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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
In~ependence: The Movement isindependent. . and maintain competencies andthe. collectively and individually. awareness required for exceptional service. Unity: There can be only one Red Cross or one Red Crescent Society in anyone country. while auxiliari. Source:www.to prevent and alleviate human suffering WQereit may be. financial assistance. and openly share ideas and i_nformationwith each other."_--'-" f)(hibit 1 Principles ofIntemational Red Cross • • • • • • • Hurilanity:ThelnternationalBed Cross and Red Crescent Movement. Voluntary Service:ltis a voluntary relief movement not prompted in any manner by desireJorgain. in excess of 6 million pints of blood. racial. Universality: The International Hed Cross and Red Crescent Movement.000 volunteers help disaster victims by providing food. to identify. ".orpoliticafopinions. inits internati.org. endeavors.en~. e72 Case 11:: American Red Cross .org. and efficiently with resources entrusted to us.eavors rel.redcross. always listening totlieirneeds and lookingforways to serve through existing or new initiatives. in which all Societies have equal status and share equal responsibilities and duties in helping eachother. Its purpose is to protect life and he.onal.volunteeJs.andappreciation. and support the rights and diversity of each person in our organization a?dinthecommunities we serve. and to give priority to to lT1?sturgentcases of distress. Stevvardship: We act respgnsibly. religious.esin. and youth. HIV/AIDS education.found. friendship. Educational services to prepare for disasters. and so forth. and without discrimination. 9~nti. prepare for. Each year 83.countries. and lasting peace amongst all peoples. providing fer victims of disasters andh_elpingpeople prevent. class.l1lJou~lea. Itmust be opento all. obtain.respect. demonstrate courage and accountability under pressure. It promotes mutual understanding. Swimming and lifeguard classes.Itmust carryon its humanitarian work throughout its territory.independently. seniors. Health and Safety Services.~utrality: In order to continue to enjoy the confidence of all. Int~grity:Weact with honesty.rning:We seek. transportation. must allNaysmaintain their autonomy so that they may be able atall times to act in accordance with the principles of the Movement. hUIllanitari an services of their governments and subject tothe laws of theirrespective. The American Red Cross supplies 3. Source: American Red Cross.ithoutdiscrimination to the wounded on the battlefield. always tpimprove.000 hospitals with about half of the blood used in the United States. andstaff we search for ways to provide hope to servewhileidemonstratingcompassion. ~~spect: Vv. "~. and so on. the Movementmay not fake sides in or engage atany time in controversies of a political. living well programs.eacknowledge. > Ej(hibit 2 Values of the American Red Cross • • • • • • • Humanitarianism: We existto serve others in need. ~~lpingOthers:Weareattentive and responsive tothose we serve. and respond to emergencies. 1111~f)~if)lity:ltrnakesno discrimination asto nationality. Disaster Services. food and nutrition information.generosity. shelter.~~irit:Asafamilvofdonors. Help for the homeless.the.The National Societies.is worldwide.religious beliefs. born of a desire tobring assistance IN.allhandto ensure respectforthe human being. www.redcross.~ndnational capacity. effectively. Community Services. race.III~tal'Y. being guided solely by their needs. cooperation. mental health counseling.ievethe suffering of individuals. or ideological nature.
