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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

org. food and nutrition information.eavors rel. inits internati.religious beliefs. shelter. and openly share ideas and i_nformationwith each other.III~tal'Y. race.orpoliticafopinions. and youth. Health and Safety Services. born of a desire tobring assistance IN. or ideological nature. and respond to emergencies. the Movementmay not fake sides in or engage atany time in controversies of a political.is worldwide.en~. and so forth. in which all Societies have equal status and share equal responsibilities and duties in helping eachother.allhandto ensure respectforthe human being. and so on. Educational services to prepare for disasters. always listening totlieirneeds and lookingforways to serve through existing or new initiatives.l1lJou~lea. www. obtain. Int~grity:Weact with honesty. mental health counseling. ~~spect: Vv. It promotes mutual understanding.000 hospitals with about half of the blood used in the United States. living well programs. effectively. providing fer victims of disasters andh_elpingpeople prevent. andstaff we search for ways to provide hope to servewhileidemonstratingcompassion. . and to give priority to to lT1?sturgentcases of distress. cooperation. awareness required for exceptional service.andappreciation. and support the rights and diversity of each person in our organization a?dinthecommunities we serve. Swimming and lifeguard classes. > Ej(hibit 2 Values of the American Red Cross • • • • • • • Humanitarianism: We existto serve others in need.redcross. Voluntary Service:ltis a voluntary relief movement not prompted in any manner by desireJorgain. class. HIV/AIDS education. friendship.~~irit:Asafamilvofdonors. always tpimprove.independently. Disaster Services. endeavors. racial.The National Societies.~ndnational capacity. must allNaysmaintain their autonomy so that they may be able atall times to act in accordance with the principles of the Movement.ievethe suffering of individuals. e72 Case 11:: American Red Cross . Source:www. being guided solely by their needs. religious. Source: American Red Cross. ~~lpingOthers:Weareattentive and responsive tothose we serve.volunteeJs. to identify. and lasting peace amongst all peoples.~utrality: In order to continue to enjoy the confidence of all.esin.redcross. In~ependence: The Movement isindependent. demonstrate courage and accountability under pressure. and maintain competencies andthe. 1111~f)~if)lity:ltrnakesno discrimination asto nationality. 9~nti. while auxiliari. and efficiently with resources entrusted to us.found.onal.respect.ithoutdiscrimination to the wounded on the battlefield. The American Red Cross supplies 3. Stevvardship: We act respgnsibly. Universality: The International Hed Cross and Red Crescent Movement. Unity: There can be only one Red Cross or one Red Crescent Society in anyone country. financial assistance. collectively and individually.eacknowledge. ".rning:We seek.the.000 volunteers help disaster victims by providing food.generosity. transportation. "~.Itmust carryon its humanitarian work throughout its territory.countries. and without discrimination. seniors. hUIllanitari an services of their governments and subject tothe laws of theirrespective. Community Services.org. Help for the homeless.to prevent and alleviate human suffering WQereit may be. in excess of 6 million pints of blood. Itmust be opento all. Each year 83. Its purpose is to protect life and he. prepare for."_--'-" f)(hibit 1 Principles ofIntemational Red Cross • • • • • • • Hurilanity:ThelnternationalBed Cross and Red Crescent Movement.

