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American Red Cross Case

American Red Cross Case

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Published by: Eddie8209 on Jul 17, 2011
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Case Tl


As Marsha "Marty" Johnson Evans American Red Cross on August 5, with the challenge of restoring the . . During the past 24 of negative

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

and 5). Recruiting and organizing volunteers. and young adults.117 billion." a nationwide disaster simulation to help prepare for acts of terrorism. You feel this sense of urgency whenever there's a disaster-e-you want that information up as quickly as you can get it. primary health care programs. The Red Cross is able to provide long-term aid and education to those in need. and improve response time to local disasters. Financial Overview In fiscal year 2001-2002 the American Red Cross had operating revenues of $4. grants. expenses in blood. It works with the World Health Organization to alleviate malnutrition. and the use of new technology will make this information available online. materials. Total operating revenues for fiscal year 2000-2001 were $2.• and so forth.. vice president of Disaster Services at the American Red Cross. online media manager for the Ameri- . Russ Finkelstein. other monetary and in-kind contributions. plasma. Wireless communication allows the American Red Cross to make faster damage assessment at the scene. Total operating expenses for the fiscal year 2001-2002 were $3.. it's only going to get more pervasive.v'? However. In the near future. 4. fees from collecting.C. Archer stated. and so on." a service that enables blood drive sponsors to use their intranets to recruit donors and allows hospital customers to order blood products online. teens. Biomedical services: Facility maintenance. and tissue services."!' About 12 million Americans enroll in Red Cross courses each year. The Red Cross has routinely published the latest public health information.1 Technology and Operations Technology has helped the American Red Cross better coordinate its efforts among its 1. and so on. the Internet serves as a vital source of information to the American public and as a new way to collect donations. it may be possible for the American Red Cross to offer an online shopping network to generate additional resources. legacies. and distributing blood and tissue. For Cindee Archer. International Services. As a result of recent research and development. indicated that "If every American near a Coinstar machine would donate a handful • • Disaster costs: Assistance to victims. there were costs associated with a Web site that many nonprofit groups did not realize. director of outreach at Action Without Borders has stated. find relatives in a disaster area."? Archer worked on developing a Web site where visitors could enter a zip code and quickly find information. feeding programs. The Web site helps visitors locate local Red Cross shelters. Total operating expenses for the 2000-2001 fiscal year were $2. testing.712 billion. Inc. Products and services: Fees for products. lack of pure water. and diarrhea in poor countries and to support primary health care. D. and obtain information about donating and volunteering. John Clizbe. It is now possible to make these courses available online. and so forth. administer funds. Nursing. Each year more than 12 million Americans take advantage of lifesaving courses offered by the Red Cross. Three main funding sources for the American Red Cross were:" • • Contributions: Fund-raising efforts by the United Way & Combined Federal Campaign. Massachusetts General Hospital and the American Red Cross jointly own a patent for a protein associated with the underlying cause of Alzheimer's disease. the American Red Cross supplies over 3.743 billion. Emergency disaster response. Consumers could drop loose change into the Coinstar machines located in local supermarkets. Red Cross delegates help local citizens rebuild infrastructure. A donation to the World Hemophilia Foundation of plasma product is used to treat hemophilia. keep up with breaking news. Jane Delano Society. Helping kids. In addition.P Strategic Alliances The American Red Cross has established a number of alliances with other organizations. Youth Involvement. The communication network allows it to locate family members during crises more efficiently. Also. These "click" sites appeal to a newer and often younger audience for the nonprofits.400 chapters and to expand its reach across America. Cindy Archer also believed that "more and more people are coming onlinethis isn't going to go away. In 1999 the American Red Cross joined the Federal Emergency Management Agency for "TOPOFF. Geneva Conventions. strengthen public health. Investment income and other income: Investment income from endowments and reserve funds and income from contracts to provide various programs. In 2000 it launched "iGiveLife. Student nurses. Coinstar machines were located within two miles of 130 million Americans. and courses.570 billion (see Exhibits 3.000 hospitals with blood donations. Volunteering. 13 In February 2001 the American Red Cross teamed up with Coinstar. staff expenses at disaster sites. "The Internet has definitely changed how the whole organization thinks. and it's not necessarily that. to collect Red Cross donations for disaster relief efforts. Funding disaster services: Expenses to solicit donations. "Some of them think this is going to be a kind of panacea for doing fund-raising. 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. and major expenses included:" can Red Cross in Washington.