staff expenses at disaster sites. strengthen public health. The communication network allows it to locate family members during crises more efficiently. administer funds. These "click" sites appeal to a newer and often younger audience for the nonprofits. Total operating revenues for fiscal year 2000-2001 were $2. International Services. to collect Red Cross donations for disaster relief efforts. Wireless communication allows the American Red Cross to make faster damage assessment at the scene."? Archer worked on developing a Web site where visitors could enter a zip code and quickly find information. As a result of recent research and development. The Red Cross has routinely published the latest public health information. indicated that "If every American near a Coinstar machine would donate a handful • • Disaster costs: Assistance to victims. online media manager for the Ameri- .P Strategic Alliances The American Red Cross has established a number of alliances with other organizations. Biomedical services: Facility maintenance. and courses. In the near future. Coinstar machines were located within two miles of 130 million Americans. In 2000 it launched "iGiveLife. and so on. Recruiting and organizing volunteers. and distributing blood and tissue. Three main funding sources for the American Red Cross were:" • • Contributions: Fund-raising efforts by the United Way & Combined Federal Campaign.v'? However. Financial Overview In fiscal year 2001-2002 the American Red Cross had operating revenues of $4.712 billion. and obtain information about donating and volunteering. and so on. lack of pure water. grants. plasma.743 billion. Each year more than 12 million Americans take advantage of lifesaving courses offered by the Red Cross. Also.C. For Cindee Archer. the American Red Cross supplies over 3. feeding programs. A donation to the World Hemophilia Foundation of plasma product is used to treat hemophilia. D. Helping kids. Jane Delano Society. 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. Russ Finkelstein." a nationwide disaster simulation to help prepare for acts of terrorism. find relatives in a disaster area. there were costs associated with a Web site that many nonprofit groups did not realize.1 Technology and Operations Technology has helped the American Red Cross better coordinate its efforts among its 1.117 billion. and so forth. Emergency disaster response. and the use of new technology will make this information available online. Red Cross delegates help local citizens rebuild infrastructure. "The Internet has definitely changed how the whole organization thinks. Consumers could drop loose change into the Coinstar machines located in local supermarkets. fees from collecting. legacies.• and so forth. Geneva Conventions. keep up with breaking news."!' About 12 million Americans enroll in Red Cross courses each year. director of outreach at Action Without Borders has stated. and 5). Youth Involvement. 13 In February 2001 the American Red Cross teamed up with Coinstar. it's only going to get more pervasive. 4. and improve response time to local disasters. Archer stated. You feel this sense of urgency whenever there's a disaster-e-you want that information up as quickly as you can get it. and major expenses included:" can Red Cross in Washington. primary health care programs. and young adults. Volunteering.. teens. expenses in blood.400 chapters and to expand its reach across America. Investment income and other income: Investment income from endowments and reserve funds and income from contracts to provide various programs. materials. the Internet serves as a vital source of information to the American public and as a new way to collect donations.570 billion (see Exhibits 3. Products and services: Fees for products. Funding disaster services: Expenses to solicit donations. Massachusetts General Hospital and the American Red Cross jointly own a patent for a protein associated with the underlying cause of Alzheimer's disease.000 hospitals with blood donations. Total operating expenses for the 2000-2001 fiscal year were $2. other monetary and in-kind contributions. and diarrhea in poor countries and to support primary health care. The Red Cross is able to provide long-term aid and education to those in need." a service that enables blood drive sponsors to use their intranets to recruit donors and allows hospital customers to order blood products online. Total operating expenses for the fiscal year 2001-2002 were $3. and it's not necessarily that. John Clizbe. testing. In addition. "Some of them think this is going to be a kind of panacea for doing fund-raising. vice president of Disaster Services at the American Red Cross. Inc. Nursing.. The Web site helps visitors locate local Red Cross shelters. In 1999 the American Red Cross joined the Federal Emergency Management Agency for "TOPOFF. and tissue services. it may be possible for the American Red Cross to offer an online shopping network to generate additional resources. Student nurses. It works with the World Health Organization to alleviate malnutrition. 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.
823 950.544 155.825 197.386 12.437. and other property.252 12..180 13.411 $439.385 American. net of allowance for obsolescence of $7._ ~jhibit 3 (ill thousands) Consolidated Statement of Financial Position.209 823. 9.029.894 18.103 56 15.036 357.301 in 2001: Trade Contributions.575.626 1.0.089 2.784 in 2001 Other assets Total current assets Investments Contributions receivable Prepaid pension costs Land.042 93.543 16.57..149 2. current portion Other Inventories.604 in 2002 and $19.402 3.892 1.801 126.541 11.570 15..913 548.209 39. $2.545 34. 2001) $146.704 380.924 2.473 7.547 986.164. 2002 (with summarized information as of June 30.924 liabilities 20.964 325.374.293 63 63 23.619 $771.633 4. •.238 2.556 379.750 in 2002 and $6. Annual Report.798 1.500 771.92 22.042 92.374.626 1.569 11.680 (-'elnsieln and postretirement liabilities benefits 357.374 203.602.514 15..826 823.092 20 83 380.354 2. 2002.541 35.258 110. June 30.385 6.653 366.'c· _~.894 18.623 936.247 309..525.149 287.243 15.840 12. net of allowance for doubtful accounts of $19.050 $ 1.421 1.654 183 29.453 120.162 585.293 3.137 liabilities and netassets Cross.587 mitl11ents and contingencies L.272 $3.lles.453 120.Red ..453 296.525. net 304.913 Receival.662 39.825 319..066 $380.buildings.674 28.
