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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
always listening totlieirneeds and lookingforways to serve through existing or new initiatives. In~ependence: The Movement isindependent.rning:We seek. shelter. and so forth.is worldwide. providing fer victims of disasters andh_elpingpeople prevent. Source:www. Voluntary Service:ltis a voluntary relief movement not prompted in any manner by desireJorgain.The National Societies.eavors rel.allhandto ensure respectforthe human being.l1lJou~lea. awareness required for exceptional service. friendship. > Ej(hibit 2 Values of the American Red Cross • • • • • • • Humanitarianism: We existto serve others in need. and so on. religious.generosity. always tpimprove. and efficiently with resources entrusted to us. The American Red Cross supplies 3.esin. and respond to emergencies. financial assistance. 9~nti. race.en~. endeavors. in which all Societies have equal status and share equal responsibilities and duties in helping eachother. and maintain competencies andthe. and support the rights and diversity of each person in our organization a?dinthecommunities we serve. Community Services. racial.~~irit:Asafamilvofdonors. born of a desire tobring assistance IN. and to give priority to to lT1?sturgentcases of distress. Universality: The International Hed Cross and Red Crescent Movement.ievethe suffering of individuals. "~. Educational services to prepare for disasters. . inits internati.ithoutdiscrimination to the wounded on the battlefield. and without discrimination. ~~spect: Vv. being guided solely by their needs. living well programs.redcross. It promotes mutual understanding. prepare for.countries. while auxiliari.000 volunteers help disaster victims by providing food. Source: American Red Cross.respect. Each year 83. Unity: There can be only one Red Cross or one Red Crescent Society in anyone country.org. andstaff we search for ways to provide hope to servewhileidemonstratingcompassion.orpoliticafopinions. Its purpose is to protect life and he.~utrality: In order to continue to enjoy the confidence of all. Stevvardship: We act respgnsibly. Itmust be opento all. www. to identify.org.III~tal'Y. or ideological nature. demonstrate courage and accountability under pressure. HIV/AIDS education.to prevent and alleviate human suffering WQereit may be.onal.independently.religious beliefs. mental health counseling. effectively.eacknowledge. food and nutrition information. Health and Safety Services. Swimming and lifeguard classes.andappreciation.volunteeJs. the Movementmay not fake sides in or engage atany time in controversies of a political. ~~lpingOthers:Weareattentive and responsive tothose we serve.found. obtain. e72 Case 11:: American Red Cross . cooperation.the. 1111~f)~if)lity:ltrnakesno discrimination asto nationality. Int~grity:Weact with honesty. and openly share ideas and i_nformationwith each other. transportation. in excess of 6 million pints of blood.000 hospitals with about half of the blood used in the United States. must allNaysmaintain their autonomy so that they may be able atall times to act in accordance with the principles of the Movement.Itmust carryon its humanitarian work throughout its territory. seniors. and youth.~ndnational capacity.redcross. Help for the homeless. collectively and individually. and lasting peace amongst all peoples."_--'-" f)(hibit 1 Principles ofIntemational Red Cross • • • • • • • Hurilanity:ThelnternationalBed Cross and Red Crescent Movement. hUIllanitari an services of their governments and subject tothe laws of theirrespective. ". class. Disaster Services.
