Hurricanes Drain Red Cross Relief Fund
September 11, 2008 - 3:27 PMThe wave of storms battering the U.S. has plunged the American Red Cross deep into debt as it rushes to prepare for Hurricane Ike, prompting a searching look at how to stabilize its finances.
Gail McGovern, who became the embattled charity's president in June, said even a request for federal funding is under consideration as the Red Cross seeks to become less dependent on spontaneous donations that arrive only in the wake of huge disasters.
"We are going to explore every avenue we can to ensure we have a healthy Red Cross," McGovern said in an interview Thursday as her organization deployed 1,000 out-of-state volunteers to Texas to await menacing Ike.
"We're brainstorming absolutely anything," she said. "We're looking at the possibility of appropriations, whatever - because we want to be able to serve the American public."
As of last week, when Ike was still a distant threat, the Red Cross said it has raised only $5 million to cover costs from Hurricane Gustav that will total at least $40 million, possibly more than $70 million. It has borrowed money to meet those bills, and now is incurring more expenses as it shifts response teams to Texas and readies its shelters.
"The beautiful thing about the American Red Cross is we are going to be there when people need us," McGovern said. "As the disaster relief fund depletes, we will borrow money if we need to, to be there."
McGovern said Red Cross officials were calling Gustav a "silent disaster" because it entailed sizable costs for sheltering displaced people, yet did not trigger the flood of donations that often follows more deadly and destructive storms.
With Ike, McGovern said, the Red Cross wants to be ready even though it has no idea how damaging or costly the storm will be. It launched a new fundraising appeal Monday, and will get a plug this weekend when the NFL encourages donations with on-air and in-stadium announcements during its games.
The Red Cross endured widespread criticism - some from within its own ranks - after Hurricane Katrina hit New Orleans in 2005. An internal report cited overwhelmed volunteers, inflexible attitudes and inadequate anti-fraud measures.
One major change since then, McGovern said, is a greater focus on getting relief supplies into threatened areas before a hurricane arrives.
"With Katrina, we had the supplies, but they were in the wrong place," she said.
More broadly, McGovern said, the Red Cross needs steadier funding sources in addition to what she called "episodic fundraising" - the gifts, often relatively small, that pour in after a large-scale disaster rouses public sympathy.
She said the Red Cross will always welcome these gifts, but wants to encourage corporation donations and large contributions from wealthy individuals that are not linked to the latest disaster.
"The American public is going to be moved when they see a time of need," she said. "It's incumbent on us to be very clear about our mission so they understand there are other times to give, too. It's our responsibility to explain our mission better."
Despite the depleted relief fund, and Ike's approach, McGovern said she was not anxious.
"The reason I'm calm and cool and collected is because the American public always comes through for us - always," she said. "We put out a campaign for our local chapters to raise money because of Gustav. ... I've gotten e-mail after e-mail saying, `We are behind you, this is a defining moment, we can do it.'
"I just believe that this country will not let harm come to the American Red Cross."
Fundraising is only one of several major challenges confronting the Red Cross in recent years. Faced with a deficit of about $210 million, it laid off one-third of the 3,000 employees at its Washington headquarters earlier this year. Emergency response operations have not been affected, and the deficit is now about $140 million, McGovern said.
The Red Cross also had been plagued by rapid turnover of its presidents.
McGovern is the fourth full-fledged president to serve since 2001, along with three interim leaders. She replaced Mark Everson, who resigned last November because of an extramarital affair with an official from a Red Cross chapter in Mississippi.
Everson's two predecessors resigned after conflicts with the Red Cross board of governors, but the board - formerly with 50 members - is being gradually reduced to 20 as part of a management overhaul. McGovern, a veteran executive and professor of marketing at Harvard University, described her relations with the board as excellent.
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