259.575.034 21.549 84.156 617.410 3.915 906 1.845 1.699.083 3.016 22.570.208 $2.466.674.402 $1.902 32. Annual Report. 2002.351 230.195) 411.756 284.069 2.967 213.604 (63.712.815) 1.077 137.035.022 705 Armed Forces Emergency Services Disaster services liberty disaster relief-Sept.5.164.736 3.742.071 ) 2.967 213.18 22.085 (131.182 311.083 3.289' 1.614 152.902 32.728 76.727 115.872.822 1.872.272 65.137 in net assets from operations gains (losses) effect of accounting change in net assets beginning of year end of year Red Cross.844 2.097 4.848 136.745 96.090 121)24 50.924.513 308.261 1.848 136.463 51. 103.726 263.156 11 617.117.931 420.901 174.342 2.876) 2.518 (548) 419.931 61.727 (2.960 108.330 (135. 2002 (with summarized information for the year ended 30.437.060 6.513 308.236 213.978 203.201 (31.195. response Biomedical services Health and safety services Community services International services program services Supporting services: Fund raising Management and general 61.960 1.058 150.601 989.686.135 2.137 $2.747) 19.171 81.649 $ 757.222 67~175 36.302 30.960 1.4 Consolidated Statement of Activities.970 337.238 2.900) (28.035.171 82.086 $380.175 81.901 174.736 3.089 1.570.405 40. Year ended June 30.582 58.077 136.616 154.587 .2001) (in thousands) $ 205.108 45.118 22.066 546.906 61.924.619 22.594 49.008 (1.448.614 152.980 360.182 311.410) 420.259.394 49.164.488 58.
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Respite centers were set up in New York City.of change on their next supermarket visit. The national campaign theme used for this promotion was "Taking Care of America Everyday. the American Red Cross rose to the challenge of providing the most extensive relief operation in its 120-year history." 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. those handfuls will make a huge difference in our capacity to help others thisyear. 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. In providing more than half the nation's blood. In January 2002 Masterfoods USA presented a check to the Red Cross in the amount of$3. and changes in legislation. HemaCare's chief executive officer. platelets) below production costs to drive out competitors while it charged higher prices for the same products in markets where there is no competition.5 million. HemaCare Corp. the plaintiffs alleged the Red Cross violated Section 2 of the Sherman Antitrust Act. the Red Cross would be that much better prepared to respond to disaster immediately. "You no longer need a credit card or checkbook to provide financial support to those in need. the president and chief executive officer of the Red Cross. 15 One hundred percent of all profits from the sales of these M&Ms were donated to the American Red Cross Disaster Relief Fund.. frequent schedule changes. said in a written statement.'? Unfair Trade Practices Lawsuit The Red Cross derived 60 percent of its revenues from the sale of blood. If all Americans donate the change in their wallet or pocket. MD. unfair trade practices. and other services to victims' families and others affected. COO of Coinstar."20 Recent Problems Events between 2000 and 2002 provided the American Red Cross with a number of challenges. "What has taken place is extraordinary. based on Healy'S policy of using donations for a "long period of C78 Case 11:: Amer lean Red Cr ass . Financial assistance. In response to the tragedy. "We believe that's unfair and illegal. and relief workers. the new M&Ms' captured the heart of America. and at the Pentagon to provide meals. 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. and we will vigorously defend this lawsuit.g."!" Masterfoods USA. Within 15 days of the September 11. their families. said. The American Red Cross has a heavy burden-to live up to the inspiration and memory of those lost. child care. and increasing health benefit costs. the American Red Cross released a spending plan for the first $300 million in the Liberty Fund. 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 Red Cross set up family assistance centers to provide counseling.3 billion. It is with great humility and pride that we carry out this noble obligation/'P On October 12. and transportation were provided to families of missing foreign nationals. and Liberty Disaster Relief Fund After the terrorist attacks on September 11. white. the Red Cross had annual sales of more than $1. financial assistance. and will explore efforts in joint training exercises. Because of the large dollar amount of donations from the American people. The Red Cross is a fine organization. Pennsylvania. Somerset County. We have been in full compliance with the law. William Nicely. sleeping quarters. thousands of blood donations. stated. "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. senior vice president. declarations. We just want them to play by the rules that are reasonable and fair and compete on a level playing field." "Through appearances on television. Bernadine Healy. lodging. "Everything is happening at such a fast pace. and we must respond in an extraordinary way. She indicated that organization officials earmarked $100 million from the fund to provide short-term financial assistance to families of victims. and meals for volunteers and staff working on-site. In the lawsuit. American Red Cross Growth and Integrated Development. 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. a Red Cross spokeswoman." unfair competition under the California Business and Professional Code. Millions of dollars. The workers were unhappy about long hours. counseling. and help from a myriad of volunteers contributed to Red Cross efforts to provide aid to survivors. Less than 50 percent of the money raised was targeted for victims.P This planned distribution of funds. created a special package of red. and creative displays in stores across the country. food. attack. victims' families.2001. 2001. Funds were used for travel. and Coral Blood Services alleged the Red Cross had cost them more than $25 million in lost business. which prohibits monopolization. radio and newspapers. and blue M&Ms specifically to benefit the Red Cross. or rescue workers. 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 Red Cross had collected $202 million in donations. Deborah Goldburg. stated. said in a written statement." Rich Stillman. a Mars Incorporated Company. 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."? Blythe Kubina. a Red Cross spokesperson. They further alleged that the American Red Cross priced some blood products (e. and other items to relief workers and volunteers. The lawsuit also charged tortuous interference.
