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As Marsha "Marty" Johnson Evans American Red Cross on August 5, with the challenge of restoring the . . During the past 24 of negative
redcross. living well programs. In~ependence: The Movement isindependent. and so forth. endeavors. awareness required for exceptional service. Unity: There can be only one Red Cross or one Red Crescent Society in anyone country.III~tal'Y. Swimming and lifeguard classes.~~irit:Asafamilvofdonors.redcross. ~~spect: Vv. prepare for."_--'-" f)(hibit 1 Principles ofIntemational Red Cross • • • • • • • Hurilanity:ThelnternationalBed Cross and Red Crescent Movement. class. and openly share ideas and i_nformationwith each other. and respond to emergencies.~ndnational capacity. born of a desire tobring assistance IN. effectively.org. Disaster Services. ~~lpingOthers:Weareattentive and responsive tothose we serve.Itmust carryon its humanitarian work throughout its territory. hUIllanitari an services of their governments and subject tothe laws of theirrespective. Int~grity:Weact with honesty.respect. Each year 83. cooperation. demonstrate courage and accountability under pressure. . inits internati. food and nutrition information. in excess of 6 million pints of blood. and youth. collectively and individually.countries. It promotes mutual understanding. obtain.eavors rel. financial assistance. providing fer victims of disasters andh_elpingpeople prevent.found. www. The American Red Cross supplies 3. while auxiliari.The National Societies. 9~nti. and so on. Community Services. Source: American Red Cross. Stevvardship: We act respgnsibly. and support the rights and diversity of each person in our organization a?dinthecommunities we serve. > Ej(hibit 2 Values of the American Red Cross • • • • • • • Humanitarianism: We existto serve others in need.religious beliefs. Source:www. Educational services to prepare for disasters.000 volunteers help disaster victims by providing food. Universality: The International Hed Cross and Red Crescent Movement. and without discrimination. always tpimprove. and efficiently with resources entrusted to us. HIV/AIDS education. being guided solely by their needs. must allNaysmaintain their autonomy so that they may be able atall times to act in accordance with the principles of the Movement.rning:We seek. Itmust be opento all. seniors. to identify. Health and Safety Services. racial.is worldwide. and lasting peace amongst all peoples.independently. the Movementmay not fake sides in or engage atany time in controversies of a political.l1lJou~lea. shelter. friendship.000 hospitals with about half of the blood used in the United States.ievethe suffering of individuals.en~.allhandto ensure respectforthe human being.generosity. and maintain competencies andthe.onal.ithoutdiscrimination to the wounded on the battlefield.the. or ideological nature.esin.eacknowledge. race. 1111~f)~if)lity:ltrnakesno discrimination asto nationality. Voluntary Service:ltis a voluntary relief movement not prompted in any manner by desireJorgain. ".to prevent and alleviate human suffering WQereit may be. always listening totlieirneeds and lookingforways to serve through existing or new initiatives.org. in which all Societies have equal status and share equal responsibilities and duties in helping eachother. andstaff we search for ways to provide hope to servewhileidemonstratingcompassion. e72 Case 11:: American Red Cross . "~. Help for the homeless. Its purpose is to protect life and he.~utrality: In order to continue to enjoy the confidence of all. and to give priority to to lT1?sturgentcases of distress. mental health counseling.orpoliticafopinions. religious.volunteeJs.andappreciation. transportation.
