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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
en~. hUIllanitari an services of their governments and subject tothe laws of theirrespective. and so forth.eavors rel. Community Services. Source: American Red Cross. andstaff we search for ways to provide hope to servewhileidemonstratingcompassion. 9~nti.to prevent and alleviate human suffering WQereit may be.ievethe suffering of individuals.~~irit:Asafamilvofdonors. and maintain competencies andthe. and so on. Universality: The International Hed Cross and Red Crescent Movement. prepare for. www. and youth. must allNaysmaintain their autonomy so that they may be able atall times to act in accordance with the principles of the Movement. the Movementmay not fake sides in or engage atany time in controversies of a political. 1111~f)~if)lity:ltrnakesno discrimination asto nationality.~utrality: In order to continue to enjoy the confidence of all. . HIV/AIDS education. Voluntary Service:ltis a voluntary relief movement not prompted in any manner by desireJorgain.rning:We seek. cooperation.The National Societies. and respond to emergencies. race. always listening totlieirneeds and lookingforways to serve through existing or new initiatives. e72 Case 11:: American Red Cross . while auxiliari. Health and Safety Services. demonstrate courage and accountability under pressure. and support the rights and diversity of each person in our organization a?dinthecommunities we serve. Each year 83. friendship.ithoutdiscrimination to the wounded on the battlefield.is worldwide. mental health counseling.countries.~ndnational capacity.onal.redcross.orpoliticafopinions. Help for the homeless. Int~grity:Weact with honesty.allhandto ensure respectforthe human being. and openly share ideas and i_nformationwith each other. shelter.l1lJou~lea. and to give priority to to lT1?sturgentcases of distress. awareness required for exceptional service. The American Red Cross supplies 3.independently.000 hospitals with about half of the blood used in the United States.esin. racial. living well programs. seniors."_--'-" f)(hibit 1 Principles ofIntemational Red Cross • • • • • • • Hurilanity:ThelnternationalBed Cross and Red Crescent Movement. Unity: There can be only one Red Cross or one Red Crescent Society in anyone country. born of a desire tobring assistance IN.religious beliefs. Its purpose is to protect life and he.eacknowledge. > Ej(hibit 2 Values of the American Red Cross • • • • • • • Humanitarianism: We existto serve others in need. providing fer victims of disasters andh_elpingpeople prevent. Swimming and lifeguard classes. in excess of 6 million pints of blood. ~~lpingOthers:Weareattentive and responsive tothose we serve. food and nutrition information. class. collectively and individually. religious. ".the. always tpimprove. financial assistance. In~ependence: The Movement isindependent.Itmust carryon its humanitarian work throughout its territory.redcross. Disaster Services. effectively.000 volunteers help disaster victims by providing food.andappreciation. Itmust be opento all.respect. and efficiently with resources entrusted to us. being guided solely by their needs. Educational services to prepare for disasters. ~~spect: Vv. endeavors.found. in which all Societies have equal status and share equal responsibilities and duties in helping eachother. Stevvardship: We act respgnsibly. obtain. transportation. and lasting peace amongst all peoples.III~tal'Y.volunteeJs. It promotes mutual understanding.org. or ideological nature.generosity. to identify. inits internati.org. Source:www. "~. and without discrimination.
