Tuesday, December 15, 2015

American Red Cross Implosion. Will it survive loss in revenues, staff, chapters, volunteers and confidence?

by Gary Snyder

Under Gail McGovern, the Red Cross has slashed its payroll by more than a third, eliminating thousands of jobs and closing hundreds of local chapters. Many veteran volunteers, who do the vital work of responding to local fires and floods have also left, alienated by what many perceive as an increasingly rigid, centralized management structure.

In 2013, losses were mounting. The organization ran a $70 million deficit that fiscal year and has been in the red ever since. Internal projections say the charity will not break even before 2017. But such projections have not served the organization well. All of this despite a projected billion-dollar jump in revenue, powered by expanded fundraising and growing profits from fees paid for CPR classes, swimming lessons and training materials.

Special government oversight of the charity’s blood-banking operation, which collects and sells blood to hospitals has cost the organization tens of millions of dollars in fines. A federal judge ended two decades of such oversight. The blood unit, which is the Red Cross’ largest division, is a $100 million drag on the charity’s bottom line, in part because changes in medicine have sharply reduced the demand for blood. In its statement, the Red Cross pointed to those changes as the reason for the charity’s recent deficits.

When McGovern was hired as CEO, there were over 700 Red Cross chapters across the country. Today, there around 250, though some former chapter offices stayed open even as they were folded into other chapters. The Red Cross declined to say how many offices it closed.

The number of paid employees fell from around 36,000 to around 23,000. Amid layoffs, bonuses given have raised eyebrows within the Red Cross, a former headquarters official said.

An internal survey obtained by ProPublica found volunteers around the country had a satisfaction rate of 32 percent this year — down 20 points from last year.

Between 2001 and 2008, the organization went through six interim or permanent leaders, several of whom departed amid allegations of mismanagement and misuse of donated funds.

In 2007, the Red Cross board, led by Bonnie McElveen-Hunter — a wealthy Republican donor appointed by President George W. Bush in 2004 — recruited Bush administration official Mark Everson as the CEO who would bring stability to the organization. Six months later, the board forced Everson out after the affair with his subordinate, touching off yet another round of embarrassing headlines.








Nonprofit Imperative gathers its information principally from public documents...some of which are directly quoted. Virtually all cited are in some phase of criminal proceedings; some have not been charged, however. Cites in various media: Featured in print, broadcast, and online media outlets, including: Charity Navigator, Vermont Public Radio, Miami Herald, National Public Radio (NPR), Huffington Post, The Sun News, Atlanta Journal Constitution, Wall Street Journal (Profile, News and Photos), “Betrayal”, (a movie), NBC (on Charity Fraud…TBD), FOX2, ABC Spotlight on the News, WWJ Radio, Marie Claire, Ethics World, Aspen Philanthropy Newsletter, Harvard Business Review, Current Affairs, Charity Navigator, The Chronicle of Philanthropy, St. Petersburg Times, Board Room Insider, USA Today Topics, Accountants News, Newsweek.com, Responsive Philanthropy Magazine, New York Times, Portfolio Magazine, The Virgin Islands Daily News, NANKAI (China) BUSINESS REVIEW, National Religious Broadcasters newsletter, The Charity Governance Blog, American Chronicle, Palm Beach Post, Detroit Free Press, Oakland Press, Nonprofit World, Socially Responsible Business Forum, PNNOnline, Ohio Nonprofit Resources, Nonprofit Good Practice Guide, Nonprofit Startup Guide, Nonprofit Blog, National Coalition of Homeless Newsletter, Finance and Administration Roundtable Newsletter, MichiganNonprofit.com, CORP! Magazine, Crain’s Michigan Nonprofit, ncrp.org, PhilanTopic, Nashville Free Press, Nonprofit Law Blog, Seniors World Chronicle, Carnegie Reporter, Assoc. of Certified Fraud Examiners Examiner, msnbc.com, Worchester (MA) Telegram and Gazette, Carnegie Corporation of America, EO Tax Journal, Wikipedia: Non-profit Organizations; Parent: Wise Austin, Accountants News, Veterans Today, Answers.com, Far-roundtable, #Nonprofit Report, nonprofithelpnews, nonprofit news; National Enquirer, Northwest Herald, The HelpWise Daily, The #Nonprofit Report, Wikipedia (Nonprofit Organization), Answers.com, Nonprofits: On the Brink (2006) Silence: The Impending Threat to the Charitable Sector (2011)
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