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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
Help for the homeless. in which all Societies have equal status and share equal responsibilities and duties in helping eachother.onal. ~~lpingOthers:Weareattentive and responsive tothose we serve. ~~spect: Vv.eacknowledge.redcross. seniors. mental health counseling. prepare for. obtain. born of a desire tobring assistance IN. Disaster Services.en~.the.redcross.volunteeJs. and without discrimination. being guided solely by their needs.eavors rel.~ndnational capacity. Source: American Red Cross. and respond to emergencies. always tpimprove. Health and Safety Services. and so forth.Itmust carryon its humanitarian work throughout its territory. Universality: The International Hed Cross and Red Crescent Movement.000 volunteers help disaster victims by providing food. the Movementmay not fake sides in or engage atany time in controversies of a political. must allNaysmaintain their autonomy so that they may be able atall times to act in accordance with the principles of the Movement. and so on. e72 Case 11:: American Red Cross . Itmust be opento all.org.ievethe suffering of individuals.allhandto ensure respectforthe human being.III~tal'Y. inits internati.independently. and efficiently with resources entrusted to us.andappreciation.religious beliefs.respect. Unity: There can be only one Red Cross or one Red Crescent Society in anyone country.esin. ".to prevent and alleviate human suffering WQereit may be. Voluntary Service:ltis a voluntary relief movement not prompted in any manner by desireJorgain.l1lJou~lea. religious.countries. It promotes mutual understanding.orpoliticafopinions. Stevvardship: We act respgnsibly. Each year 83.~~irit:Asafamilvofdonors.ithoutdiscrimination to the wounded on the battlefield. shelter. transportation.org. to identify. HIV/AIDS education.rning:We seek.found. friendship. The American Red Cross supplies 3. providing fer victims of disasters andh_elpingpeople prevent. and lasting peace amongst all peoples.000 hospitals with about half of the blood used in the United States. always listening totlieirneeds and lookingforways to serve through existing or new initiatives. Educational services to prepare for disasters. cooperation. in excess of 6 million pints of blood. Community Services. 9~nti. demonstrate courage and accountability under pressure. and youth. Source:www. Swimming and lifeguard classes. hUIllanitari an services of their governments and subject tothe laws of theirrespective. andstaff we search for ways to provide hope to servewhileidemonstratingcompassion. endeavors. collectively and individually. In~ependence: The Movement isindependent. 1111~f)~if)lity:ltrnakesno discrimination asto nationality. or ideological nature.is worldwide. www. financial assistance. while auxiliari. > Ej(hibit 2 Values of the American Red Cross • • • • • • • Humanitarianism: We existto serve others in need.generosity. living well programs. Its purpose is to protect life and he. racial. and maintain competencies andthe. awareness required for exceptional service."_--'-" f)(hibit 1 Principles ofIntemational Red Cross • • • • • • • Hurilanity:ThelnternationalBed Cross and Red Crescent Movement.The National Societies.~utrality: In order to continue to enjoy the confidence of all. and to give priority to to lT1?sturgentcases of distress. race. effectively. . Int~grity:Weact with honesty. class. food and nutrition information. and openly share ideas and i_nformationwith each other. and support the rights and diversity of each person in our organization a?dinthecommunities we serve. "~.