find relatives in a disaster area. Nursing. In 1999 the American Red Cross joined the Federal Emergency Management Agency for "TOPOFF. lack of pure water. Youth Involvement. The Web site helps visitors locate local Red Cross shelters. Coinstar machines were located within two miles of 130 million Americans. and so on.400 chapters and to expand its reach across America. online media manager for the Ameri- . and courses. D. "Some of them think this is going to be a kind of panacea for doing fund-raising. Total operating expenses for the 2000-2001 fiscal year were $2. director of outreach at Action Without Borders has stated. In addition. For Cindee Archer. and so forth. Products and services: Fees for products. and diarrhea in poor countries and to support primary health care. it's only going to get more pervasive. Red Cross delegates help local citizens rebuild infrastructure. plasma. Investment income and other income: Investment income from endowments and reserve funds and income from contracts to provide various programs. the Internet serves as a vital source of information to the American public and as a new way to collect donations. Emergency disaster response. and young adults. and the use of new technology will make this information available online. to collect Red Cross donations for disaster relief efforts. "The Internet has definitely changed how the whole organization thinks. Helping kids. Cindy Archer also believed that "more and more people are coming onlinethis isn't going to go away. teens. and 5). and tissue services. Volunteering.• and so forth. and major expenses included:" can Red Cross in Washington. and it's not necessarily that. Total operating expenses for the fiscal year 2001-2002 were $3. the American Red Cross supplies over 3.743 billion. Inc. Geneva Conventions. 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. and obtain information about donating and volunteering. 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. primary health care programs. fees from collecting. Student nurses. materials. 4. there were costs associated with a Web site that many nonprofit groups did not realize."? Archer worked on developing a Web site where visitors could enter a zip code and quickly find information.570 billion (see Exhibits 3. You feel this sense of urgency whenever there's a disaster-e-you want that information up as quickly as you can get it. it may be possible for the American Red Cross to offer an online shopping network to generate additional resources.712 billion. indicated that "If every American near a Coinstar machine would donate a handful • • Disaster costs: Assistance to victims. As a result of recent research and development. Biomedical services: Facility maintenance.. other monetary and in-kind contributions.117 billion." a nationwide disaster simulation to help prepare for acts of terrorism. International Services.P Strategic Alliances The American Red Cross has established a number of alliances with other organizations.C. These "click" sites appeal to a newer and often younger audience for the nonprofits. Financial Overview In fiscal year 2001-2002 the American Red Cross had operating revenues of $4. It is now possible to make these courses available online. The Red Cross has routinely published the latest public health information. strengthen public health. Funding disaster services: Expenses to solicit donations. administer funds. and so on.000 hospitals with blood donations. Total operating revenues for fiscal year 2000-2001 were $2. 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 communication network allows it to locate family members during crises more efficiently." a service that enables blood drive sponsors to use their intranets to recruit donors and allows hospital customers to order blood products online. Three main funding sources for the American Red Cross were:" • • Contributions: Fund-raising efforts by the United Way & Combined Federal Campaign. Archer stated. It works with the World Health Organization to alleviate malnutrition."!' About 12 million Americans enroll in Red Cross courses each year. grants. Wireless communication allows the American Red Cross to make faster damage assessment at the scene. Also. legacies. and distributing blood and tissue. Jane Delano Society. expenses in blood. staff expenses at disaster sites. Each year more than 12 million Americans take advantage of lifesaving courses offered by the Red Cross. vice president of Disaster Services at the American Red Cross. Recruiting and organizing volunteers. In 2000 it launched "iGiveLife. keep up with breaking news. testing.. 13 In February 2001 the American Red Cross teamed up with Coinstar. feeding programs. In the near future. Russ Finkelstein. John Clizbe. 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.v'? However. and improve response time to local disasters.
825 197.57.162 585.525.149 287. net of allowance for doubtful accounts of $19.293 63 63 23.137 liabilities and netassets Cross.164.704 380.500 771.247 309.029.626 1._ ~jhibit 3 (ill thousands) Consolidated Statement of Financial Position. 9....089 2.354 2.'c· _~.Red .826 823.514 15.587 mitl11ents and contingencies L.050 $ 1. 2001) $146.374. 2002 (with summarized information as of June 30.453 120. net 304.066 $380.385 American.543 16. current portion Other Inventories.801 126.680 (-'elnsieln and postretirement liabilities benefits 357.541 11.092 20 83 380.525.626 1.421 1.92 22. and other property.825 319.913 Receival.892 1.653 366.798 1.674 28...252 12. June 30.541 35.619 $771.545 34.293 3.209 39. 2002.180 13.823 950.386 12.894 18.103 56 15.411 $439.258 110.556 379. net of allowance for obsolescence of $7.604 in 2002 and $19.924 2.209 823.750 in 2002 and $6. •.042 92.840 12.575..0.374 203.964 325.547 986.402 3.437.buildings.453 296.243 15.544 155.924 liabilities 20.374.385 6.042 93.570 15.473 7.lles..149 2.913 548.602.453 120.238 2.633 4.623 936. Annual Report.272 $3.662 39.654 183 29.036 357.569 11.894 18.301 in 2001: Trade Contributions. $2.784 in 2001 Other assets Total current assets Investments Contributions receivable Prepaid pension costs Land.