primary health care programs. Total operating expenses for the fiscal year 2001-2002 were $3. Wireless communication allows the American Red Cross to make faster damage assessment at the scene.P Strategic Alliances The American Red Cross has established a number of alliances with other organizations. and it's not necessarily that. find relatives in a disaster area. Three main funding sources for the American Red Cross were:" • • Contributions: Fund-raising efforts by the United Way & Combined Federal Campaign. 8 The Internet provides information about nonprofit organizations and can provide "click-to-donate" sites for those individuals who are willing to help out with contributions while they are online. As a result of recent research and development. Funding disaster services: Expenses to solicit donations.400 chapters and to expand its reach across America. Financial Overview In fiscal year 2001-2002 the American Red Cross had operating revenues of $4. testing. to collect Red Cross donations for disaster relief efforts. Emergency disaster response. legacies. and the use of new technology will make this information available online.v'? However. It is now possible to make these courses available online. In addition. online media manager for the Ameri- . Nursing. administer funds. there were costs associated with a Web site that many nonprofit groups did not realize. the Internet serves as a vital source of information to the American public and as a new way to collect donations. Jane Delano Society. Russ Finkelstein. Student nurses. Archer stated. Investment income and other income: Investment income from endowments and reserve funds and income from contracts to provide various programs.."!' About 12 million Americans enroll in Red Cross courses each year. indicated that "If every American near a Coinstar machine would donate a handful • • Disaster costs: Assistance to victims. For Cindee Archer. Helping kids. and major expenses included:" can Red Cross in Washington. strengthen public health. other monetary and in-kind contributions." a service that enables blood drive sponsors to use their intranets to recruit donors and allows hospital customers to order blood products online. teens. Each year more than 12 million Americans take advantage of lifesaving courses offered by the Red Cross.• and so forth. and young adults. The Web site helps visitors locate local Red Cross shelters. Total operating revenues for fiscal year 2000-2001 were $2. and so on. and diarrhea in poor countries and to support primary health care. Total operating expenses for the 2000-2001 fiscal year were $2. 13 In February 2001 the American Red Cross teamed up with Coinstar. These "click" sites appeal to a newer and often younger audience for the nonprofits. and obtain information about donating and volunteering. In the near future. and 5).570 billion (see Exhibits 3. 4. International Services. director of outreach at Action Without Borders has stated. Also. and so forth.743 billion. materials. It works with the World Health Organization to alleviate malnutrition. Inc.117 billion. Recruiting and organizing volunteers." a nationwide disaster simulation to help prepare for acts of terrorism. The communication network allows it to locate family members during crises more efficiently. Cindy Archer also believed that "more and more people are coming onlinethis isn't going to go away. and so on..C. In 1999 the American Red Cross joined the Federal Emergency Management Agency for "TOPOFF. "The Internet has definitely changed how the whole organization thinks.000 hospitals with blood donations. Red Cross delegates help local citizens rebuild infrastructure. John Clizbe. lack of pure water. and courses. Products and services: Fees for products.712 billion. vice president of Disaster Services at the American Red Cross. it may be possible for the American Red Cross to offer an online shopping network to generate additional resources. plasma. "Some of them think this is going to be a kind of panacea for doing fund-raising. feeding programs."? Archer worked on developing a Web site where visitors could enter a zip code and quickly find information. keep up with breaking news. The Red Cross is able to provide long-term aid and education to those in need.1 Technology and Operations Technology has helped the American Red Cross better coordinate its efforts among its 1. The Red Cross has routinely published the latest public health information. and tissue services. the American Red Cross supplies over 3. Volunteering. D. Consumers could drop loose change into the Coinstar machines located in local supermarkets. A donation to the World Hemophilia Foundation of plasma product is used to treat hemophilia. and improve response time to local disasters. fees from collecting. Geneva Conventions. You feel this sense of urgency whenever there's a disaster-e-you want that information up as quickly as you can get it. expenses in blood. staff expenses at disaster sites. Biomedical services: Facility maintenance. it's only going to get more pervasive. grants. Youth Involvement. In 2000 it launched "iGiveLife. Massachusetts General Hospital and the American Red Cross jointly own a patent for a protein associated with the underlying cause of Alzheimer's disease. Coinstar machines were located within two miles of 130 million Americans. and distributing blood and tissue.
