Red Cross's Board Chairman Pledges to Repair Charity's Image
By Grant Williams
philanthropy.com
The chairman of the board of the American Red Cross says he worries about the public's perception of his charity in the wake of the organization's response to the September 11 terrorist attacks -- and pledged that the Red Cross would work in coming weeks to make sure that Americans understand its accomplishments in helping victims of the disasters. David T. McLaughlin also said the Red Cross had hired an independent auditor to make sure contributions received in the aftermath of the September 11 attacks were properly managed.
The charity has been rocked by controversy. Its president, Bernadine P. Healy, resigned on October 26, three days after the board voted 27-5 on a measure declaring its loss of confidence in her leadership.
One of the disputes between Dr. Healy and the board was the handling of the special Liberty Disaster Fund that Dr. Healy set up to help victims of the terrorist attacks and to support related Red Cross programs. This week the Red Cross said that it will stop seeking donations for the fund, which has collected $547-million.
"There's been a lot of media coverage directed at whether the funds of the Liberty Fund are being properly appropriated and spent," said Mr. McLaughlin. "You read that enough, and other people read it, and you have to be concerned that people are asking, 'Gee, is the Red Cross still a credible organization, as credible as it always was?'"
Said Mr. McLaughlin: "From my standpoint, it clearly is. But I do worry about the perception. I don't think people understand the complexity of the disaster."
Mr. McLaughlin noted that, among its accomplishments, the Red Cross has distributed money to more than 2,300 families affected by the disasters. He said the charity has also hired a major accounting firm to set up "an entire system to account for the dollars" in the Liberty Fund and to make periodic reports to the public." The charity will make public a full accounting of the fund's condition before December 31, he said.
"We're going to do everything we can to show the public that we are a responsible agency and are spending the money responsibly," he said.
Looking back on the Red Cross's handling of the aftermath of the terrorist attacks, Mr. McLaughlin said he thinks that Dr. Healy was right to create the Liberty Disaster Fund in a manner separate and distinct from the charity's general Disaster Relief Fund. Some people inside and outside the Red Cross had criticized Dr. Healy for taking that step, in part because the charity's usual policy is to ask donors to give to its general disaster fund so that money raised can go wherever it is needed.
But Mr. McLaughlin said that the Red Cross probably should have had simpler procedures to disburse money to victims. "The money is getting to where it needs to go, but there are some people who feel that there is more red tape involved" than necessary, he said. "We will sit back and say, What are the lessons learned from this experience? And my guess is that we might try and streamline the disbursement system."
On another matter, Mr. McLaughlin said that he was "disappointed" with an essay published in The Washington Post this week by Lawrence S. Eagleburger, a former Secretary of State. In the essay, Mr. Eagleburger said that Dr. Healy was forced out by the Red Cross board because of her stand in favor of pressuring the International Federation of Red Cross and Red Crescent Societies to recognize the Magen David Adom, Israel's Red Cross equivalent, and withholding administrative dues from the federation until the policy is changed. Mr. Eagleburger said that he had been a close adviser to Dr. Healy on the issue.
In her resignation speech, Dr. Healy attributed her departure in part to her stand on withholding the dues, saying the policy to withhold the dues was "now up for grabs" at the Red Cross.
But Mr. McLaughlin said that the American Red Cross board last weekend reiterated its policy of withholding the dues.
"Dr. Healy was concerned that the policy was going to change," he said. "In fact, part of the board felt that with the events of September 11, and the kind of support that we have received from the international community, we ought to revisit that policy, as we do with all our policies from time to time."
The question, said Mr. McLaughlin, was "by withholding the administrative payments, are you hurting the international effort to respond to disasters? What folks don't realize is that the American Red Cross puts a lot of money into international disasters."
But, said Mr. McLaughlin, when the board voted, one day after Dr. Healy's resignation announcement, "while it wasn't unanimous, certainly a strong majority of the board reaffirmed our policy" to continue withholding the dues.
"She was concerned about it, but the board just stood right behind her policy," said Mr. McLaughlin.
Before the Red Cross chooses a successor to Dr. Healy, the charity is putting together a special committee "to look at the governance of the American Red Cross" and report back by the end of the year or soon after the New Year, said Mr. McLaughlin.
"It's such a complex organization," he said, "with 1,043 chapters and a large board and a lot of committees and blood regions and 1.3 million volunteers. We have a system that is difficult to work with, regardless of the CEO," he said. "It's a governance system that is not necessarily conducive to very close relationships between the CEO and the board and the chapters and the whole system." He added: "We really need to step back and say, Can we structure this in a way that makes it easier for the CEO to be more effective?"
The Red Cross also plans to talk with its own management and chapter officials "about what kind of person do they think the next head of the Red Cross should be and what should the attributes of that individual be," Mr. McLaughlin said.
He acknowledged that there are many different leadership "models" that could be followed, including hiring a well-known person to head the organization in the tradition of Dr. Healy, who had been director of the National Institutes of Health, and her predecessor, Elizabeth Hanford Dole, a former Cabinet secretary.
"Even before we begin the search, we will spend a lot of time networking within the Red Cross organization to get their thinking on what kind of successor to Dr. Healy we should have, and then we will begin the search," said Mr. McLaughlin.
He said that the charity has not set a deadline for hiring a new leader. Noting that it took the charity about a year to replace Mrs. Dole, Mr. McLaughlin said, "I would certainly hope it wouldn't take that long, but I haven't set a date until we get the early stages of the process under way."
Mr. McLaughlin declined to discuss the way that Dr. Healy's compensation, which is $450,000 a year, is being handled as she departs. "That is strictly a matter between Dr. Healy and the Red Cross," he said. |