The Web site helps visitors locate local Red Cross shelters. Archer stated. In 2000 it launched "iGiveLife. and improve response time to local disasters.743 billion. and it's not necessarily that.• and so forth. and 5). vice president of Disaster Services at the American Red Cross. and young adults. "The Internet has definitely changed how the whole organization thinks. online media manager for the Ameri- .570 billion (see Exhibits 3. and the use of new technology will make this information available online. testing. grants. to collect Red Cross donations for disaster relief efforts. Russ Finkelstein.. Coinstar machines were located within two miles of 130 million Americans. You feel this sense of urgency whenever there's a disaster-e-you want that information up as quickly as you can get it. Massachusetts General Hospital and the American Red Cross jointly own a patent for a protein associated with the underlying cause of Alzheimer's disease. it may be possible for the American Red Cross to offer an online shopping network to generate additional resources.v'? However. The Red Cross is able to provide long-term aid and education to those in need. Also.712 billion. In 1999 the American Red Cross joined the Federal Emergency Management Agency for "TOPOFF. feeding programs. find relatives in a disaster area. materials. Total operating revenues for fiscal year 2000-2001 were $2."? Archer worked on developing a Web site where visitors could enter a zip code and quickly find information. administer funds. and diarrhea in poor countries and to support primary health care. In addition. Jane Delano Society.1 Technology and Operations Technology has helped the American Red Cross better coordinate its efforts among its 1. Helping kids. and obtain information about donating and volunteering.000 hospitals with blood donations. Student nurses. Youth Involvement. Inc. Geneva Conventions."!' About 12 million Americans enroll in Red Cross courses each year. legacies. indicated that "If every American near a Coinstar machine would donate a handful • • Disaster costs: Assistance to victims. Wireless communication allows the American Red Cross to make faster damage assessment at the scene. International Services. the American Red Cross supplies over 3. the Internet serves as a vital source of information to the American public and as a new way to collect donations. The Red Cross has routinely published the latest public health information. Each year more than 12 million Americans take advantage of lifesaving courses offered by the Red Cross. For Cindee Archer. there were costs associated with a Web site that many nonprofit groups did not realize. The communication network allows it to locate family members during crises more efficiently. fees from collecting. Recruiting and organizing volunteers. John Clizbe. and distributing blood and tissue. These "click" sites appeal to a newer and often younger audience for the nonprofits." a service that enables blood drive sponsors to use their intranets to recruit donors and allows hospital customers to order blood products online. Investment income and other income: Investment income from endowments and reserve funds and income from contracts to provide various programs. primary health care programs. other monetary and in-kind contributions. Emergency disaster response. As a result of recent research and development. It is now possible to make these courses available online.117 billion. "Some of them think this is going to be a kind of panacea for doing fund-raising. Volunteering. and courses. and so forth. and major expenses included:" can Red Cross in Washington. Biomedical services: Facility maintenance. Total operating expenses for the 2000-2001 fiscal year were $2. Red Cross delegates help local citizens rebuild infrastructure. Financial Overview In fiscal year 2001-2002 the American Red Cross had operating revenues of $4. strengthen public health. expenses in blood. Consumers could drop loose change into the Coinstar machines located in local supermarkets. and so on. director of outreach at Action Without Borders has stated.P Strategic Alliances The American Red Cross has established a number of alliances with other organizations.400 chapters and to expand its reach across America. Three main funding sources for the American Red Cross were:" • • Contributions: Fund-raising efforts by the United Way & Combined Federal Campaign. lack of pure water. D." a nationwide disaster simulation to help prepare for acts of terrorism. keep up with breaking news. staff expenses at disaster sites. 4. and tissue services. It works with the World Health Organization to alleviate malnutrition. teens. it's only going to get more pervasive. A donation to the World Hemophilia Foundation of plasma product is used to treat hemophilia. In the near future.. Nursing. 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. Products and services: Fees for products. 13 In February 2001 the American Red Cross teamed up with Coinstar.C. plasma. Cindy Archer also believed that "more and more people are coming onlinethis isn't going to go away. Total operating expenses for the fiscal year 2001-2002 were $3. and so on. Funding disaster services: Expenses to solicit donations.

913 Receival.374 203. 2001) $146.247 309.042 92.473 7.293 3.633 4.556 379.453 120..525.784 in 2001 Other assets Total current assets Investments Contributions receivable Prepaid pension costs Land.626 1.619 $771.892 1.826 823.029.089 2.149 2.525.840 12.57.654 183 29.545 34.680 (-'elnsieln and postretirement liabilities benefits 357.. 2002. and other property.92 22.662 39.453 296.602.402 3.587 mitl11ents and contingencies L.825 197..301 in 2001: Trade Contributions.570 15..258 110.252 12.575.386 12.541 11.354 2. •. 2002 (with summarized information as of June 30. 9..544 155.543 16.547 986.0.437.924 2. current portion Other Inventories.825 319.209 39.500 771.050 $ 1. net of allowance for doubtful accounts of $19.036 357.750 in 2002 and $6.674 28.453 120. net 304.243 15.293 63 63 23..626 1.964 325.042 93. $2.'c· _~.374.Red .272 $3.704 380.374.092 20 83 380.569 11. net of allowance for obsolescence of $7.209 823.801 126.385 American. Annual Report.066 $380.514 15.buildings.623 936.180 13. June 30.103 56 15.924 liabilities 20.823 950.421 1.137 liabilities and netassets Cross._ ~jhibit 3 (ill thousands) Consolidated Statement of Financial Position.913 548.653 366.385 6.164.lles..604 in 2002 and $19.894 18.238 2.162 585.411 $439.541 35.894 18.798 1.149 287.