587 mitl11ents and contingencies L.374.Red .473 7.162 585.042 93.164.92 22..964 325.825 319.272 $3.541 35.209 39.374 203.180 13.924 2.704 380. 2002.674 28.602.525.525.'c· _~.386 12.57.453 120.453 120.894 18.137 liabilities and netassets Cross.619 $771. June 30.894 18. net of allowance for doubtful accounts of $19.626 1.604 in 2002 and $19.089 2.252 12.556 379.lles.798 1.042 92.293 3.385 6.092 20 83 380.buildings.385 American.258 110.626 1.784 in 2001 Other assets Total current assets Investments Contributions receivable Prepaid pension costs Land.623 936. 2002 (with summarized information as of June 30.103 56 15..050 $ 1.238 2. and other property.541 11.924 liabilities 20.543 16.801 126.149 2.654 183 29...066 $380.149 287.354 2.750 in 2002 and $6. current portion Other Inventories.301 in 2001: Trade Contributions.036 357.402 3.823 950.374. 9. net of allowance for obsolescence of $7. $2.500 771.243 15. Annual Report._ ~jhibit 3 (ill thousands) Consolidated Statement of Financial Position. net 304.547 986.293 63 63 23.892 1.653 366.514 15.826 823..570 15.662 39.840 12.209 823.680 (-'elnsieln and postretirement liabilities benefits 357.0.633 4.545 34.913 Receival..029.569 11. •.437.411 $439.421 1. 2001) $146..544 155.913 548.453 296.575.825 197.247 309.
848 136.175 81.967 213.236 213.614 152.330 (135.238 2.058 150.970 337.727 (2.289' 1.090 121)24 50.4 Consolidated Statement of Activities. 103.171 81.822 1.022 705 Armed Forces Emergency Services Disaster services liberty disaster relief-Sept.201 (31.156 11 617.016 22.674.351 230.756 284.513 308.872.437.614 152.008 (1.960 1.156 617.118 22.848 184.108.40.206 2.066 546.083 3.035.089 1. Year ended June 30.108 45.208 $2.2001) (in thousands) $ 205.924.967 213.259.699.069 2.077 136.570.900) (28.616 154. 2002.960 1.575.402 $1.727 115.195.035.410 3.604 (63.085 (131.649 $ 757.594 49.342 2.083 3.405 40.171 82.518 (548) 419.182 311.736 3.876) 2.582 58.844 2.18 22.060 6.195) 411. response Biomedical services Health and safety services Community services International services program services Supporting services: Fund raising Management and general 61.549 84.712.570.902 32.726 263.619 22.978 203.906 61. Annual Report.845 1.272 65.601 989.071 ) 2.164.466.302 30.960 108.931 61.587 .736 3.410) 420.915 906 1.5.872.902 32.924.901 174.815) 1.980 360.686.742.086 $380.097 4.463 51.077 137.394 49.747) 19.137 in net assets from operations gains (losses) effect of accounting change in net assets beginning of year end of year Red Cross. 2002 (with summarized information for the year ended 30.448.745 96.901 174.182 311.728 76.034 21.513 308.222 67~175 36.259.261 1.931 420.137 $2.488 58.
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the president and chief executive officer of the Red Cross. and help from a myriad of volunteers contributed to Red Cross efforts to provide aid to survivors. the new M&Ms' captured the heart of America. white. and increasing health benefit costs. William Nicely. HemaCare Corp.5 million.' stated Skip Seitz.g. The lawsuit also charged tortuous interference." "Through appearances on television. The workers were unhappy about long hours. and meals for volunteers and staff working on-site. unfair trade practices. financial assistance. The remainder was earmarked to help the Red Cross improve its own organization and expand into new aid programs that might be needed in the event of future terrorist attacks. said in a written statement. sleeping quarters.3 billion. a Mars Incorporated Company. the Red Cross created the Liberty Disaster Relief Fund to be used exclusively to meet the needs of people directly affected by the September 11 tragedy. platelets) below production costs to drive out competitors while it charged higher prices for the same products in markets where there is no competition. food.P This planned distribution of funds." Rich Stillman. The national campaign theme used for this promotion was "Taking Care of America Everyday.'? Unfair Trade Practices Lawsuit The Red Cross derived 60 percent of its revenues from the sale of blood. In providing more than half the nation's blood. American Red Cross Growth and Integrated Development. those handfuls will make a huge difference in our capacity to help others thisyear. and at the Pentagon to provide meals. the Red Cross had collected $202 million in donations. attack. The ASAE provides the Red Cross with demographic information about associations and assistance with identifying organizations they wish to contact during times of need. We just want them to play by the rules that are reasonable and fair and compete on a level playing field."