Financial Overview In fiscal year 2001-2002 the American Red Cross had operating revenues of $4. feeding programs. Youth Involvement. Massachusetts General Hospital and the American Red Cross jointly own a patent for a protein associated with the underlying cause of Alzheimer's disease. vice president of Disaster Services at the American Red Cross. expenses in blood. Nursing.570 billion (see Exhibits 3. and so on. Geneva Conventions.. Red Cross delegates help local citizens rebuild infrastructure. Investment income and other income: Investment income from endowments and reserve funds and income from contracts to provide various programs. and diarrhea in poor countries and to support primary health care. Consumers could drop loose change into the Coinstar machines located in local supermarkets. and it's not necessarily that. Wireless communication allows the American Red Cross to make faster damage assessment at the scene. to collect Red Cross donations for disaster relief efforts. it may be possible for the American Red Cross to offer an online shopping network to generate additional resources. Each year more than 12 million Americans take advantage of lifesaving courses offered by the Red Cross. Helping kids. Emergency disaster response. fees from collecting.. indicated that "If every American near a Coinstar machine would donate a handful • • Disaster costs: Assistance to victims. and courses." a nationwide disaster simulation to help prepare for acts of terrorism.• and so forth. In the near future. Jane Delano Society. and young adults. Coinstar machines were located within two miles of 130 million Americans. director of outreach at Action Without Borders has stated. and 5). Student nurses.000 hospitals with blood donations. 4. The Red Cross is able to provide long-term aid and education to those in need. lack of pure water.400 chapters and to expand its reach across America. other monetary and in-kind contributions. Funding disaster services: Expenses to solicit donations. Recruiting and organizing volunteers. As a result of recent research and development. and so forth.v'? However. it's only going to get more pervasive. 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. strengthen public health. Total operating revenues for fiscal year 2000-2001 were $2. grants. find relatives in a disaster area. Inc. materials."!' About 12 million Americans enroll in Red Cross courses each year. Archer stated. "Some of them think this is going to be a kind of panacea for doing fund-raising. keep up with breaking news. You feel this sense of urgency whenever there's a disaster-e-you want that information up as quickly as you can get it.P Strategic Alliances The American Red Cross has established a number of alliances with other organizations. The Web site helps visitors locate local Red Cross shelters."? Archer worked on developing a Web site where visitors could enter a zip code and quickly find information. Three main funding sources for the American Red Cross were:" • • Contributions: Fund-raising efforts by the United Way & Combined Federal Campaign. and the use of new technology will make this information available online. online media manager for the Ameri- . Russ Finkelstein.C. and so on. The Red Cross has routinely published the latest public health information. legacies." a service that enables blood drive sponsors to use their intranets to recruit donors and allows hospital customers to order blood products online. In 2000 it launched "iGiveLife.1 Technology and Operations Technology has helped the American Red Cross better coordinate its efforts among its 1. Volunteering. Also. Total operating expenses for the 2000-2001 fiscal year were $2.117 billion. primary health care programs. 13 In February 2001 the American Red Cross teamed up with Coinstar. A donation to the World Hemophilia Foundation of plasma product is used to treat hemophilia. teens. and obtain information about donating and volunteering. staff expenses at disaster sites. For Cindee Archer. testing. In 1999 the American Red Cross joined the Federal Emergency Management Agency for "TOPOFF. plasma. the Internet serves as a vital source of information to the American public and as a new way to collect donations. The communication network allows it to locate family members during crises more efficiently. administer funds. Cindy Archer also believed that "more and more people are coming onlinethis isn't going to go away. It is now possible to make these courses available online. the American Red Cross supplies over 3.712 billion. and improve response time to local disasters. John Clizbe. These "click" sites appeal to a newer and often younger audience for the nonprofits. there were costs associated with a Web site that many nonprofit groups did not realize. In addition. and tissue services. Biomedical services: Facility maintenance. and major expenses included:" can Red Cross in Washington. and distributing blood and tissue.743 billion. Products and services: Fees for products. "The Internet has definitely changed how the whole organization thinks. International Services. D. It works with the World Health Organization to alleviate malnutrition. Total operating expenses for the fiscal year 2001-2002 were $3.
654 183 29.238 2.587 mitl11ents and contingencies L.402 3.547 986. 2001) $146.385 6.826 823..750 in 2002 and $6.385 American.buildings.823 950. Annual Report.066 $380.042 92.545 34. June 30.840 12.029.lles. 2002.149 287.149 2.825 197.825 319.437.042 93.386 12..604 in 2002 and $19.180 13.784 in 2001 Other assets Total current assets Investments Contributions receivable Prepaid pension costs Land.293 3.801 126.272 $3.680 (-'elnsieln and postretirement liabilities benefits 357.252 12.924 liabilities 20.894 18.258 110.543 16. and other property. current portion Other Inventories.500 771.103 56 15. $2.421 1..913 Receival.913 548.662 39.162 585.894 18.541 11.Red ..626 1.674 28. net of allowance for doubtful accounts of $19.473 7.209 823.453 120.525.209 39.569 11._ ~jhibit 3 (ill thousands) Consolidated Statement of Financial Position.050 $ 1.92 22.541 35.892 1.092 20 83 380.354 2.374.137 liabilities and netassets Cross.089 2. net 304.411 $439.57.575.164.704 380.556 379.301 in 2001: Trade Contributions.570 15.964 325.623 936.'c· _~.247 309.544 155. •.653 366.619 $771.525..374 203.633 4.374.293 63 63 23.036 357.453 120..0. net of allowance for obsolescence of $7.243 15.798 1.514 15.. 2002 (with summarized information as of June 30.453 296.924 2.602.626 1. 9.