845 1.083 3.208 $2.182 311.117.872.410 3.402 $1.575.022 705 Armed Forces Emergency Services Disaster services liberty disaster relief-Sept.931 420.083 3.135 2.086 $380.058 150.931 61.756 284.815) 1.980 360.549 84.747) 19.238 2.587 .448.686.201 (31.614 152.604 (63.195) 411.069 2.924.259.513 308.674.164.960 1.727 (2.876) 2.164.097 4.261 1.594 49.137 $2.513 308.915 906 1.195.410) 420.463 51.924.960 108.736 3.614 152.108 45.902 32. 103.035.967 213.156 11 617.066 546.518 (548) 419. Annual Report.736 3.4 Consolidated Statement of Activities.570.616 154.901 174.967 213.745 96. 2002 (with summarized information for the year ended 30.137 in net assets from operations gains (losses) effect of accounting change in net assets beginning of year end of year Red Cross.960 1.289' 1.351 230.570.978 203.302 30.844 2.008 (1.699.2001) (in thousands) $ 205.437.848 136.085 (131.822 1.182 311. response Biomedical services Health and safety services Community services International services program services Supporting services: Fund raising Management and general 61.906 61.405 40.601 989.466.222 67~175 36.236 213.060 6.970 337.728 76.901 174.848 136.726 263.035.5.259.900) (28.034 21.712.089 1.016 22.872.488 58.18 22.649 $ 757.330 (135.077 136.175 81.077 137.171 81.090 121)24 50.619 22. 2002.071 ) 2.742.118 22.272 65.342 2.902 32. Year ended June 30.171 82.394 49.582 58.156 617.727 115.

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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. and other services to victims' families and others affected. The Red Cross is a fine organization. "Everything is happening at such a fast pace. the new M&Ms' captured the heart of America. American Red Cross Growth and Integrated Development." Rich Stillman. and at the Pentagon to provide meals. In January 2002 Masterfoods USA presented a check to the Red Cross in the amount of$3. those handfuls will make a huge difference in our capacity to help others thisyear. attack. victims' families. In response to the tragedy.g. which prohibits monopolization. radio and newspapers. food. "What has taken place is extraordinary."20 Recent Problems Events between 2000 and 2002 provided the American Red Cross with a number of challenges." "Through appearances on television." 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. a Red Cross spokesperson. and other items to relief workers and volunteers. financial assistance. If all Americans donate the change in their wallet or pocket. HemaCare Corp. Within 15 days of the September 11. Bernadine Healy."!" Masterfoods USA. "We believe that's unfair and illegal.. declarations. 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.' stated Skip Seitz. the Red Cross had collected $202 million in donations. counseling. "You no longer need a credit card or checkbook to provide financial support to those in need. based on Healy'S policy of using donations for a "long period of C78 Case 11:: Amer lean Red Cr ass . lodging. 2001. 15 One hundred percent of all profits from the sales of these M&Ms were donated to the American Red Cross Disaster Relief Fund. and will explore efforts in joint training exercises. Somerset County.3 billion. The workers were unhappy about long hours. In the lawsuit. MD. and increasing health benefit costs. said in a written statement. said in a written statement. the Red Cross had annual sales of more than $1. the American Red Cross released a spending plan for the first $300 million in the Liberty Fund. and Liberty Disaster Relief Fund After the terrorist attacks on September 11. In providing more than half the nation's blood. said. frequent schedule changes. platelets) below production costs to drive out competitors while it charged higher prices for the same products in markets where there is no competition. 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. Respite centers were set up in New York City. and creative displays in stores across the country. and relief workers. HemaCare's chief executive officer. Financial assistance. stated. 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. white. unfair trade practices. or rescue workers.P This planned distribution of funds. Because of the large dollar amount of donations from the American people. The lawsuit also charged tortuous interference. Millions of dollars. stated. and blue M&Ms specifically to benefit the Red Cross. and we will vigorously defend this lawsuit. Less than 50 percent of the money raised was targeted for victims."? Blythe Kubina. and we must respond in an extraordinary way. a Red Cross spokeswoman.2001. The national campaign theme used for this promotion was "Taking Care of America Everyday. COO of Coinstar.'? Unfair Trade Practices Lawsuit The Red Cross derived 60 percent of its revenues from the sale of blood. the Red Cross set up family assistance centers to provide counseling. and meals for volunteers and staff working on-site.5 million. Deborah Goldburg. and Coral Blood Services alleged the Red Cross had cost them more than $25 million in lost business. It is with great humility and pride that we carry out this noble obligation/'P On October 12. created a special package of red.of change on their next supermarket visit. the president and chief executive officer of the Red Cross. She indicated that organization officials earmarked $100 million from the fund to provide short-term financial assistance to families of victims." unfair competition under the California Business and Professional Code. The American Red Cross has a heavy burden-to live up to the inspiration and memory of those lost. child care. 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. thousands of blood donations. a Mars Incorporated Company. the Red Cross would be that much better prepared to respond to disaster immediately. Funds were used for travel. the American Red Cross rose to the challenge of providing the most extensive relief operation in its 120-year history. and help from a myriad of volunteers contributed to Red Cross efforts to provide aid to survivors. "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. William Nicely. the plaintiffs alleged the Red Cross violated Section 2 of the Sherman Antitrust Act. Pennsylvania. and transportation were provided to families of missing foreign nationals. The ASAE provides the Red Cross with demographic information about associations and assistance with identifying organizations they wish to contact during times of need. and changes in legislation. They further alleged that the American Red Cross priced some blood products (e. senior vice president. sleeping quarters. their families. We just want them to play by the rules that are reasonable and fair and compete on a level playing field. We have been in full compliance with the law.

