American Red Cross Employees Doubt Nonprofit's Ethics and Future

by Gary Snyder

A survey of American Red Cross employees shows a crisis of trust in the charity's leadership and deep internal doubts about the Red Cross' commitment to ethical conduct.

A summary of the survey results, obtained by ProPublica and NPR, was released internally in September. The survey was completed by a bit more than half of the Red Cross' roughly 25,000 employees.

In response to the statement, "I trust the senior leadership of the American Red Cross," just 39 percent responded favorably. 

About 4 in 10 respondents doubt the ethics of the venerable charity. The employee survey, which was conducted by IBM, notes that other companies scored better on the questions about trust. About 20 percent of respondents at other companies expressed concern about their organization's ethics, compared with nearly 40 percent for the Red Cross survey.

Most of the survey respondents do not believe the Red Cross has a bright future. In response to the statement, "The senior leadership of the American Red Cross has communicated a vision of the future that motivates me," 39 percent responded favorably. That compares with an average 61 percent of respondents from other companies in response to the same question.

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)

American Red Cross Stands By Its "Near Flawless" Response

The American Red Cross has called its post-Sandy relief efforts "near flawless." But internal documents and on-the-record accounts from responders paint a different picture of how the renowned charity handled its mission -- casting doubt on whether the Red Cross is ready for the next disaster.

ProPublica's Justin Elliott joins Steve Engelberg on the podcast this week to discuss his latest report on the Red Cross and how it botched several key components of its relief efforts, whether it was wasting massive amounts of food, simply not showing up to areas affected by the storm or, most disturbingly, diverting crucial resources for public relations purposes.

"The Red Cross has denied a lot of elements of our story, but they have never come to us with anything that they say is inaccurate," Elliott says.

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)

Another $11 Million Charity Fraud

by Gary Snyder

Federal prosecutors say the former chief financial officer of two nonprofit health clinics for the poor and homeless—Birmingham (AL) Health Care and the Central Alabama Comprehensive Health Inc.-- has been indicted in a scheme to defraud the agencies and the government, which provided most of their funding. 

She and her co-conspirators helped steal roughly $11 million in federal grant money and other property from the agencies. (source). She illegally received $1.7 million for herself, the indictment said. 

The indictment seeks more than $900,000 seized from accounts in her name as well as money and other assets totaling the $11 million estimate of the fraud. 

This is serious with these maximum penalties: 1. mail and wire fraud, 20 years in prison and a $250,000 fine; 2. money laundering (counts 56-68), 20 years in prison and a $500,000 fine, or twice the value of the property involved; 3. money laundering (counts 69-74) involving criminally derived property valued at more than $10,000, 10 years in prison and a $250,000 fine; 4. aggravated identity theft, mandatory two years in prison added to any sentence imposed for the underlying felony and a $250,000 fine; 5. filing a false tax return, three years in prison and a $100,000 fine.

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)

Nonprofit Exposed In Cheating Employees

by Gary Snyder

A report exposed the employment practices of a Brooklyn nonprofit that failed to pay its mentally ill workers correctly for years.

It is alleged that it paid its janitors a third of the wages and benefits required by the state’s 'prevailing wage' law for janitorial jobs.  Shorefront Mental health board may have underpaid their employees by as much as $123,224 during 2013, a figure that is likely to rise after taking into account the lack of supplemental and other benefits to which workers were entitled

Shorefront was contracted until March 2014 to supply 26 janitors to work at several locations in Brooklyn and Staten Island as part of the part of the State Office of Mental Health’s (OMH) “Buy OMH” program, a statewide workplace initiative established to facilitate and improve the employability of New Yorkers with a psychiatric disability.

Shorefront management attempted to conceal their duplicity by falsifying the hours on the payrolls they were required to submit to the OMH. They continued to cheat employees out of the correct wage by paying them for fewer hours than they had actually completed, telling workers to submit blank time sheets that would supposedly be filled in accurately by management. The audit found that one worker who completed a total of 72 hours in January 2014 and should have been paid $2,201.04 received just $600.34. These inconsistencies were present throughout Shorefront’s payroll documents.

“This contractor unconscionably cheated disabled employees out of thousands of dollars.” New York state comptroller Tom DiNapoli said. “OMH needs to take immediate action to make sure contractors follow the law to protect all workers.”

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)

American Red Cross Again In Serious Trouble

by Gary Snyder

A lengthy joint report published this week by ProPublica and NPR finds that the Red Cross completely failed many of its rescue efforts during Hurricanes Isaac and Sandy in 2012.

ARC tried to cover up foul up after foul up. Some of the overt mistakes included allegations that 1) diverted (see internal report) 80 nearly empty trucks that should’ve contained food were told to drive around to “look like you're giving disaster relief” so that the agency would impress Red Cross “brass” in the area; 2) the caterer couldn’t produce lunches and dinners so Red Cross volunteers had to distribute cold leftovers; 3) used an emergency response vehicle and staff for a photo-op for 5 hours; 4) shelters were not properly staffed, materials and food resources; 5) more

Two weeks after Sandy hit, Red Cross Chief Executive Gail McGovern declared that the group’s relief efforts had been “near flawless.” The group’s self-assessments, drawn together just weeks later, were far less congratulatory.

  

The charity, nevertheless, ultimately raised $312 million to help Sandy victims. (ProPublica has raised questions about the opacity of Red Cross disclosures on how this money was spent.)

There is a long a rich history of poor leadership, misappropriations, political intervention and questionable representation of the operations of the organization. 

Although blood-compliance problems are seldom in the forefront for the public, decades of Red Cross problems include unsuccessful attempts to improve its blood-collection program to meet government safety standards. After a Federal Drug Administration Consent Decree the agency, ARC continues to be cited by the U.S. Federal Drug Administration for failure to take precautions to assure the safety of the blood donations. This failure has resulted in huge fines amounting in tens of millions of dollars. In 2010 alone, federal health regulators fined the American Red Cross $16 million for sloppy screening of donated blood.

There are several reasons for years of lax governmental oversight by Congress. The Red Cross was created under a special Congressional charter. The President of the United States, who is honorary president of the organization, appoints eight members of its board of governors. This relationship has caused significant problems in several of the Red Cross administrations. The American Red Cross was essentially pardoned from its misdeeds. In the past, it was bailed out with a $100 million no-strings attached tax-payer funded bonus to cover a shortfall.

Leadership has been a serious problem. The current president is the seventh CEO in as many years, counting the interim heads.

The boards and administrations have taken so little action about the problems that the American National Red Cross Modernization Act of 2007 (Pub. Law 110-26), a bill to strengthen the governance structure of the American Red Cross, was signed into law to provide to provide the first major overhaul of the organization since its 1947 congressional charter.

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)