156 617. Annual Report.727 (2.238 2.901 174.728 76.069 2.931 61.736 3.978 203.085 (131.086 $380.902 32. response Biomedical services Health and safety services Community services International services program services Supporting services: Fund raising Management and general 61.137 in net assets from operations gains (losses) effect of accounting change in net assets beginning of year end of year Red Cross.699.035.208 $2.097 4.619 22.466.5.822 1.182 311.604 (63.815) 1.077 136.171 82.182 311.756 284.089 1.960 1.906 61.876) 2.967 213.402 $1.686.18 22.164.090 121)24 50.410 3.405 40.980 360.742.2001) (in thousands) $ 205.118 22.570.513 308.171 81.601 989.967 213.747) 19.594 49.008 (1.034 21.071 ) 2.518 (548) 419.848 136.394 49.448.289' 1.549 84.931 420.083 3.342 2.060 6.164.582 58.302 30.970 337.022 705 Armed Forces Emergency Services Disaster services liberty disaster relief-Sept.872.463 51.845 1.137 $2.674.960 1.488 58.175 81. Year ended June 30.236 213.351 230.117.330 (135.058 150.261 1.259.259.437.195.575.745 96.614 152.156 11 617.201 (31.900) (28.736 3. 103.135 2.614 152.035.901 174.066 546.915 906 1.4 Consolidated Statement of Activities.410) 420.272 65.083 3.195) 411.108 45.587 . 2002 (with summarized information for the year ended 30.924.649 $ 757.616 154.726 263.727 115. 2002.712.570.222 67~175 36.924.844 2.848 136.077 137.872.902 32.960 108.513 308.016 22.
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which prohibits monopolization. HemaCare Corp. and increasing health benefit costs. Funds were used for travel.5 million. sleeping quarters. 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. or rescue workers. If all Americans donate the change in their wallet or pocket. Less than 50 percent of the money raised was targeted for victims. 2001. The national campaign theme used for this promotion was "Taking Care of America Everyday. She indicated that organization officials earmarked $100 million from the fund to provide short-term financial assistance to families of victims.' stated Skip Seitz. 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. The American Red Cross has a heavy burden-to live up to the inspiration and memory of those lost. child care."!" Masterfoods USA. the Red Cross would be that much better prepared to respond to disaster immediately.. those handfuls will make a huge difference in our capacity to help others thisyear. the American Red Cross released a spending plan for the first $300 million in the Liberty Fund. They further alleged that the American Red Cross priced some blood products (e. food. Because of the large dollar amount of donations from the American people. and help from a myriad of volunteers contributed to Red Cross efforts to provide aid to survivors. said. stated. stated. the Red Cross set up family assistance centers to provide counseling. and other items to relief workers and volunteers. "What has taken place is extraordinary.P This planned distribution of funds. radio and newspapers. their families." "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. MD. 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 American Red Cross rose to the challenge of providing the most extensive relief operation in its 120-year history." unfair competition under the California Business and Professional Code. victims' families. and relief workers.'? Unfair Trade Practices Lawsuit The Red Cross derived 60 percent of its revenues from the sale of blood. Bernadine Healy. 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. Deborah Goldburg. senior vice president. HemaCare's chief executive officer. "You no longer need a credit card or checkbook to provide financial support to those in need. William Nicely. white. 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 we must respond in an extraordinary way.2001. a Red Cross spokesperson. In providing more than half the nation's blood. 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 meals for volunteers and staff working on-site. frequent schedule changes. In the lawsuit. a Red Cross spokeswoman. said in a written statement. the Red Cross had collected $202 million in donations. and creative displays in stores across the country.g. created a special package of red. a Mars Incorporated Company. Within 15 days of the September 11. said in a written statement. It is with great humility and pride that we carry out this noble obligation/'P On October 12. and changes in legislation."20 Recent Problems Events between 2000 and 2002 provided the American Red Cross with a number of challenges. The Red Cross is a fine organization. "We believe that's unfair and illegal. In response to the tragedy. and Liberty Disaster Relief Fund After the terrorist attacks on September 11. 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. We just want them to play by the rules that are reasonable and fair and compete on a level playing field.3 billion.of change on their next supermarket visit. Pennsylvania. financial assistance."? Blythe Kubina. and will explore efforts in joint training exercises. lodging. the plaintiffs alleged the Red Cross violated Section 2 of the Sherman Antitrust Act. Financial assistance. declarations. attack. and at the Pentagon to provide meals. unfair trade practices. Respite centers were set up in New York City. the Red Cross had annual sales of more than $1. and other services to victims' families and others affected. based on Healy'S policy of using donations for a "long period of C78 Case 11:: Amer lean Red Cr ass . the president and chief executive officer of the Red Cross. We have been in full compliance with the law. and blue M&Ms specifically to benefit the Red Cross. and transportation were provided to families of missing foreign nationals. Millions of dollars. "Everything is happening at such a fast pace. American Red Cross Growth and Integrated Development. thousands of blood donations. 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. "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. Somerset County. counseling. In January 2002 Masterfoods USA presented a check to the Red Cross in the amount of$3. The workers were unhappy about long hours. The lawsuit also charged tortuous interference." Rich Stillman. and we will vigorously defend this lawsuit. and Coral Blood Services alleged the Red Cross had cost them more than $25 million in lost business. the new M&Ms' captured the heart of America. COO of Coinstar.