The largest 126 chapters must send quarterly financial reports to the national Red Cross.000people $169 270 94 3. She stated that Wallace's claim that chapters "are not even required to submit financial reports" is completely false. Art Taylor..assistanceto 3.'dE)ceasedand seriously injured . "Today we are recognizing the work of our staff.26 On November 14. "As oflast week. mental he. Healy was confronted with allegations of "panicking the public into wasteful donations of blood. the American public donated blood for the disaster victims. "Outside audits of local Red Cross chapters are rare. It appears to have contained some inaccuracies concerning floods. interim president.uncertainty and recovery.000people. News & World Report. David T.500 families affected by the attacks.'! BBB Wise Giving Alliance On February 16. Chapters must meet specific national guidelines to maintain their charters.266families of . David McLaughlin stated. Regrettably. . $ millions gir~Gt. and extend the use of toll-free telephone lines. chairman of the American Red Cross Board of Governors. sent a letter to CBS News indicating the errors and an explanation. Chapters that have over $100." caused a huge uproar. and Bennett Weiner. David McLaughlin stated. Harold Decker." Harold Decker. Wallace reported. The attorney general of New York State threatened legal action. In fact. The Red Cross does regular audits of chapters. Wallace reported. participate in a database to be shared among relief agencies. 2.i" The donors blasted Healy because they expected their donations to be helping September 11 disaster victims now." Deborah Daley responded that chapters are accountable in a number of ways. the Better Business Bureau Wise Giving Alliance removed the American Red Cross from its "give.org Web site. and donors who responded to September 11th. the American Red Cross saluted the staff and volunteers who provided assistance to the more than 54. "Donors charged the organization with abuse of their good intentions. it took us too long to hear their message. All chapters must have an independent annual review.althservices for 232. The Red Cross would provide increased financial support to families. As for the Alpine fire in Southern California. These donations were given in response to Healy'S "Together. made some unsupported public statements regarding the Red Cross that were reported in the Philadelphia Inquirer. "The people of this country have given the Red Cross their hard-earned dollars." In response. a spokesperson for the Red Cross.32 Another onslaught of negative publicity for the American Red Cross occurred March 10. fires. volunteers.S. and very clear direction for our September 11 relief effort."?" In an article in U. "In the West Virginia flood ad. 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. 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. 14 months after the fire. we can save a life" public service announcement. stated. In a comment about advertising practices." she said. In addition. president of the alliance. announced that the American Red Cross received $930 million in contributions and this money was used to provide the following." Healy finally responded with her announcement of retirement. "If we don't subject ourselves to public scrutiny. Deborah Daley reported. 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. 2001. H. 2002. hire an additiona1200 caseworkers. Experts questioned the wisdom of calling for blood donations when there were very few blood recipients. 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. agreed to a March 30 deadline for the updated report. on the CBS news show 60 Minutes.org" Web site. McLaughlin. and the financial accountability of Red Cross chapters. "I had no choice. it's in small print. allegedly because the American Red Cross did not provide a timely report to the alliance." The Lancet reported. "They also decided to put a disclaimer in their ads saying that donations will be used for this and other disasters."28 In addition to donating money.P In a congressional hearing.~ssistanceto 51.000families of displaced workers and disaster workers Provision for 14million meals. the "this and other disasters" language appears in the same font and size as the rest of the body copy appealing for support. 2002. Deborah Daley. CFO of the Red Cross.P? On March 7. interim CEO and president of the Red Cross. COO of the alliance. The trouble is.P 60 Minutes Program 1. and health services for 129. claiming that the organization's board had pushed her OUt. 2002. Given the recent activities of the American Red Cross. By November 2001 about 10 percent of the red blood cells collected on September 11 and 12 had expired. we will never have public truSt. it was determined that such a report could not be provided by the due date. their trust.000 in annual expenses must have an external audit conducted by an independent CPA. Mike Wallace reported. Jack Campbell.

