Any large organization – FEMA, the University of Illinois, General Motors – is going to have its share of organizational problems. And when a crisis strikes, the chance for errors, omissions and mismanagement increases even more. But such mishaps have become habitual at the American Red Cross, whether it's responding to the 9/11 disaster or Hurricane Katrina, managing blood donation centers or keeping its finances in order. The Red Cross is a mess and it needs to be overhauled.
Most recently, it was charges of improprieties, possibly criminal, in the way the organization distributed relief supplies in New Orleans following last summer's hurricane. Two key supervisors were dismissed by the Red Cross last week after it was disclosed that supplies had been improperly diverted.
What makes the charges even more troubling was that Red Cross volunteers apparently had been complaining for months about the diversion of supplies but that nothing was done until recently, when the staff of Sen. Charles Grassley, R-Iowa, and reporters began snooping around. Grassley is the chairman of the Senate Finance Committee, which has oversight powers because the Red Cross is officially designated as the charity the federal government relies on first in national disasters.
Grassley said last weekend that the Red Cross must make immediate changes in its structure. "Business as usual cannot continue," he said.
In addition to charges related to diversion of relief supplies, the Red Cross is accused of:
– Spending too much money on image-building (including paying consultants more than $500,000 over three years to promote the organization in Hollywood and in other venues).
– Being run largely by an absentee and hands-off 50-member board.
– Not promptly investigating accusations made by whistleblowers.
– And spending millions of dollars on "golden parachutes" for dismissed executives. The organization has had five directors in the last seven years.
A spokeswoman for the Red Cross said that the charity will pay for an independent review of operations and is committed to making changes. But will it?
In a remarkably prescient e-mail written more than four years ago in the aftermath of charges of financial mismanagement in the aftermath of the 9/11 attacks, Red Cross board member Bill George criticized the organization's management for not embracing change. "The worst thing we could do is to gloss over the split on the board, make some superficial changes in governance, and see the whole scenario repeated three or four years from now," George wrote in an e-mail.
He encouraged the board to find a strong leader and give that person authority. But four years later, another Red Cross CEO would resign, citing problems with the board.
Major changes are needed at the Red Cross. And it would be a bad sign if Congress – which also is responsible for overseeing the woeful FEMA – had to do it. Let's hope Red Cross can put its own house in order before the next national disaster strikes.