137 $2.118 22.980 360.171 81.156 617.756 284.726 263.090 121)24 50.736 3.022 705 Armed Forces Emergency Services Disaster services liberty disaster relief-Sept.872.071 ) 2.728 76.117.967 213.901 174.488 58.845 1.549 84.931 420.815) 1.108 45.616 154.727 (2.289' 1.699.736 3.727 115.619 22.601 989.614 152.614 152.208 $2.342 2.201 (31.649 $ 757.195) 411.182 311.970 337.570.195.960 1.848 136.518 (548) 419.712.906 61.747) 19.902 32.924.238 2.086 $380.261 1.902 32.077 137.901 174.924.085 (131.686.410) 420. response Biomedical services Health and safety services Community services International services program services Supporting services: Fund raising Management and general 61.164.405 40.066 546.745 96.016 22.570.034 21.259.742.513 308. 2002.060 6.582 58. 2002 (with summarized information for the year ended 30.097 4.18 22.164.171 82.2001) (in thousands) $ 205.175 81.135 2.137 in net assets from operations gains (losses) effect of accounting change in net assets beginning of year end of year Red Cross.876) 2. 103.960 108.5.674.604 (63.035.4 Consolidated Statement of Activities. Year ended June 30.302 30.872.513 308.083 3.083 3.008 (1. Annual Report.351 230.463 51.437.594 49.089 1.844 2.402 $1.272 65.182 311.394 49.822 1.058 150.978 203.259.900) (28.069 2.466.587 .967 213.848 136.931 61.156 11 617.915 906 1.236 213.077 136.410 3.035.575.222 67~175 36.448.960 1.330 (135.
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" "Through appearances on television. 15 One hundred percent of all profits from the sales of these M&Ms were donated to the American Red Cross Disaster Relief Fund.g.3 billion.2001. the Red Cross set up family assistance centers to provide counseling."!" Masterfoods USA. HemaCare Corp. and increasing health benefit costs. and other services to victims' families and others affected. She indicated that organization officials earmarked $100 million from the fund to provide short-term financial assistance to families of victims. COO of Coinstar." unfair competition under the California Business and Professional Code. Because of the large dollar amount of donations from the American people. The Red Cross is a fine organization. counseling. frequent schedule changes. the Red Cross would be that much better prepared to respond to disaster immediately. the Red Cross had collected $202 million in donations. and other items to relief workers and volunteers. Deborah Goldburg. thousands of blood donations. the American Red Cross rose to the challenge of providing the most extensive relief operation in its 120-year history. 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. and Coral Blood Services alleged the Red Cross had cost them more than $25 million in lost business. Financial assistance. created a special package of red. We just want them to play by the rules that are reasonable and fair and compete on a level playing field. In providing more than half the nation's blood. or rescue workers. said. In response to the tragedy."? Blythe Kubina.of change on their next supermarket visit. 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. the president and chief executive officer of the Red Cross. Respite centers were set up in New York City. and we will vigorously defend this lawsuit. MD. "What has taken place is extraordinary. Somerset County. the new M&Ms' captured the heart of America. and relief workers. and will explore efforts in joint training exercises. the plaintiffs alleged the Red Cross violated Section 2 of the Sherman Antitrust Act. The American Red Cross has a heavy burden-to live up to the inspiration and memory of those lost. platelets) below production costs to drive out competitors while it charged higher prices for the same products in markets where there is no competition. The lawsuit also charged tortuous interference. a Red Cross spokesperson. attack. Bernadine Healy. which prohibits monopolization. Funds were used for travel. declarations. The national campaign theme used for this promotion was "Taking Care of America Everyday. stated. victims' families. 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." 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. 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 changes in legislation. Millions of dollars. and help from a myriad of volunteers contributed to Red Cross efforts to provide aid to survivors. It is with great humility and pride that we carry out this noble obligation/'P On October 12. white. a Red Cross spokeswoman. food. 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. In the lawsuit. "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. and meals for volunteers and staff working on-site." Rich Stillman. financial assistance. They further alleged that the American Red Cross priced some blood products (e. William Nicely.'? Unfair Trade Practices Lawsuit The Red Cross derived 60 percent of its revenues from the sale of blood. We have been in full compliance with the law. Less than 50 percent of the money raised was targeted for victims. The ASAE provides the Red Cross with demographic information about associations and assistance with identifying organizations they wish to contact during times of need. Pennsylvania. 2001. the American Red Cross released a spending plan for the first $300 million in the Liberty Fund.. and blue M&Ms specifically to benefit the Red Cross. senior vice president.' stated Skip Seitz. "You no longer need a credit card or checkbook to provide financial support to those in need. their families. lodging. The workers were unhappy about long hours. radio and newspapers. and creative displays in stores across the country. said in a written statement. In January 2002 Masterfoods USA presented a check to the Red Cross in the amount of$3. and Liberty Disaster Relief Fund After the terrorist attacks on September 11. stated. "We believe that's unfair and illegal. 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."20 Recent Problems Events between 2000 and 2002 provided the American Red Cross with a number of challenges. and we must respond in an extraordinary way. If all Americans donate the change in their wallet or pocket. sleeping quarters. those handfuls will make a huge difference in our capacity to help others thisyear. "Everything is happening at such a fast pace. American Red Cross Growth and Integrated Development. unfair trade practices. HemaCare's chief executive officer. said in a written statement. child care. a Mars Incorporated Company. and transportation were provided to families of missing foreign nationals.P This planned distribution of funds. and at the Pentagon to provide meals.5 million. the Red Cross had annual sales of more than $1.