Russ Finkelstein. director of outreach at Action Without Borders has stated. lack of pure water. there were costs associated with a Web site that many nonprofit groups did not realize. Youth Involvement. Emergency disaster response. Inc."!' About 12 million Americans enroll in Red Cross courses each year.v'? However. and it's not necessarily that. In the near future.1 Technology and Operations Technology has helped the American Red Cross better coordinate its efforts among its 1. and major expenses included:" can Red Cross in Washington. Volunteering. the American Red Cross supplies over 3.P Strategic Alliances The American Red Cross has established a number of alliances with other organizations. Cindy Archer also believed that "more and more people are coming onlinethis isn't going to go away. other monetary and in-kind contributions.570 billion (see Exhibits 3. and distributing blood and tissue. Total operating revenues for fiscal year 2000-2001 were $2. keep up with breaking news. staff expenses at disaster sites. These "click" sites appeal to a newer and often younger audience for the nonprofits. Three main funding sources for the American Red Cross were:" • • Contributions: Fund-raising efforts by the United Way & Combined Federal Campaign. John Clizbe. strengthen public health. legacies. The Red Cross has routinely published the latest public health information. As a result of recent research and development. online media manager for the Ameri- . it may be possible for the American Red Cross to offer an online shopping network to generate additional resources.117 billion. Jane Delano Society. Geneva Conventions. Coinstar machines were located within two miles of 130 million Americans.C. International Services. indicated that "If every American near a Coinstar machine would donate a handful • • Disaster costs: Assistance to victims. Consumers could drop loose change into the Coinstar machines located in local supermarkets. find relatives in a disaster area. The Red Cross is able to provide long-term aid and education to those in need. and so forth. it's only going to get more pervasive. and young adults. feeding programs. the Internet serves as a vital source of information to the American public and as a new way to collect donations. Funding disaster services: Expenses to solicit donations.• and so forth. 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 tissue services. expenses in blood.. "The Internet has definitely changed how the whole organization thinks. vice president of Disaster Services at the American Red Cross. For Cindee Archer.000 hospitals with blood donations. testing. and the use of new technology will make this information available online. Red Cross delegates help local citizens rebuild infrastructure. to collect Red Cross donations for disaster relief efforts. primary health care programs. In addition. and courses. fees from collecting. D. Each year more than 12 million Americans take advantage of lifesaving courses offered by the Red Cross. Student nurses. Wireless communication allows the American Red Cross to make faster damage assessment at the scene.743 billion. 13 In February 2001 the American Red Cross teamed up with Coinstar.712 billion. and improve response time to local disasters. and obtain information about donating and volunteering. Helping kids. A donation to the World Hemophilia Foundation of plasma product is used to treat hemophilia." 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. materials. The communication network allows it to locate family members during crises more efficiently. administer funds. Also. and diarrhea in poor countries and to support primary health care."? Archer worked on developing a Web site where visitors could enter a zip code and quickly find information. Nursing. In 1999 the American Red Cross joined the Federal Emergency Management Agency for "TOPOFF. Products and services: Fees for products. and so on. Massachusetts General Hospital and the American Red Cross jointly own a patent for a protein associated with the underlying cause of Alzheimer's disease." a nationwide disaster simulation to help prepare for acts of terrorism. Total operating expenses for the 2000-2001 fiscal year were $2.. It works with the World Health Organization to alleviate malnutrition.400 chapters and to expand its reach across America. 4. plasma. teens. Archer stated. It is now possible to make these courses available online. "Some of them think this is going to be a kind of panacea for doing fund-raising. Biomedical services: Facility maintenance. grants. and 5). The Web site helps visitors locate local Red Cross shelters. You feel this sense of urgency whenever there's a disaster-e-you want that information up as quickly as you can get it. Financial Overview In fiscal year 2001-2002 the American Red Cross had operating revenues of $4. Recruiting and organizing volunteers. and so on. Investment income and other income: Investment income from endowments and reserve funds and income from contracts to provide various programs. Total operating expenses for the fiscal year 2001-2002 were $3.
374.924 liabilities 20. current portion Other Inventories.913 548.180 13.674 28.964 325.654 183 29.894 18.541 35.293 63 63 23.042 92.0.103 56 15..385 6.lles.570 15.823 950. June 30.421 1.913 Receival.750 in 2002 and $6.293 3.149 2.453 120.092 20 83 380.575.385 American.209 823.801 126.162 585.301 in 2001: Trade Contributions.453 296..036 357.92 22.029. net of allowance for obsolescence of $7.569 11. $2.500 771.238 2. net 304.252 12.626 1.784 in 2001 Other assets Total current assets Investments Contributions receivable Prepaid pension costs Land. 2002.386 12.137 liabilities and netassets Cross. net of allowance for doubtful accounts of $19.258 110.209 39.514 15. and other property.704 380.626 1.57.'c· _~..402 3.164.541 11.Red .633 4.662 39.623 936.826 823.545 34.602.653 366.543 16.840 12..453 120.089 2.473 7.243 15.825 197.544 155.798 1.. 9.894 18.354 2.437.042 93.050 $ 1.374.924 2.892 1. 2002 (with summarized information as of June 30.525.411 $439..272 $3. Annual Report.604 in 2002 and $19.825 319..066 $380.556 379.680 (-'elnsieln and postretirement liabilities benefits 357.247 309._ ~jhibit 3 (ill thousands) Consolidated Statement of Financial Position.587 mitl11ents and contingencies L.525.buildings. 2001) $146.149 287.619 $771.547 986. •.374 203.