The trouble is.000people $169 270 94 3. Chapters must meet specific national guidelines to maintain their charters. The attorney general of New York State threatened legal action. announced that the American Red Cross received $930 million in contributions and this money was used to provide the following. 2. president of the alliance."28 In addition to donating money. volunteers. and very clear direction for our September 11 relief effort. Mike Wallace reported. participate in a database to be shared among relief agencies.000families of displaced workers and disaster workers Provision for 14million meals. McLaughlin. It appears to have contained some inaccuracies concerning floods. Art Taylor." caused a huge uproar. "Donors charged the organization with abuse of their good intentions. "In the West Virginia flood ad. In fact. made some unsupported public statements regarding the Red Cross that were reported in the Philadelphia Inquirer. interim CEO and president of the Red Cross. 2002. agreed to a March 30 deadline for the updated report.org" Web site.S. Healy was confronted with allegations of "panicking the public into wasteful donations of blood. "If we don't subject ourselves to public scrutiny. 2002. . allegedly because the American Red Cross did not provide a timely report to the alliance. "Today we are recognizing the work of our staff.althservices for 232.'dE)ceasedand seriously injured . Deborah Daley. and extend the use of toll-free telephone lines. Chapters that have over $100.. Given the recent activities of the American Red Cross. COO of the alliance. David T. In a comment about advertising practices. Experts questioned the wisdom of calling for blood donations when there were very few blood recipients. 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.500 families affected by the attacks.000 in annual expenses must have an external audit conducted by an independent CPA. the "this and other disasters" language appears in the same font and size as the rest of the body copy appealing for support.org Web site. the Better Business Bureau Wise Giving Alliance removed the American Red Cross from its "give. the American Red Cross saluted the staff and volunteers who provided assistance to the more than 54.26 On November 14.~ssistanceto 51. 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. Harold Decker. Jack Campbell. David McLaughlin stated. it was determined that such a report could not be provided by the due date. David McLaughlin stated. She stated that Wallace's claim that chapters "are not even required to submit financial reports" is completely false. Deborah Daley reported. we can save a life" public service announcement. As for the Alpine fire in Southern California. stated.uncertainty and recovery. and Bennett Weiner. 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. their trust.P 60 Minutes Program 1. The Red Cross would provide increased financial support to families. and donors who responded to September 11th. By November 2001 about 10 percent of the red blood cells collected on September 11 and 12 had expired."?" In an article in U. 2002. Regrettably. "Outside audits of local Red Cross chapters are rare.P? On March 7." Healy finally responded with her announcement of retirement." she said. 2001. In addition. fires. claiming that the organization's board had pushed her OUt." The Lancet reported. "They also decided to put a disclaimer in their ads saying that donations will be used for this and other disasters. Wallace reported." In response. H.assistanceto 3. chairman of the American Red Cross Board of Governors. it took us too long to hear their message. we will never have public truSt. The Red Cross does regular audits of chapters.'! BBB Wise Giving Alliance On February 16.32 Another onslaught of negative publicity for the American Red Cross occurred March 10. and the financial accountability of Red Cross chapters. 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.P In a congressional hearing. "I had no choice. News & World Report. a spokesperson for the Red Cross. These donations were given in response to Healy'S "Together. CFO of the Red Cross. hire an additiona1200 caseworkers. $ millions gir~Gt. mental he. "As oflast week. on the CBS news show 60 Minutes. interim president. the American public donated blood for the disaster victims. "The people of this country have given the Red Cross their hard-earned dollars. sent a letter to CBS News indicating the errors and an explanation." Harold Decker. All chapters must have an independent annual review. 14 months after the fire.000people. The largest 126 chapters must send quarterly financial reports to the national Red Cross.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. it's in small print. and health services for 129. Wallace reported.266families of .