000people $169 270 94 3. These donations were given in response to Healy'S "Together. Jack Campbell.~ssistanceto 51. $ millions gir~Gt. it was determined that such a report could not be provided by the due date.althservices for 232. stated. The Red Cross would provide increased financial support to families. "In the West Virginia flood ad. David McLaughlin stated. sent a letter to CBS News indicating the errors and an explanation. 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. and health services for 129. fires. we will never have public truSt." Deborah Daley responded that chapters are accountable in a number of ways. "Outside audits of local Red Cross chapters are rare.500 families affected by the attacks. president of the alliance. Art Taylor. announced that the American Red Cross received $930 million in contributions and this money was used to provide the following. News & World Report.P? On March 7.000 in annual expenses must have an external audit conducted by an independent CPA." she said. "As oflast week. 2002. It appears to have contained some inaccuracies concerning floods. Chapters that have over $100. 2. As for the Alpine fire in Southern California. Given the recent activities of the American Red Cross. interim CEO and president of the Red Cross. 2002. David McLaughlin stated. Harold Decker. "The people of this country have given the Red Cross their hard-earned dollars. claiming that the organization's board had pushed her OUt.. it took us too long to hear their message.P In a congressional hearing. Experts questioned the wisdom of calling for blood donations when there were very few blood recipients.org Web site. "They also decided to put a disclaimer in their ads saying that donations will be used for this and other disasters."?" In an article in U. participate in a database to be shared among relief agencies. The trouble is.000families of displaced workers and disaster workers Provision for 14million meals. mental he. volunteers. By November 2001 about 10 percent of the red blood cells collected on September 11 and 12 had expired. hire an additiona1200 caseworkers.'dE)ceasedand seriously injured . "Donors charged the organization with abuse of their good intentions. their trust. Regrettably. Deborah Daley. 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 largest 126 chapters must send quarterly financial reports to the national Red Cross. COO of the alliance. In addition. and very clear direction for our September 11 relief effort. it's in small print. Wallace reported. on the CBS news show 60 Minutes. Wallace reported. H.org" Web site.32 Another onslaught of negative publicity for the American Red Cross occurred March 10. "Today we are recognizing the work of our staff." caused a huge uproar. 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. and Bennett Weiner. a spokesperson for the Red Cross. In fact. the "this and other disasters" language appears in the same font and size as the rest of the body copy appealing for support.'! BBB Wise Giving Alliance On February 16. "I had no choice. McLaughlin. made some unsupported public statements regarding the Red Cross that were reported in the Philadelphia Inquirer. interim president. 2001. Mike Wallace reported. She stated that Wallace's claim that chapters "are not even required to submit financial reports" is completely false.P 60 Minutes Program 1. 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. 14 months after the fire. allegedly because the American Red Cross did not provide a timely report to the alliance. Chapters must meet specific national guidelines to maintain their charters. agreed to a March 30 deadline for the updated report.i" The donors blasted Healy because they expected their donations to be helping September 11 disaster victims now.26 On November 14. ." Harold Decker. chairman of the American Red Cross Board of Governors. In a comment about advertising practices. Healy was confronted with allegations of "panicking the public into wasteful donations of blood. and extend the use of toll-free telephone lines. and donors who responded to September 11th.assistanceto 3. the American Red Cross saluted the staff and volunteers who provided assistance to the more than 54." The Lancet reported.S." Healy finally responded with her announcement of retirement.000people."28 In addition to donating money.uncertainty and recovery. Deborah Daley reported. "If we don't subject ourselves to public scrutiny. David T. All chapters must have an independent annual review. we can save a life" public service announcement. CFO of the Red Cross. the American public donated blood for the disaster victims. The attorney general of New York State threatened legal action.266families of . 2002. and the financial accountability of Red Cross chapters. The Red Cross does regular audits of chapters. the Better Business Bureau Wise Giving Alliance removed the American Red Cross from its "give." In response.