!" Masterfoods USA. Funds were used for travel. and blue M&Ms specifically to benefit the Red Cross. victims' families. radio and newspapers. which prohibits monopolization. and relief workers.. Bernadine Healy. In August 2001 the American Red Cross and the American Society of Association Executives (ASAE) signed an agreement under which the two organizations will share data regarding disasters. and transportation were provided to families of missing foreign nationals. based on Healy'S policy of using donations for a "long period of C78 Case 11:: Amer lean Red Cr ass . Within 15 days of the September 11.of change on their next supermarket visit. said. "You no longer need a credit card or checkbook to provide financial support to those in need. The Red Cross is a fine organization. HemaCare's chief executive officer. "Everything is happening at such a fast pace. frequent schedule changes. and changes in legislation. Somerset County. Respite centers were set up in New York City. Millions of dollars. created a special package of red. the Red Cross had annual sales of more than $1. and other items to relief workers and volunteers. and we will vigorously defend this lawsuit. The American Red Cross has a heavy burden-to live up to the inspiration and memory of those lost. senior vice president. a Red Cross spokeswoman. "What has taken place is extraordinary. Financial assistance. In January 2002 Masterfoods USA presented a check to the Red Cross in the amount of$3." unfair competition under the California Business and Professional Code. child care.2001. thousands of blood donations. Worker Strike In June 2000 Red Cross workers who collected blood donations and delivered them to hospitals went on strike after rejecting a contract offer by the American Red Cross. She indicated that organization officials earmarked $100 million from the fund to provide short-term financial assistance to families of victims."? Blythe Kubina. the Red Cross set up family assistance centers to provide counseling. and will explore efforts in joint training exercises. or rescue workers. stated. 15 One hundred percent of all profits from the sales of these M&Ms were donated to the American Red Cross Disaster Relief Fund. In the lawsuit. a Red Cross spokesperson. If all Americans donate the change in their wallet or pocket. Pennsylvania. In response to the tragedy. counseling. Because of the large dollar amount of donations from the American people. 2001. the plaintiffs alleged the Red Cross violated Section 2 of the Sherman Antitrust Act. Right now we are just trying to keep up with responses/'" Goldburg stated that the entire amount raised by the Red Cross since the disaster would go into the newly created Liberty Fund." In January 2001 a California blood supplier filed an antitrust suit against the American Red Cross claiming the organization used its clout to eliminate competitors. the Red Cross would be that much better prepared to respond to disaster immediately. Less than 50 percent of the money raised was targeted for victims. declarations."20 Recent Problems Events between 2000 and 2002 provided the American Red Cross with a number of challenges. and Liberty Disaster Relief Fund After the terrorist attacks on September 11. and creative displays in stores across the country. "We believe that's unfair and illegal. their families. stated. and other services to victims' families and others affected. the American Red Cross released a spending plan for the first $300 million in the Liberty Fund. COO of Coinstar. They further alleged that the American Red Cross priced some blood products (e. Deborah Goldburg. lodging. We have been in full compliance with the law. and Coral Blood Services alleged the Red Cross had cost them more than $25 million in lost business. and we must respond in an extraordinary way. It is with great humility and pride that we carry out this noble obligation/'P On October 12. "We believe the American Red Cross has done nothing inappropriate regarding HemaCare's claims to unfair business practices and we were surprised by this lawsuit. MD. said in a written statement. the American Red Cross rose to the challenge of providing the most extensive relief operation in its 120-year history.