209 823.704 380.453 120.066 $380.374 203.Red .544 155.050 $ 1.604 in 2002 and $19.238 2.149 2.473 7.541 35.654 183 29.825 197.602.680 (-'elnsieln and postretirement liabilities benefits 357.525.662 39..653 366.525.514 15.042 93.252 12.092 20 83 380.164. current portion Other Inventories..385 6. $2.209 39.137 liabilities and netassets Cross.243 15.354 2..924 liabilities 20.623 936. net 304.385 American._ ~jhibit 3 (ill thousands) Consolidated Statement of Financial Position.633 4.374.180 13.buildings.587 mitl11ents and contingencies L.801 126.411 $439.036 357. •.547 986. and other property.57.825 319.964 325.421 1. 9.556 379.894 18.272 $3. 2002.913 Receival.674 28.500 771.0..374.'c· _~.293 63 63 23.840 12.293 3.042 92. net of allowance for doubtful accounts of $19.913 548.892 1...437.162 585.386 12.301 in 2001: Trade Contributions. Annual Report.826 823.894 18.541 11.103 56 15.453 296. June 30.92 22.149 287.569 11.798 1.823 950.258 110. 2002 (with summarized information as of June 30.lles.545 34.247 309.784 in 2001 Other assets Total current assets Investments Contributions receivable Prepaid pension costs Land.924 2.626 1.570 15.626 1.750 in 2002 and $6.575.089 2.453 120..543 16.402 3.619 $771. 2001) $146. net of allowance for obsolescence of $7.029.

728 76. 2002.967 213.164.845 1.978 203.035.822 1.727 115.289' 1. 103.405 40.901 174.2001) (in thousands) $ 205.071 ) 2.614 152.518 (548) 419.351 230.616 154.083 3.236 213.058 150.5.201 (31.649 $ 757.402 $1.175 81.156 11 617.195.872.745 96.066 546.900) (28.302 30.902 32.960 1.272 65.844 2.4 Consolidated Statement of Activities.208 $2.182 311.108 45.970 337.686.488 58.699.549 84.085 (131.902 32.736 3.437.016 22.118 22.931 420.137 $2.261 1.582 58.18 22.466.238 2.747) 19.034 21.931 61.164.171 81.960 108.135 2.182 311.674. Year ended June 30.727 (2.587 . 2002 (with summarized information for the year ended 30.086 $380.330 (135.259.915 906 1.742.712.077 136.604 (63. Annual Report. response Biomedical services Health and safety services Community services International services program services Supporting services: Fund raising Management and general 61.342 2.171 82.960 1.090 121)24 50.726 263.394 49.195) 411.756 284.980 360.906 61.156 617.594 49.513 308.077 137.035.089 1.876) 2.924.848 136.924.570.448.060 6.575.619 22.097 4.410) 420.736 3.967 213.022 705 Armed Forces Emergency Services Disaster services liberty disaster relief-Sept.083 3.069 2.848 136.137 in net assets from operations gains (losses) effect of accounting change in net assets beginning of year end of year Red Cross.901 174.259.222 67~175 36.008 (1.570.463 51.601 989.410 3.614 152.513 308.872.117.815) 1.

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

allegedly because the American Red Cross did not provide a timely report to the alliance. Chapters that have over $100.assistanceto 3. Wallace reported.000families of displaced workers and disaster workers Provision for 14million meals. stated. Experts questioned the wisdom of calling for blood donations when there were very few blood recipients. mental he. 2001. "In the West Virginia flood ad. interim CEO and president of the Red Cross. Wallace reported. "As oflast week.org" Web site. McLaughlin.26 On November 14." Deborah Daley responded that chapters are accountable in a number of ways." The Lancet reported." In response. on the CBS news show 60 Minutes." Harold Decker. The attorney general of New York State threatened legal action. it took us too long to hear their message. 2002.S.P In a congressional hearing. News & World Report. "Today we are recognizing the work of our staff. By November 2001 about 10 percent of the red blood cells collected on September 11 and 12 had expired. These donations were given in response to Healy'S "Together. 14 months after the fire. In a comment about advertising practices. 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. "I had no choice. Chapters must meet specific national guidelines to maintain their charters. the American public donated blood for the disaster victims. Harold Decker.~ssistanceto 51. In fact. $ millions gir~Gt. Jack Campbell. we will never have public truSt. Art Taylor. The largest 126 chapters must send quarterly financial reports to the national Red Cross.'dE)ceasedand seriously injured . The Red Cross would provide increased financial support to families. David McLaughlin stated. COO of the alliance. it's in small print. All chapters must have an independent annual review. 2002. Regrettably. volunteers. sent a letter to CBS News indicating the errors and an explanation. chairman of the American Red Cross Board of Governors." caused a huge uproar. and donors who responded to September 11th. 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. As for the Alpine fire in Southern California. "If we don't subject ourselves to public scrutiny.32 Another onslaught of negative publicity for the American Red Cross occurred March 10. a spokesperson for the Red Cross.P 60 Minutes Program 1. "The people of this country have given the Red Cross their hard-earned dollars. H. The trouble is. made some unsupported public statements regarding the Red Cross that were reported in the Philadelphia Inquirer. claiming that the organization's board had pushed her OUt."28 In addition to donating money. 2002. the "this and other disasters" language appears in the same font and size as the rest of the body copy appealing for support.P? On March 7.'! BBB Wise Giving Alliance On February 16. president of the alliance. and health services for 129. "They also decided to put a disclaimer in their ads saying that donations will be used for this and other disasters. The Red Cross does regular audits of chapters.. and extend the use of toll-free telephone lines.uncertainty and recovery. fires. "Donors charged the organization with abuse of their good intentions. Healy was confronted with allegations of "panicking the public into wasteful donations of blood. we can save a life" public service announcement. David McLaughlin stated. Deborah Daley reported. CFO of the Red Cross. . Mike Wallace reported.000 in annual expenses must have an external audit conducted by an independent CPA. She stated that Wallace's claim that chapters "are not even required to submit financial reports" is completely false. and Bennett Weiner.266families of . 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.500 families affected by the attacks.i" The donors blasted Healy because they expected their donations to be helping September 11 disaster victims now."?" In an article in U.org Web site." she said. the Better Business Bureau Wise Giving Alliance removed the American Red Cross from its "give. it was determined that such a report could not be provided by the due date. agreed to a March 30 deadline for the updated report. 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. 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. and very clear direction for our September 11 relief effort. "Outside audits of local Red Cross chapters are rare.000people $169 270 94 3. announced that the American Red Cross received $930 million in contributions and this money was used to provide the following. and the financial accountability of Red Cross chapters. In addition. hire an additiona1200 caseworkers. It appears to have contained some inaccuracies concerning floods.000people. David T. Given the recent activities of the American Red Cross. Deborah Daley." Healy finally responded with her announcement of retirement. 2.althservices for 232. interim president.

