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American Red Cross Troubles

December 14, 2005 at 12:00 AM EST
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MARGARET WARNER: When disaster strikes, the Red Cross is the one private charity that U.S. officials from the president on down urge Americans to give to, just as they did after Hurricane Katrina hit this year.

PRESIDENT GEORGE W. BUSH: Right now if our fellow citizens want to help, they ought to give a cash donation to the Red Cross, which they can find at a phone number 1-800-HELP-NOW.

MARGARET WARNER: Americans responded. Of the $2.6 billion raised in private donations for hurricane relief, by far the largest amount, more than $1.8 billion, went to the Red Cross.

The government has designated the American Red Cross as the frontline private agency for delivering relief, food, shelter, and medical care during times of local and national emergencies. The group also collects and distributes half of the nation’s blood supply.

But in recent years, the $3 billion-a-year charity has been plagued by troubles and upheaval. After 9/11 it came under fire for collecting nearly $1 billion in the name of victim relief but using some of the money for other Red Cross needs. President Bernadine Healey was forced to resign.

In 2002, former Navy Admiral Marsha Evans took over, and the organization promised to be more transparent about its fund raising.

The Red Cross did provide shelters and other relief for hundreds of thousands of victims, but evacuees, public officials, and even some of its own volunteers were critical. They said the organization responded too slowly, often seemed disorganized, and failed to assist many remote Gulf Coast communities.

At a hearing yesterday, Louisiana Congressman Jim McCrery assailed the charity for its performance.

REP. JIM McCRERY: After witnessing the Red Cross’s struggles during Katrina and Rita, I question whether it’s prudent for Congress to place such great responsibility in the hands of one organization.

MARGARET WARNER: Hours earlier, Evans had quit as president, the fourth CEO to leave the Red Cross in a decade. Red Cross officials attributed her departure to conflicts with the board, not to unhappiness over its performance after Katrina.

And for more on Ms. Evans’ departure and the Red Cross we’re joined by Paul Light, professor of public service at New York University.

Professor Light, welcome. What do you think is behind the Evans resignation?

PAUL LIGHT: Well, even though the organization disputes the role of Katrina, I think Katrina played a role here. I think that Marsha Evans has become, to some extent, a scapegoat for all that ails the organization, and was having tremendous conflict with the board and eventually came under fire herself for being too much of an over promiser and an apologist for what had been going wrong down in the Gulf states.

MARGARET WARNER: Well, what is the problem with the board because it’s kind of unusual for a company or an organization to actually say, the board and its president don’t get along?

PAUL LIGHT: Well, it’s unusual to have a board that doesn’t get along with four different presidents in such a short order. I mean, it is the hiring and firing agency, and it doesn’t seem to like anybody that it selects. We’ve had three different executive directors over the past six years, each one with a very different style, none of which could get along with the board.

The problem with the board is, number one, that it’s very large. And most nonprofit experts would argue that a much smaller board would be much more effective in overseeing the agency.

The second problem is that the board has a very large number of members who are elected by the local chapters that the president of the organization oversees. To some extent, when you’re having conflict with that board, you’re having conflict with the people that you supervise.

Indirectly, for sure, but the 30 members of this 49-member board who come from the slates elected by the local chapters are very strong advocates on behalf of those chapters, and that’s where a lot of the tension comes from.

MARGARET WARNER: How does that translate operationally? Why did that, say, contribute to problems in responding to Katrina?

PAUL LIGHT: Well, I think the problems in responding to Katrina go way back to underinvestment by the Red Cross in desperately needed management systems over the years.

I mean, this is not a sudden event with Katrina. The problems that the Red Cross experienced in getting down there involve a lack of investment in technology, a lack of investment in telecommunications, a very serious lack of investment in volunteer training.

I mean, they moved quickly. They were faster than the Federal Emergency Management Agency in getting down there, and they have great compassion for the people they help, but they’re only as good as their management systems are at this point.

They’re only as good as their worst chapter down in the Gulf states; they’re only as good as their volunteers down in the Gulf states are, and we saw tremendous weaknesses in the organization that have been years in the making come to the fore in the days and weeks after Katrina.

MARGARET WARNER: All right. But now the Red Cross says, as you said, we got down there first. We were prevented from getting into New Orleans by the blocked roads. What is it that they really failed to do?

PAUL LIGHT: You know, I was so positive about the Red Cross in the first few days after Katrina. They were very fast down to the Gulf, as you say. They moved quickly to set up their tents and their shelters.