The trouble is.P? On March 7."?" In an article in U. The attorney general of New York State threatened legal action. on the CBS news show 60 Minutes. The Red Cross would provide increased financial support to families. Wallace reported.althservices for 232. 14 months after the fire. In a comment about advertising practices. it's in small print. president of the alliance.500 families affected by the attacks. the American public donated blood for the disaster victims. Wallace reported. Chapters must meet specific national guidelines to maintain their charters. 2002.uncertainty and recovery. we can save a life" public service announcement. In fact." Deborah Daley responded that chapters are accountable in a number of ways. announced changes adopted by the American Red Cross Board of Governors to meet the immediate and long-term needs of people affected by the September 11 terrorist attacks." Harold Decker." The Lancet reported. stated. 2. She stated that Wallace's claim that chapters "are not even required to submit financial reports" is completely false. Jack Campbell. Healy was confronted with allegations of "panicking the public into wasteful donations of blood. David T. News & World Report.32 Another onslaught of negative publicity for the American Red Cross occurred March 10." In response. Harold Decker. 2002.P 60 Minutes Program 1." she said.P In a congressional hearing. Deborah Daley. "Today we are recognizing the work of our staff. agreed to a March 30 deadline for the updated report. All chapters must have an independent annual review.S. Given the recent activities of the American Red Cross.26 On November 14. and health services for 129. it took us too long to hear their message. and Bennett Weiner. "I had no choice.000 in annual expenses must have an external audit conducted by an independent CPA. Chapters that have over $100. McLaughlin. there is so little accountability that local chapters-and there are more than one thousand of them-aren't even required to submit financial reports to Red Cross headquarters in Washington. "Donors charged the organization with abuse of their good intentions. By November 2001 about 10 percent of the red blood cells collected on September 11 and 12 had expired. and the financial accountability of Red Cross chapters. "As oflast week. hire an additiona1200 caseworkers. It appears to have contained some inaccuracies concerning floods. chairman of the American Red Cross Board of Governors. "Outside audits of local Red Cross chapters are rare. and extend the use of toll-free telephone lines. the Better Business Bureau Wise Giving Alliance removed the American Red Cross from its "give. CFO of the Red Cross. the American Red Cross saluted the staff and volunteers who provided assistance to the more than 54. their trust. participate in a database to be shared among relief agencies." Healy finally responded with her announcement of retirement. "They also decided to put a disclaimer in their ads saying that donations will be used for this and other disasters. we will never have public truSt. COO of the alliance. "The people of this country have given the Red Cross their hard-earned dollars. Art Taylor. In his letter Decker requested a public retraction of Taylor's statements and that the Better Business Bureau's current report on the Red Cross be restored to the give." caused a huge uproar.'! BBB Wise Giving Alliance On February 16.000families of displaced workers and disaster workers Provision for 14million meals.."28 In addition to donating money. As for the Alpine fire in Southern California. H. Regrettably. allegedly because the American Red Cross did not provide a timely report to the alliance. David McLaughlin stated. a spokesperson for the Red Cross. 2002.~ssistanceto 51. Deborah Daley reported. it was determined that such a report could not be provided by the due date. mental he.000people. made some unsupported public statements regarding the Red Cross that were reported in the Philadelphia Inquirer.org" Web site. and donors who responded to September 11th. .i" The donors blasted Healy because they expected their donations to be helping September 11 disaster victims now. fires.000people $169 270 94 3. Mike Wallace reported. "In the West Virginia flood ad.org Web site. sent a letter to CBS News indicating the errors and an explanation. volunteers. announced that the American Red Cross received $930 million in contributions and this money was used to provide the following. The Red Cross does regular audits of chapters. David McLaughlin stated. claiming that the organization's board had pushed her OUt. and very clear direction for our September 11 relief effort. The largest 126 chapters must send quarterly financial reports to the national Red Cross. $ millions gir~Gt.266families of . "If we don't subject ourselves to public scrutiny. 2001. interim president. Experts questioned the wisdom of calling for blood donations when there were very few blood recipients.assistanceto 3. A letter from Harold Decker to the Wise Giving Alliance explained that a request by the alliance for an updated report from the Red Cross was received in January 2002. In addition. These donations were given in response to Healy'S "Together.'dE)ceasedand seriously injured . the "this and other disasters" language appears in the same font and size as the rest of the body copy appealing for support. interim CEO and president of the Red Cross.
