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The American Red Cross: A Ship Adrift

The Red Cross was in the news again this week as reports aired regarding possible criminal misconduct by disaster volunteers, and as Senator Chuck Grassley of Iowa calls for organizational reform. SPEA Assistant Professor Beth Gazley comments on Grassley's actions.

Expert perspective: “Is Grassley’s criticism of the Red Cross warranted? Yes and no. Grassley is justified in pointing out the need for the Red Cross to get its internal house in order – specifically, board reform. A ship adrift and without strong executive leadership is bound to see more problems from the crew. The Red Cross instituted many important reforms after 9/11, but they were instituted in response to external criticism. Katrina reinforces the need for the Red Cross to be more proactive about reform. They should start with clear expectations of board members to fully exercise their fiduciary responsibilities rather than serving as political placeholders. The board could also make good faith efforts to change its culture so that its CEO no longer serves as the organizational whipping horse.

“However, the Red Cross faces at least three major barriers to meeting Grassley’s expectations. To begin, it is a unique organization: a nonprofit dependent on volunteers but operating under congressional charter with the designation of a ‘federal instrumentality.’ This charter dictates who serves on the 50-member Red Cross board. But it begs the question: if board reform recommendations suggested reducing the number of political appointments, would Congress go along?

“In addition, all nonprofits face demands from multiple stakeholder groups – clients, government regulators, media watchdogs, donors, taxpayers. At times, these expectations are mutually incompatible. The reports of volunteer criminal conduct illustrate the tradeoff that can happen between response time and procedural considerations – in management parlance, between efficiency and effectiveness. Congress and other stakeholders may have to decide which is more important: a fast response or a clean response? I doubt any organization can achieve both at once.

“Third, the magnitude of this disaster may have been beyond the ability of a single organization to address. As befits the largest and oldest voluntary emergency response organization in the nation, the Red Cross is normally exceptionally good at screening, training and deploying volunteers – and in requiring ethical conduct from them. However, these were not normal times. After Katrina and Rita, the Red Cross was expected to expand its volunteer capacity five-fold overnight and still conduct business flawlessly.

“Finally, part of the solution also lies with American donors, who should be generous but also judicious about where they direct their gifts. A wider dispersal of contributions to other Gulf State nonprofits would have placed a lesser burden on one organization, and would have better met certain other needs, particularly those connected to charitable infrastructure rather than victim services.”

SPEA Toolkit: Beth Gazley is an assistant professor at the School of Public and Environmental Affairs with an emphasis on nonprofit management, civic engagement, fundraising and government-nonprofit relationships.

Click here to read more about Prof. Gazley.

Click here to read more about Sen. Grassley.

Click here to read a recent New York Times article about problems with the Red Cross volunteers’ response to Hurricane Katrina.