9. PR Newswire. American Red Cross. February 12. US Newswire. Levine. Ibid. 2002. Samantha. C80 Case 11:: American Red CI ass . Daniel S. Ibid.000 in the months since last September. www. Blood.redcross. 2000. American 2. Annual June 27. Cross. 26. American Red Cross letter to Better Business Bureau's Wise Giving Alliance. and the American Red Cross. A torrent of donations. Modern Healthcare 31. their talent. prior to which she had a 29-year career in the U. 8. Sanborn. some 45. Ibid. Charity olympics. ASAE and American Red Cross formalize partnership agreement. politics. Charity olympics. November 14. 2002. said. February 1. Ibid. Blood. Taylor. Newsweek: Former Red Cross head says her fundraising message was clear . but there are costs. 2000-2001. Looking to the Future After a five-month search. 53(8): 12. 35. 2002. 31. Annual Report. Marsha. American 3. Red Cross workers on strike. 12. Ibid. How should she proceed? Endnotes 1. Greenberg. Press release. 2001. Tyrangiel. 2001. February 16. 15. 22(25): 37. 21. charities wrestle with how best to spend money pouring in since attacks. Cross. 33. Fund Raising Management.. June 27. 2001. 2000. October 1: 8. 13. American Red Cross. Infoworld. Tyrangiel. December 9. and the American Red Cross.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 Cross announces major changes in Liberty Fund.. November 19. Navy. 29. 31(4): 33. politics. Reports. Ibid. 34. 23. American Red Cross. 10. Tyrangiel. David McLaughlin. 19. 25. 200 I. Ibid. 2000. 28. November 24: 1789. Nonprofits reap rewards of the Web-Internet proves to be a great fund-raising tool for charities. Red Cross faces antitrust lawsuit. where she earned the rank of rear admiral." As she begins to guide the organization. March 7. January 1: 20. Annual Report. 20. 2001. Modern Healthcare 31.. February 1. and the American Red Cross. U. PR Newswire. American 5. Ibid. The charity olympics: After weeks of record giving. 30. she is well poised to guide our organization as we continue to provide vital services in a world faced by new challenges. 32. Press release. 16. Red Red Red Red Red Cross. politics. Becker." Deborah Daley responded that the chapter has provided up-to-date financial information on its response to the Alpine fire three times since November. 2000. American Red Cross. 14. Press release. November 5: 75.org. American 4. 22. 2001-2002.S. Association Management. Mark. 11. Red Cross announces major changes in Liberty Fund: Fund solely used for people affected by September 11 tragedy. 2002. 2001.S. News & WorldReport. Lancet. Cinda. Josh. In his announcement. and most especially their dedication. Reports. Greenberg. 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. Evans has served as national executive director of the Girl Scouts of the USA for the past four years. Taylor. Stephanie. 24. 2001. 7. 2001. Marsha Johnson Evans must confront the many issues faced by the American Red Cross. Press release. 2002. American 6. The timely and capable response day-in and day-out to these disasters speaks volumes about the character of the volunteers and staff. Greenberg. 2002. Blood. US Newswire. American Red Cross and Coinstar to launch new fundraising technology to prepare for disasters. 2001. 18. Annual Cross. Americans want to know: Is that money helping? Time. Press release. 17. Red Crossroads. Johnson Evans was named president and CEO of the American Red Cross on June 27. "Marty's unique style of leadership along with her experience as established administrator will bring new vigor to the American Red Cross. Cross. 2002. With great insight into our mission. 27. Red Cross faces antitrust lawsuit. chairman of the Board of Governors of the American Red Cross."?" 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.
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