2000. Red Cross announces major changes in Liberty Fund: Fund solely used for people affected by September 11 tragedy. American 5. Press release."?" Evans remarked that: In the midst of responding to the extraordinary demands of 9/11 and a lot of criticism about these efforts. American Red Cross. US Newswire.. 31. politics. 2001. Tyrangiel. 2001. Annual June 27. Red Cross faces antitrust lawsuit. Stephanie. Blood. Johnson Evans was named president and CEO of the American Red Cross on June 27.S. 2001. With great insight into our mission. Reports. Greenberg. 2000. PR Newswire. Blood. 2002. 17.S. and the American Red Cross. Reports. Lancet. November 14. Press release. 25. 27. Ibid. Red Cross faces antitrust lawsuit. News & WorldReport. Annual Report. 11. 14. 16. 24. 10. "Marty's unique style of leadership along with her experience as established administrator will bring new vigor to the American Red Cross.. How should she proceed? Endnotes 1. Ibid. A torrent of donations. 35. politics. Newsweek: Former Red Cross head says her fundraising message was clear .San Diego was still waiting for a full accounting of how the money donated for the fire victims has been and will be spent. 2002. 18. February 16. February 1.000 in the months since last September. November 5: 75. Charity olympics. Red Crossroads. my observation is that the Red Cross never lost sight of its responsibility to every community and every victim of the other disasters that occurred." As she begins to guide the organization. 29.redcross. she is well poised to guide our organization as we continue to provide vital services in a world faced by new challenges." Deborah Daley responded that the chapter has provided up-to-date financial information on its response to the Alpine fire three times since November. David McLaughlin. 9. American 4. Ibid. American Red Cross. Marsha Johnson Evans must confront the many issues faced by the American Red Cross. American Red Cross letter to Better Business Bureau's Wise Giving Alliance. Ibid. 26. In his announcement. Cross. 2002. Press release. 2000-2001. Samantha. www. and the American Red Cross. The timely and capable response day-in and day-out to these disasters speaks volumes about the character of the volunteers and staff. Looking to the Future After a five-month search. Navy. Greenberg. Charity olympics. November 19. 2000. Americans want to know: Is that money helping? Time. October 1: 8. politics. where she earned the rank of rear admiral. Daniel S. Press release.. ASAE and American Red Cross formalize partnership agreement. 2001. Red Cross announces major changes in Liberty Fund. Annual Cross. Infoworld. 2001-2002. 7. February 12. Ibid. Cross. 2000. American Red Cross. 20.org. Taylor. 19. U. The charity olympics: After weeks of record giving. 22(25): 37. 33. 32. Modern Healthcare 31. Annual Report. 28. American 2. 200 I. Mark. 15. February 1. 53(8): 12. American Red Cross. Marsha. 2002. November 24: 1789. Evans has served as national executive director of the Girl Scouts of the USA for the past four years. C80 Case 11:: American Red CI ass . American 3. 8. Ibid. US Newswire. and most especially their dedication. Greenberg. said. Ibid. 2001. 2002. chairman of the Board of Governors of the American Red Cross. 2002. 2001. Fund Raising Management. Taylor. American 6. and the American Red Cross. Sanborn. January 1: 20. Ibid. American Red Cross. Josh. some 45. December 9. June 27. their talent. 12. prior to which she had a 29-year career in the U. PR Newswire. Modern Healthcare 31. 13. 30. 2002. 21. but there are costs. Cross. Nonprofits reap rewards of the Web-Internet proves to be a great fund-raising tool for charities. Becker. Association Management. Tyrangiel. 31(4): 33. 34. 2001. 2001. March 7. Levine. 22. 23. Tyrangiel. Press release. American Red Cross and Coinstar to launch new fundraising technology to prepare for disasters. charities wrestle with how best to spend money pouring in since attacks. Blood. Red Red Red Red Red Cross. Cinda. Red Cross workers on strike.
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