Red Cross Crisis

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Any organization that has burned through four CEOs in ten years and has been constantly criticized by legislators, the press, and the public for mishandling funds, misrepresentations in fundraising, and failure to perform its job effectively is an organization with serious problems—problems that cannot be solved by replacing top managers. Nor can an organization in this situation solve its problems by merely addressing symptoms; it must engage the deep structural problems that are causing them.

ARC’s uneven performance in delivering aid in the Gulf region was not due to lack of resources: the Red Cross raised a billion dollars and deployed thousands of volunteers. But with minimal infrastructure on the ground in the region, there was a major disconnect between intentions and actions: Louisiana has only 7 local chapters; Mississippi only 6, Alabama only 9—in contrast to states like North Carolina (29), New Jersey (18), and Connecticut (13). Effective disaster response, especially in rural areas, requires local knowledge that imported volunteers can’t be expected to possess.

Why didn’t ARC make more of an effort to build local capacity in a region prone to catastrophic storms and floods? Given the organization’s Congressional mandate as the primary agency for sheltering, feeding, and providing medical care to disaster victims, building local capacity should certainly be among its responsibilities. But an organization so averse to introspection about its own governance is unlikely to be introspective about larger issues of organizational structure and process.

The American Red Cross’s congressional charter places it in a special category of “federal instrumentality”. This should render it more publicly accountable and transparent. Ironically, however, it may be this in combination with its iconic status that has impaired the ARC’s ability to make a searching and fearless inventory of its strengths and weaknesses. It has preferred to take the easier, softer way: scape-goating its CEOs in place of rigorously honest critical introspection and reform.

ARC’s self-assessment should go well beyond governance reform. Its board needs to reappraise the scale and scope of the organization’s responsibilities. Such a job of rigorous self-examination is one that one would expect a responsible board to do or have done for it fairly regularly. But is ARC’s board, as presently structured, up to the task? Unwieldy in size, with 50 members, and motley in composition, with 30 members representing chapters, 12 co-opted by the board, and 8 appointed by the President of the United States, there is little reason for optimism in this regard.

The unfolding Red Cross crisis calls attention to the deplorable lack of knowledge about all federated organizations. Almost all the nonprofit scholarship produced over the past thirty years focuses on freestanding organizations rather than federated ones—despite the fact that federated nonprofits are among the most important organizations in the sector, including such entities as religious denominations, the YM/YWCA, United Way, scouting organizations, service clubs (Rotary, Kiwanis), fraternal and sororal organizations (Masons, Knights of Columbus), and the health charities (Heart & Lung Association, American Cancer Society).

The failure to produce critical literature on federated organizations is matched by the lack of research on the Red Cross itself. In its one hundred and thirteen years of existence, only two general histories have been written of the organization, neither of them by academic scholars—one in 1950, the other in 2003. None of the scholarly articles or doctoral dissertations produced over the past twenty years has addressed issues relating to its organization, management, or governance. This is a massive oversight considering the centrality of the organization to the nation’s disaster response.

About the Author
Peter Dobkin Hall is Hauser Lecturer on Nonprofit Organizations at Harvard University.