Experts questioned the wisdom of calling for blood donations when there were very few blood recipients. "They also decided to put a disclaimer in their ads saying that donations will be used for this and other disasters.org Web site. participate in a database to be shared among relief agencies. the American public donated blood for the disaster victims.assistanceto 3. Wallace reported. the Better Business Bureau Wise Giving Alliance removed the American Red Cross from its "give.26 On November 14. Chapters that have over $100.uncertainty and recovery. claiming that the organization's board had pushed her OUt.32 Another onslaught of negative publicity for the American Red Cross occurred March 10. allegedly because the American Red Cross did not provide a timely report to the alliance.althservices for 232. the "this and other disasters" language appears in the same font and size as the rest of the body copy appealing for support. the American Red Cross saluted the staff and volunteers who provided assistance to the more than 54. In a comment about advertising practices. agreed to a March 30 deadline for the updated report. Art Taylor.i" The donors blasted Healy because they expected their donations to be helping September 11 disaster victims now. "Today we are recognizing the work of our staff. interim president. Chapters must meet specific national guidelines to maintain their charters." she said. sent a letter to CBS News indicating the errors and an explanation.266families of .000people.~ssistanceto 51.000families of displaced workers and disaster workers Provision for 14million meals. "If we don't subject ourselves to public scrutiny. 2002. 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. All chapters must have an independent annual review. 2001. 14 months after the fire. Healy was confronted with allegations of "panicking the public into wasteful donations of blood.000 in annual expenses must have an external audit conducted by an independent CPA.P In a congressional hearing."?" In an article in U.. McLaughlin. She stated that Wallace's claim that chapters "are not even required to submit financial reports" is completely false. CFO of the Red Cross. COO of the alliance. 2. fires. 2002. hire an additiona1200 caseworkers.500 families affected by the attacks. president of the alliance. we will never have public truSt. it's in small print. Deborah Daley reported. News & World Report. stated.000people $169 270 94 3. "Outside audits of local Red Cross chapters are rare. By November 2001 about 10 percent of the red blood cells collected on September 11 and 12 had expired. In addition.P? On March 7. their trust. The attorney general of New York State threatened legal action." Healy finally responded with her announcement of retirement. The Red Cross does regular audits of chapters. 2002. it took us too long to hear their message."28 In addition to donating money." Harold Decker. Regrettably. a spokesperson for the Red Cross. "I had no choice. 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. and donors who responded to September 11th. on the CBS news show 60 Minutes.org" Web site. The trouble is. "As oflast week. $ millions gir~Gt. and the financial accountability of Red Cross chapters. Mike Wallace reported.'dE)ceasedand seriously injured . mental he. David T. and Bennett Weiner. it was determined that such a report could not be provided by the due date. David McLaughlin stated. chairman of the American Red Cross Board of Governors. we can save a life" public service announcement. "Donors charged the organization with abuse of their good intentions." In response.S.'! BBB Wise Giving Alliance On February 16. Jack Campbell. announced that the American Red Cross received $930 million in contributions and this money was used to provide the following. These donations were given in response to Healy'S "Together. Harold Decker. and extend the use of toll-free telephone lines. interim CEO and president of the Red Cross. volunteers." caused a huge uproar. The Red Cross would provide increased financial support to families. The largest 126 chapters must send quarterly financial reports to the national Red Cross.P 60 Minutes Program 1. Deborah Daley. and health services for 129. Wallace reported. As for the Alpine fire in Southern California. "The people of this country have given the Red Cross their hard-earned dollars. and very clear direction for our September 11 relief effort. Given the recent activities of the American Red Cross. It appears to have contained some inaccuracies concerning floods. H. 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." The Lancet reported. David McLaughlin stated. In fact. "In the West Virginia flood ad. . 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. made some unsupported public statements regarding the Red Cross that were reported in the Philadelphia Inquirer." Deborah Daley responded that chapters are accountable in a number of ways.