January 1: 20. Blood. 35. The timely and capable response day-in and day-out to these disasters speaks volumes about the character of the volunteers and staff. November 5: 75. Annual June 27. November 24: 1789. ASAE and American Red Cross formalize partnership agreement.. Red Cross announces major changes in Liberty Fund: Fund solely used for people affected by September 11 tragedy. Cross. Modern Healthcare 31. Greenberg. US Newswire. 7. November 14. Taylor. 24. Press release. 20. Cinda. but there are costs. 8. 2001. Josh. Marsha Johnson Evans must confront the many issues faced by the American Red Cross. 2001-2002. Ibid. American Red Cross and Coinstar to launch new fundraising technology to prepare for disasters.org. American Red Cross.redcross. How should she proceed? Endnotes 1. 13. Charity olympics. 30. said. American 2. Tyrangiel. 15. www. 53(8): 12.San Diego was still waiting for a full accounting of how the money donated for the fire victims has been and will be spent. 11. chairman of the Board of Governors of the American Red Cross. American Red Cross letter to Better Business Bureau's Wise Giving Alliance. February 16. some 45. 2000. October 1: 8. Nonprofits reap rewards of the Web-Internet proves to be a great fund-raising tool for charities. 2000-2001. Ibid. 14. 21. 29. 2002. Reports. 2002. American 6. 2002. Ibid. U. 2001. Tyrangiel. 2001. "Marty's unique style of leadership along with her experience as established administrator will bring new vigor to the American Red Cross. 9. 2002. Ibid. Press release. Red Cross workers on strike. Red Cross announces major changes in Liberty Fund. Annual Report. Ibid. 32. 2002. 26. March 7. Stephanie. February 1. 16. Americans want to know: Is that money helping? Time. David McLaughlin. June 27. Looking to the Future After a five-month search. politics. C80 Case 11:: American Red CI ass . 2002. 25. PR Newswire. November 19. News & WorldReport. 31(4): 33. Tyrangiel. Red Crossroads. Greenberg. Ibid. politics. 34. 10. and the American Red Cross. American 5.000 in the months since last September. 2001. 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. Greenberg." Deborah Daley responded that the chapter has provided up-to-date financial information on its response to the Alpine fire three times since November. 22(25): 37. she is well poised to guide our organization as we continue to provide vital services in a world faced by new challenges. Samantha. Red Red Red Red Red Cross. Navy. 18. 12.. Annual Report. 200 I. February 1. 28. February 12. Mark. American Red Cross. Becker. 2001.. Levine. Daniel S. With great insight into our mission. 2000. Press release. 2002. Red Cross faces antitrust lawsuit. Ibid. A torrent of donations."?" Evans remarked that: In the midst of responding to the extraordinary demands of 9/11 and a lot of criticism about these efforts. December 9. 2000. 31. Reports. 2000. In his announcement. Taylor. American 4. Sanborn. politics. PR Newswire. Blood. 2001. and most especially their dedication. and the American Red Cross. Press release. American Red Cross. The charity olympics: After weeks of record giving. Modern Healthcare 31.S. 22. Red Cross faces antitrust lawsuit. 23. prior to which she had a 29-year career in the U. Johnson Evans was named president and CEO of the American Red Cross on June 27. American 3. Charity olympics. Lancet. Marsha. Association Management. Press release. Newsweek: Former Red Cross head says her fundraising message was clear . and the American Red Cross. Cross. 2001.S. Fund Raising Management. Blood. 27." As she begins to guide the organization. US Newswire. Infoworld. Annual Cross. Cross. 33. American Red Cross. their talent. 17. American Red Cross. charities wrestle with how best to spend money pouring in since attacks. where she earned the rank of rear admiral. Evans has served as national executive director of the Girl Scouts of the USA for the past four years. Ibid. 19. 2001.

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