513 308. Year ended June 30.745 96.967 213.448.086 $380.236 213.182 311.575.822 1.594 49.931 420.083 3.699.712.394 49.980 360.195) 411.164. 2002 (with summarized information for the year ended 30.931 61.175 81.034 21.549 84.728 76.164.614 152.900) (28.022 705 Armed Forces Emergency Services Disaster services liberty disaster relief-Sept.135 2.970 337.513 308.736 3.815) 1.960 1.614 152.402 $1.906 61.089 1.410 3.222 67~175 36.902 32.201 (31.259.035.967 213.747) 19.845 1.4 Consolidated Statement of Activities.619 22.901 174.686.902 32.272 65.302 30.261 1.587 .171 82. Annual Report.872. response Biomedical services Health and safety services Community services International services program services Supporting services: Fund raising Management and general 61.289' 1.978 203.727 (2.960 108.570.915 906 1.330 (135.727 115.844 2.108 45.117.238 2.876) 2.848 136.570.137 $2.171 81.616 154.582 58.649 $ 757.259.008 (1.069 2.342 2.182 311.195.742.058 150.118 22.756 284. 2002.601 989.090 121)24 50.085 (131.077 136.077 137.901 174.410) 420.960 1.466.924.060 6.016 22. 103.872.035.137 in net assets from operations gains (losses) effect of accounting change in net assets beginning of year end of year Red Cross.156 11 617.463 51.924.726 263.518 (548) 419.18 22.208 $2.066 546.848 136.604 (63.2001) (in thousands) $ 205.405 40.674.083 3.488 58.071 ) 2.351 230.437.736 3.097 4.5.156 617.
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based on Healy'S policy of using donations for a "long period of C78 Case 11:: Amer lean Red Cr ass . Deborah Goldburg.' stated Skip Seitz. unfair trade practices. frequent schedule changes. COO of Coinstar. The American Red Cross has a heavy burden-to live up to the inspiration and memory of those lost. the American Red Cross released a spending plan for the first $300 million in the Liberty Fund. the Red Cross had collected $202 million in donations. the Red Cross had annual sales of more than $1. radio and newspapers. and will explore efforts in joint training exercises. and meals for volunteers and staff working on-site. and changes in legislation. Less than 50 percent of the money raised was targeted for victims. stated. Pennsylvania. Funds were used for travel. She indicated that organization officials earmarked $100 million from the fund to provide short-term financial assistance to families of victims. said in a written statement. and we must respond in an extraordinary way. Somerset County. Because of the large dollar amount of donations from the American people. a Mars Incorporated Company. In response to the tragedy. food. platelets) below production costs to drive out competitors while it charged higher prices for the same products in markets where there is no competition. In January 2002 Masterfoods USA presented a check to the Red Cross in the amount of$3. "Everything is happening at such a fast pace."20 Recent Problems Events between 2000 and 2002 provided the American Red Cross with a number of challenges. "What has taken place is extraordinary. In the lawsuit.of change on their next supermarket visit. William Nicely. victims' families. the plaintiffs alleged the Red Cross violated Section 2 of the Sherman Antitrust Act. the new M&Ms' captured the heart of America. counseling. "We believe that's unfair and illegal. American Red Cross Growth and Integrated Development. and relief workers. a Red Cross spokeswoman. said. 15 One hundred percent of all profits from the sales of these M&Ms were donated to the American Red Cross Disaster Relief Fund. 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. a Red Cross spokesperson. The workers were unhappy about long hours.."!" Masterfoods USA.g. the Red Cross would be that much better prepared to respond to disaster immediately. stated.5 million. Millions of dollars." 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. which prohibits monopolization. financial assistance.P This planned distribution of funds. If all Americans donate the change in their wallet or pocket. and blue M&Ms specifically to benefit the Red Cross. Bernadine Healy. The lawsuit also charged tortuous interference. They further alleged that the American Red Cross priced some blood products (e. and Coral Blood Services alleged the Red Cross had cost them more than $25 million in lost business. the president and chief executive officer of the Red Cross. 2001. and transportation were provided to families of missing foreign nationals. Within 15 days of the September 11. the Red Cross set up family assistance centers to provide counseling. and other items to relief workers and volunteers. MD. It is with great humility and pride that we carry out this noble obligation/'P On October 12. white. their families. declarations. the American Red Cross rose to the challenge of providing the most extensive relief operation in its 120-year history.3 billion. 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." unfair competition under the California Business and Professional Code."? Blythe Kubina. and help from a myriad of volunteers contributed to Red Cross efforts to provide aid to survivors. We just want them to play by the rules that are reasonable and fair and compete on a level playing field.'? Unfair Trade Practices Lawsuit The Red Cross derived 60 percent of its revenues from the sale of blood. those handfuls will make a huge difference in our capacity to help others thisyear. Respite centers were set up in New York City. senior vice president. attack. and increasing health benefit costs. The national campaign theme used for this promotion was "Taking Care of America Everyday. created a special package of red.2001. and creative displays in stores across the country. "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. sleeping quarters. and at the Pentagon to provide meals. HemaCare Corp. child care. We have been in full compliance with the law. 