ASAE and American Red Cross formalize partnership agreement. 2001." Deborah Daley responded that the chapter has provided up-to-date financial information on its response to the Alpine fire three times since November. Red Red Red Red Red Cross. 35. Annual Report.redcross. she is well poised to guide our organization as we continue to provide vital services in a world faced by new challenges. February 16. American Red Cross. Levine. 15. March 7.. Taylor. Tyrangiel. Red Cross workers on strike. Red Cross faces antitrust lawsuit. politics. Nonprofits reap rewards of the Web-Internet proves to be a great fund-raising tool for charities. Blood. 2001. 21. 2002. 18. 2002. but there are costs.San Diego was still waiting for a full accounting of how the money donated for the fire victims has been and will be spent. Ibid. 2002. November 24: 1789. "Marty's unique style of leadership along with her experience as established administrator will bring new vigor to the American Red Cross. Ibid. The timely and capable response day-in and day-out to these disasters speaks volumes about the character of the volunteers and staff. US Newswire. Ibid. 33. 17. some 45. American 3. Cross. Evans has served as national executive director of the Girl Scouts of the USA for the past four years. 30. Johnson Evans was named president and CEO of the American Red Cross on June 27. Ibid. Looking to the Future After a five-month search. 9. Red Cross announces major changes in Liberty Fund. 2000-2001. 29. 2001-2002. 2000. and the American Red Cross. Annual Cross. 28. 10. 23. 32. politics. February 1. 2000.000 in the months since last September. The charity olympics: After weeks of record giving. Marsha. October 1: 8. Ibid. their talent. Cinda. 53(8): 12. February 12. 19. 2002. American Red Cross. 2000. How should she proceed? Endnotes 1. charities wrestle with how best to spend money pouring in since attacks. David McLaughlin. Tyrangiel." As she begins to guide the organization. Press release. 31(4): 33. News & WorldReport. June 27. American Red Cross and Coinstar to launch new fundraising technology to prepare for disasters. November 14. 11. Fund Raising Management. www. 2002. chairman of the Board of Governors of the American Red Cross. 2000. American 5. 13. 2001. American Red Cross. 27. American Red Cross. 34. In his announcement.org. November 19. Americans want to know: Is that money helping? Time.. 25. Red Cross faces antitrust lawsuit. American 4. 2001. 31. Greenberg. and most especially their dedication. January 1: 20. Modern Healthcare 31. 22. Marsha Johnson Evans must confront the many issues faced by the American Red Cross. Taylor. December 9. Navy. American Red Cross. 2001. Press release. Red Cross announces major changes in Liberty Fund: Fund solely used for people affected by September 11 tragedy. With great insight into our mission. Red Crossroads. Press release. politics. prior to which she had a 29-year career in the U. 200 I.. and the American Red Cross. Lancet. Daniel S. Tyrangiel. November 5: 75. Cross. 2002. February 1. said.S. 16. Ibid. American Red Cross letter to Better Business Bureau's Wise Giving Alliance. 2001. Becker. 22(25): 37. 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. 7. 8. Cross. PR Newswire.S. American 2. Press release. Sanborn. and the American Red Cross. Charity olympics."?" Evans remarked that: In the midst of responding to the extraordinary demands of 9/11 and a lot of criticism about these efforts. 2002. American 6. 24. Samantha. Association Management. where she earned the rank of rear admiral. C80 Case 11:: American Red CI ass . Josh. Annual June 27. A torrent of donations. Newsweek: Former Red Cross head says her fundraising message was clear . Reports. Ibid. Blood. 2001. 20. Greenberg. US Newswire. Reports. Blood. 12. Charity olympics. Ibid. Modern Healthcare 31. Greenberg. 26. Infoworld. 14. Annual Report. U. 2001. Mark. Stephanie. Press release. PR Newswire.
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