26. U. Annual Cross. Annual Report. 30. Ibid. Blood. Ibid. American 2. 11. 2002. ASAE and American Red Cross formalize partnership agreement. Annual June 27. American 5. Reports. 35. 2000-2001. US Newswire. 200 I. 2000. Newsweek: Former Red Cross head says her fundraising message was clear . 15. some 45. American Red Cross. 31. Tyrangiel. American 3. 8. PR Newswire. Press release. February 1. Cross. 2002. Reports. 53(8): 12. but there are costs. Taylor. Ibid. The charity olympics: After weeks of record giving. Tyrangiel. Fund Raising Management. chairman of the Board of Governors of the American Red Cross. and most especially their dedication. The timely and capable response day-in and day-out to these disasters speaks volumes about the character of the volunteers and staff. 31(4): 33. she is well poised to guide our organization as we continue to provide vital services in a world faced by new challenges. 18. American Red Cross. Press release. politics. Red Cross workers on strike. Modern Healthcare 31. 2000. 2000. Modern Healthcare 31. 17. 20. With great insight into our mission. February 1. 29. Greenberg. C80 Case 11:: American Red CI ass . "Marty's unique style of leadership along with her experience as established administrator will bring new vigor to the American Red Cross. 23. 2001. PR Newswire. 28. Americans want to know: Is that money helping? Time. Navy." Deborah Daley responded that the chapter has provided up-to-date financial information on its response to the Alpine fire three times since November. Cross.000 in the months since last September. 2002. American Red Cross. How should she proceed? Endnotes 1. Annual Report.S. 7. said. Cross. 12. 2002. 25. Press release. Association Management. Press release. Ibid. David McLaughlin. Stephanie. 2001. American Red Cross letter to Better Business Bureau's Wise Giving Alliance. Red Red Red Red Red Cross. Red Cross announces major changes in Liberty Fund: Fund solely used for people affected by September 11 tragedy. Greenberg. News & WorldReport. 2001. 22(25): 37. A torrent of donations. 2001. 22. In his announcement. Ibid. 2001. Taylor. 24. Samantha. American Red Cross. Mark. Josh. Marsha. Nonprofits reap rewards of the Web-Internet proves to be a great fund-raising tool for charities. Levine. 21."?" Evans remarked that: In the midst of responding to the extraordinary demands of 9/11 and a lot of criticism about these efforts. 2000. American 6. November 24: 1789. 34.. their talent. www. March 7. American Red Cross and Coinstar to launch new fundraising technology to prepare for disasters. where she earned the rank of rear admiral. Johnson Evans was named president and CEO of the American Red Cross on June 27. Tyrangiel. politics. Ibid. Greenberg. and the American Red Cross. 33. 14. US Newswire. November 5: 75. charities wrestle with how best to spend money pouring in since attacks." As she begins to guide the organization. 2002. January 1: 20. Sanborn. 2001. Charity olympics. Ibid.. November 14.org. 27. prior to which she had a 29-year career in the U.S. 10. Blood. Evans has served as national executive director of the Girl Scouts of the USA for the past four years. and the American Red Cross. Charity olympics. politics. February 12. Lancet. Looking to the Future After a five-month search. 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. 2002. 32. American Red Cross. Blood. February 16.redcross. American 4. Press release. 2001.San Diego was still waiting for a full accounting of how the money donated for the fire victims has been and will be spent. Red Crossroads. November 19. 2001. 19. Red Cross faces antitrust lawsuit.. Infoworld. 2002. June 27. 13. 9. Cinda. Daniel S. Marsha Johnson Evans must confront the many issues faced by the American Red Cross. Red Cross announces major changes in Liberty Fund. 2001-2002. 16. Becker. December 9. Ibid. Red Cross faces antitrust lawsuit. and the American Red Cross. October 1: 8.
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