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. thousands of blood donations. HemaCare's chief executive officer. The Red Cross is a fine organization. Financial assistance. and other services to victims' families and others affected." Rich Stillman." "Through appearances on television. and Liberty Disaster Relief Fund After the terrorist attacks on September 11. or rescue workers. lodging. said in a written statement. 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. "You no longer need a credit card or checkbook to provide financial support to those in need. In providing more than half the nation's blood. and we will vigorously defend this lawsuit. The ASAE provides the Red Cross with demographic information about associations and assistance with identifying organizations they wish to contact during times of need.
" Deborah Daley responded that chapters are accountable in a number of ways. "They also decided to put a disclaimer in their ads saying that donations will be used for this and other disasters. announced that the American Red Cross received $930 million in contributions and this money was used to provide the following.i" The donors blasted Healy because they expected their donations to be helping September 11 disaster victims now. McLaughlin. stated. $ millions gir~Gt. "As oflast week. The Red Cross would provide increased financial support to families. on the CBS news show 60 Minutes. the Better Business Bureau Wise Giving Alliance removed the American Red Cross from its "give.org" Web site. it's in small print. chairman of the American Red Cross Board of Governors.000people $169 270 94 3. it took us too long to hear their message. Experts questioned the wisdom of calling for blood donations when there were very few blood recipients. interim CEO and president of the Red Cross. a spokesperson for the Red Cross. 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. mental he. we can save a life" public service announcement. COO of the alliance." The Lancet reported. and Bennett Weiner. agreed to a March 30 deadline for the updated report.'! BBB Wise Giving Alliance On February 16. The attorney general of New York State threatened legal action. As for the Alpine fire in Southern California. the American public donated blood for the disaster victims. 2001. and donors who responded to September 11th. Chapters must meet specific national guidelines to maintain their charters.althservices for 232.. The largest 126 chapters must send quarterly financial reports to the national Red Cross. "In the West Virginia flood ad. She stated that Wallace's claim that chapters "are not even required to submit financial reports" is completely false. Deborah Daley reported. 14 months after the fire. Art Taylor. David McLaughlin stated. The trouble is. 2002.uncertainty and recovery. Jack Campbell. 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. David McLaughlin stated.assistanceto 3. Deborah Daley."28 In addition to donating money. and extend the use of toll-free telephone lines. made some unsupported public statements regarding the Red Cross that were reported in the Philadelphia Inquirer.P 60 Minutes Program 1. 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. . "Donors charged the organization with abuse of their good intentions.P? On March 7.'dE)ceasedand seriously injured . Healy was confronted with allegations of "panicking the public into wasteful donations of blood. Wallace reported.000 in annual expenses must have an external audit conducted by an independent CPA." Harold Decker. "I had no choice. president of the alliance. hire an additiona1200 caseworkers.~ssistanceto 51.S.000families of displaced workers and disaster workers Provision for 14million meals. In fact. "Today we are recognizing the work of our staff. 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. "Outside audits of local Red Cross chapters are rare. Regrettably. By November 2001 about 10 percent of the red blood cells collected on September 11 and 12 had expired. it was determined that such a report could not be provided by the due date. participate in a database to be shared among relief agencies. claiming that the organization's board had pushed her OUt. sent a letter to CBS News indicating the errors and an explanation.500 families affected by the attacks. fires. volunteers. 2002. and health services for 129.32 Another onslaught of negative publicity for the American Red Cross occurred March 10.26 On November 14.000people. In addition. allegedly because the American Red Cross did not provide a timely report to the alliance. David T. These donations were given in response to Healy'S "Together.266families of . Given the recent activities of the American Red Cross.P In a congressional hearing. Harold Decker. All chapters must have an independent annual review. 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. CFO of the Red Cross. Chapters that have over $100. News & World Report. In a comment about advertising practices. interim president." In response. 2." caused a huge uproar." she said. The Red Cross does regular audits of chapters.org Web site. and the financial accountability of Red Cross chapters. H. "If we don't subject ourselves to public scrutiny." Healy finally responded with her announcement of retirement. and very clear direction for our September 11 relief effort. Mike Wallace reported. we will never have public truSt. It appears to have contained some inaccuracies concerning floods."?" In an article in U. their trust. "The people of this country have given the Red Cross their hard-earned dollars. 2002. Wallace reported.