The Salvation Army was also very fast. I mean, they were better than government. Now, that may not be saying much when you look at the FEMA track record, but there was much to admire in what they did in the early days, but as the size of the disaster revealed itself, as the amount of money flowing into the Red Cross increased, as the pressure on the Red Cross to take up the slack created by the failure of federal, state, and local agencies increased, you started to see the agency bend.

You started to see the agency come apart, given the lack of a decent accounting system, the lack of good volunteer training, the lack of past investments.

It’s been very difficult for the Red Cross to improve its management systems because it’s a very difficult dollar to raise. Most donors want to give the money directly to the victims. They don’t want to pay for accounting systems or volunteer training, but those things really matter as a disaster of Katrina’s size wears on. And the Red Cross started to come apart within the first week to ten days after Katrina and the money started flowing in.

MARGARET WARNER: There was also some criticism about the fact that it didn’t have enough minority volunteers. Was that a serious problem?

PAUL LIGHT: That is absolutely the case. There are some who argue that it wasn’t debris that stopped the Red Cross from going into New Orleans and the Ninth Ward, where you have a very large disadvantaged minority population, but the lack of minority volunteers who can represent the agency in these particular areas.

Now, the Red Cross announced last week a new program designed to recruit and train a new generation of volunteers who are more representative of the people most likely to be in distress after a hurricane.

Our research at New York University suggests that most Americans can’t last three hours, let alone three days, without help. That means that the Red Cross has to get better at getting into the areas where people are hardest hit — meaning the lower income, less-educated, often minority communities– but the Red Cross just doesn’t have the volunteer base to do that. They’re working on it, but it’s something that should have been worked on a long, long time ago.

MARGARET WARNER: All right, so that gets back to the question, after 9/11, they did some soul-searching; they had this problem with the fund-raising where they diverted some of the money to non-9/11 causes. And they said, well, we’ll be more transparent.

One, they do any other soul-searching? Why weren’t these infrastructure problems addressed by Ms. Evans – I mean, Red Cross has a lot of money — was it her fault, was it the board’s fault — to sort of to point us to the future?

PAUL LIGHT: I think it’s all of our fault in a sense. I mean, donors don’t like giving money for organizational infrastructure. The federal government can’t abide in investment.

When you hear members of Congress say that it’s not prudent to rely on the Red Cross, it’s also not prudent to under invest in the Red Cross. They’re always on the scene first, but the federal government really doesn’t give the Red Cross any help in terms of support for organizational infrastructure, these mundane things like accounting systems and so forth.

Donors don’t like to see their dollars go to that. I mean, we want to see the money get into the victims’ hands. And I think the Red Cross itself has, to a certain extent, deluded itself that maybe it could get by with less of what it needed, perhaps less than state-of-the-art, less than even near state-of-the-art. It has made some reasonable investments in things like telecommunications, but it hasn’t been organization-wide, and it hasn’t saturated down to the local chapters on which it depends.

You know, this is very hard money to raise. It’s also hard money to spend wisely. But if you don’t invest in these things, you’re going to find that you’re going to start breaking down as an organization relatively quickly when the stress hits.

And I think it’s a certain amount of underinvestment, a certain amount of arrogance and hubris, the same kind of thing that affected the Department of Homeland Security in the days and weeks following Katrina, just a sense that we didn’t need to be as prepared for the kind of thing that hit. And I just think that’s a mistake now in this particular environment.

MARGARET WARNER: And, briefly, before we go, we’re right at the end of the charitable giving season, before the end of the year. What impact do you think this resignation coming right now is going to have on the Red Cross and on other charities?

PAUL LIGHT: Well, I don’t think the resignation itself will have much of an impact. Very few people know who Marty Evans is, and I don’t think the resignation will have that kind of impact. I do think that the performance of the Red Cross during and after Katrina really does affect Americans’ confidence in nonprofits and other charitable organizations. We know that from our survey research.

The question is whether or not the compassion and the giving spirit is enough to overwhelm that troublesome impression from Katrina. We know that as of today, only 11 percent of Americans believe that charitable organizations do a very good job spending money wisely. That’s a terrible statistic. And the Red Cross meltdown following Katrina contributes to that.

That creates doubts among donors, and that eventually does work its will in terms of actual donations.

MARGARET WARNER: All right, Professor Paul Light, thank you so much.

PAUL LIGHT: It’s great being with you.