25. The charity olympics: After weeks of record giving. 24. November 19. 2000. 2002. With great insight into our mission. December 9. Nonprofits reap rewards of the Web-Internet proves to be a great fund-raising tool for charities. Newsweek: Former Red Cross head says her fundraising message was clear . 17. News & WorldReport. 9. "Marty's unique style of leadership along with her experience as established administrator will bring new vigor to the American Red Cross. American Red Cross and Coinstar to launch new fundraising technology to prepare for disasters. 200 I. Cross. U. Charity olympics. Becker. Modern Healthcare 31. Modern Healthcare 31. American Red Cross letter to Better Business Bureau's Wise Giving Alliance. 2001. US Newswire. February 16. American Red Cross. and the American Red Cross. 2002. 20. Red Red Red Red Red Cross. Blood. but there are costs. 11. 2000. charities wrestle with how best to spend money pouring in since attacks. Fund Raising Management. 30. American 6. November 5: 75. American 3. Marsha Johnson Evans must confront the many issues faced by the American Red Cross. How should she proceed? Endnotes 1. Ibid. 13. 33. 18. and the American Red Cross. February 12. 2002. she is well poised to guide our organization as we continue to provide vital services in a world faced by new challenges. ASAE and American Red Cross formalize partnership agreement. Johnson Evans was named president and CEO of the American Red Cross on June 27. Press release. Ibid. Ibid. 2002. American 4. 29. October 1: 8. Sanborn. Ibid. Daniel S. Looking to the Future After a five-month search. 2002. 12. 23. 2001. Cross. C80 Case 11:: American Red CI ass . 2000-2001. November 14. Reports. February 1."?" Evans remarked that: In the midst of responding to the extraordinary demands of 9/11 and a lot of criticism about these efforts. Ibid. Josh. Ibid. March 7. www. their talent. Infoworld. 34. Red Cross workers on strike. said. American Red Cross. chairman of the Board of Governors of the American Red Cross. 32. American Red Cross. and the American Red Cross. Greenberg. Taylor. 22(25): 37.San Diego was still waiting for a full accounting of how the money donated for the fire victims has been and will be spent." As she begins to guide the organization. and most especially their dedication. Ibid. Annual Report. 2002. 2001. Annual Report. Association Management. 2001. 31. 15. Samantha. prior to which she had a 29-year career in the U. Evans has served as national executive director of the Girl Scouts of the USA for the past four years. 16. Press release. Greenberg. US Newswire. PR Newswire. Blood. Blood.S. Red Cross announces major changes in Liberty Fund: Fund solely used for people affected by September 11 tragedy. 10. 2001. Greenberg. Red Crossroads. American Red Cross. Ibid. American 5. Red Cross faces antitrust lawsuit. Charity olympics.. 53(8): 12." Deborah Daley responded that the chapter has provided up-to-date financial information on its response to the Alpine fire three times since November. politics. Stephanie. Cinda. 21. some 45. 28. Mark. Annual Cross. 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. Red Cross faces antitrust lawsuit. 31(4): 33.. 26. 2001. 2002. June 27. 27. Press release. Americans want to know: Is that money helping? Time.redcross. where she earned the rank of rear admiral. Levine. Red Cross announces major changes in Liberty Fund. Navy. Lancet. politics. 2001-2002. Taylor. Tyrangiel. Press release. Reports. 2001. 2000. American 2. A torrent of donations. 19. 35. Cross. November 24: 1789. Tyrangiel. politics. January 1: 20. 8. 2000.org. In his announcement. Annual June 27. David McLaughlin. Press release.S. Tyrangiel. Marsha.000 in the months since last September. 2001. American Red Cross. 22. PR Newswire. The timely and capable response day-in and day-out to these disasters speaks volumes about the character of the volunteers and staff. 7. 14.. February 1.

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