November 24: 1789. 34. PR Newswire. Tyrangiel. Reports. Annual Cross. Ibid. 29. and the American Red Cross. Navy. 23. 25. Greenberg. Infoworld. www. Tyrangiel. Taylor. 16. 2001. politics. 2002. Association Management. 2001. politics. 2000. Greenberg. Samantha." As she begins to guide the organization. February 12. Modern Healthcare 31. Press release. David McLaughlin. November 5: 75. 15. November 19. The timely and capable response day-in and day-out to these disasters speaks volumes about the character of the volunteers and staff. 12.. 2001. 13. Ibid. 31(4): 33. but there are costs. American Red Cross. 32. 2000. Cinda. March 7. American 4. Taylor. Ibid. PR Newswire. 2002. American 2. 18. 28. Ibid.S. Red Cross faces antitrust lawsuit. 21. 2002. June 27."?" Evans remarked that: In the midst of responding to the extraordinary demands of 9/11 and a lot of criticism about these efforts. Cross. 22(25): 37. 200 I. February 1. 8. 27. 2001. 11. A torrent of donations. The charity olympics: After weeks of record giving. and most especially their dedication. Charity olympics. 19. Daniel S. Red Cross announces major changes in Liberty Fund: Fund solely used for people affected by September 11 tragedy. Greenberg. Cross. American 3. 2001. Lancet. U. Looking to the Future After a five-month search. Charity olympics. 2000-2001." Deborah Daley responded that the chapter has provided up-to-date financial information on its response to the Alpine fire three times since November. Levine. she is well poised to guide our organization as we continue to provide vital services in a world faced by new challenges. Nonprofits reap rewards of the Web-Internet proves to be a great fund-raising tool for charities. 53(8): 12. 2000. 33. How should she proceed? Endnotes 1. February 1. Ibid. American Red Cross. some 45. ASAE and American Red Cross formalize partnership agreement. With great insight into our mission. 2001-2002.. American 5. 20. 2000. 2002. 26. and the American Red Cross. Press release. 10. American Red Cross. 2002. Americans want to know: Is that money helping? Time. Annual Report. Ibid. December 9.org. charities wrestle with how best to spend money pouring in since attacks.000 in the months since last September. prior to which she had a 29-year career in the U. Blood. US Newswire. 30. US Newswire. Newsweek: Former Red Cross head says her fundraising message was clear . Press release. 7. "Marty's unique style of leadership along with her experience as established administrator will bring new vigor to the American Red Cross. 14. Evans has served as national executive director of the Girl Scouts of the USA for the past four years. 22. 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. chairman of the Board of Governors of the American Red Cross. 2002. and the American Red Cross. Ibid. In his announcement.. Becker. 35. Marsha Johnson Evans must confront the many issues faced by the American Red Cross.S. Annual Report. where she earned the rank of rear admiral. C80 Case 11:: American Red CI ass .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 faces antitrust lawsuit. Marsha. News & WorldReport. Red Cross workers on strike. Modern Healthcare 31. 17. Reports. Fund Raising Management. November 14. American 6. Press release.redcross. Blood. American Red Cross. Annual June 27. 31. Sanborn. 2001. Cross. January 1: 20. American Red Cross. Stephanie. 2001. Red Crossroads. Blood. 2001. Ibid. American Red Cross letter to Better Business Bureau's Wise Giving Alliance. Red Red Red Red Red Cross. 9. Tyrangiel. Josh. Red Cross announces major changes in Liberty Fund. American Red Cross and Coinstar to launch new fundraising technology to prepare for disasters. said. 24. politics. their talent. Mark. February 16. Press release. Johnson Evans was named president and CEO of the American Red Cross on June 27. October 1: 8.
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