receive a benefit worth less than $10,000 to cover health insurance for a period of time, according to Carrie Martin, a Red Cross spokeswoman. A division of the general counsel’s office will investigate whether Mr. Everson spent any Red Cross funds inappropriately on the affair.

“We have a responsibility to make sure that donor dollars were spent in accordance with official Red Cross business,” Ms. Martin says. “Right now, we have no evidence to suggest otherwise.”

Ms. Roberts is expected to continue in her position, according to both Red Cross officials and a person close to Ms. Roberts.

A senior executive at the national office who had been hired by Mr. Everson alerted the board to the affair in mid-November, according to Red Cross officials. Ten days later, the organization announced that Mr. Everson would resign because he had “engaged in a personal relationship with a subordinate employee.” Some charity experts have questioned the accuracy of that description, given that Ms. Roberts heads a local chapter and answers to her chapter’s own board.

The American Red Cross has a policy that prohibits people who are married or romantically involved from working together in “any direct or indirect supervisory relationship.” But Ms. Martin says that despite the language in the press release, the board did not rely on that policy in deciding to remove Mr. Everson.

“There was no black-and-white issue,” Ms. Martin says. “There was no policy that was broken.”

Ms. Lyerly says she and other board members were “shocked and very disappointed” by Mr. Everson’s lack of judgment. “We basically lost confidence in his ability to lead the organization,” she says.

‘We’re Going to Be Honest’

The decision to remove Mr. Everson was applauded by some chapter executives.

Leslie Schaffer, executive director of the American Red Cross Central Iowa Chapter, says she was happy to see the Red Cross make a “strong statement” in removing Mr. Everson.

“The message was: ‘We’re going to be transparent, we’re going to be honest, and we’re going to call it what it is,’” she says.

A small number of charity experts have questioned whether the board moved too quickly to oust Mr. Everson, who seemed to be off to a strong start at the charity. The Red Cross received good reviews for its response this fall to the wildfires in California.

Renata J. Rafferty, a consultant in Indian Wells, Calif., who works with donors, initially opposed Mr. Everson’s appointment, but she now thinks it’s foolish to have fired him for infidelity and put the charity in yet another leader’s hands.

“It’s another boneheaded decision by that board,” Ms. Rafferty says.

She believes Congress, which chartered the Red Cross, should fire the board members and appoint its own committee to hire the charity’s next president.

But the reaction from Congress to Mr. Everson’s departure was muted, reflecting the widespread feeling that the flap was largely an unpredictable human failure, rather than a flaw in the charity’s hiring process.

One Congressional aide said Mr. Everson’s departure is “not expected to affect the working relationship with those in Congress who are actively interested in the Red Cross.”

Nonetheless, the Red Cross remains under close scrutiny by both Congress and the general public, which may help explain the board’s quick dismissal of Mr. Everson — and its detailed explanation for his departure.

Mike Burns, a consultant in Branford, Conn., who often works with charities that are considering firing their chief executives, says that in his experience, boards have a difficult time repairing the relationship when they’ve lost trust in their chief executive.

“If Everson was willing to cheat on his wife, who is to say that he wouldn’t hide something meaningful from the board?” Mr. Burns says. “A smart board says it’s almost impossible to repair a trust issue, so we might as well separate and find a new person.”

Donor Concerns

Ms. Martin says she doesn’t expect Mr. Everson’s resignation to have a big impact on fund raising at the Red Cross. Before publicly announcing Mr. Everson’s departure, the Red Cross briefed major donors in a conference call. Donors asked only a few questions — such as how the charity found out about the affair — and generally “appreciated the swift action by the board,” Ms. Martin says.

But Daniel Borochoff, president of the American Institute of Philanthropy, a charity watchdog group, says that while he doesn’t believe the incident should cost the Red Cross any donations, he notes that it might, in part because the Red Cross typically hires high-profile chief executives.

“They tend to make their CEO the face of the Red Cross,” he says. “When you do that, there’s always the risk the individual will make a mistake that is embarrassing to the organization.”

The charity will press ahead with priorities embraced by Mr. Everson, including making sure the Red Cross is well prepared for the next catastrophe, improving its management of 40 percent of the nation’s blood supply, and increasing the diversity among its staff and volunteers. Red Cross officials also say they will come up with plans in the next few months to eliminate the $150-million budget deficit by 2010.

Paul C. Light, a professor of public service at New York University, says the board should tap John F. (Jack) McGuire, who served as the charity’s most recent interim chief executive, as its next leader. Mr. McGuire, who left the Red Cross after not being offered the permanent post, could not be reached for comment.

Ms. Lyerly says she doesn’t know if Mr. McGuire has been contacted or if he has interest in the post. She says that Ms. Elcano, the interim president, does not intend to seek the job permanently.

“We’ve had a lot of interest in the job already, and we’re very pleased about that,” Ms. Lyerly says. “We firmly believe it is the best job in America.”

Their challenge is to find someone who can stay in it.