New CEO Mark Everson has resigned after six months on the job for having relations with a chapter executive in Mississippi (giving new meaning to Katrina relief). But the Red Cross has made its greatest strides under interim leadership over the last decade, calling into question whether the organization really needs a high profile chief—and whether they can find one.
It was a shock to see the brief resignation statement of newly installed American Red Cross CEO Mark Everson posted on the organization's web site on Tuesday. Mr. Everson had been on the job just a few days short of six months, his hiring coming after an extensive executive search process following the resignation of Marsha Evans as ARC CEO in December of 2005.
The American Red Cross (EIN 53-0196605) filed its most current form 990 electronically in March of 2007, but for some reason it is still not available on Guidestar. The link is to the form posted on the ARC web site.
- Diana Aviv, Independent Sector,
- Trent Stamp, Charity Navigator,
- Peter Dobkin Hall, Harvard, and
- Paul C. Light, New York University,
plus a few others about how bad this was for the American Red Cross.
Ms. Strom only hinted at the other track deep in the article, mentioning that Mr. Everson's affair with a chapter official on the Gulf Coast (who is also married, mother of two, and is now pregnant) was reported to the board by a person whom Mr. Everson had hired.
The scandal track was fully fleshed out by the New York Post (Geoff Earle & Chuck Bennett) in a story with a great headline (Axed Red Cross chief had Mississippi Queen), who added:
The glamorous brunette, a former TV reporter, is an official with a Mississippi chapter of the Red Cross - a position that put her on the front lines responding to the Hurricane Katrina disaster that leveled her own home.
This was enough for the Mississippi Press (Veto F. Roley) to identify the paramour as ARC's Southeast Mississippi Chapter Executive Director Paige Roberts. The Washington satire blog Wonkette served as paparazzi, providing a picture of Ms. Roberts. (Mr. Everson's picture is already widely available—he is a handsome dude who bears a passing resemblance to Aaron Eckhart, the lobbyist in the movie Thank You for Smoking.)
The Non Profit Times (Paul Clolery), a trade publication, took it a step further by reporting that the ARC is conducting a forensic audit to determine whether any ARC funds were used inappropriately by Mr. Everson or Ms. Roberts. They also confirmed that there was no severance other than a contribution to medical insurance costs, under $10,000. For comments, NPT looked to other charity CEOs:
- M. Cass Wheeler, chief executive officer of the American Heart Association
- John Graham IV, CAE, president & CEO, American Society of Association Executives
- Gary Bass, executive director of OMB Watch
- H. Art Taylor, president and CEO of the BBB Wise Giving Alliance
- Linda Crompton, president and CEO at BoardSource
The Chronicle of Philanthropy (Grant Williams), by contrast, didn't immediately go beyond the press release issued by the ARC. I'm looking forward to seeing how they handle the balance between the high road and low road in their next issue's coverage.
I have pointed out that the ARC has been pursuing major reforms and restructuring under interim leadership, first by Harold Decker (after Dr. Bernardine Healy, who resigned in 2001) and then John F. (Jack) McGuire (after Ms. Evans). The interim post is now being filled by general counsel Mary Elcano, whose prior experience was as general counsel and head of human resources for the US Postal Service.
I don't think it's a coincidence that the Red Cross moves forward on interim leadership while appointed CEOs go down in flames. I'm not sure the American Red Cross even needs a CEO as the term is ordinarily understood. The ARC has two separate missions—emergency response and blood supply—operating largely autonomously of each other. Unlike most organizations, the ARC has no strategic objective other than to provide these two services. There is no need to maximize shareholder values, no need to examine what business they are in, and no need to consider acquisitions or divestitures. Hence, no need for a corporate style CEO.
It seems to me that there could be two operational heads, one for emergency services and one for blood services, both accountable directly to the board. The public face of the organization could be the chair of the board, which could be a dollar-a-year celebrity face, with the understanding that the real work of the organization is the responsibility of two competent but largely unpublicized COOs.
The real issue with the American Red Cross is how to recast the role of the local chapters, their fundraising, and their leadership. What makes ARC so difficult to manage is that the local chapters hold the key to local fundraising, giving them extraordinary leverage. ARC is not alone with this challenge, which is shared by all chapter-based charities from the American Cancer Society to the YMCA. But ARC is unique in having also to coordinate two essential services that affect people directly at critical points in their lives. And this is where the local autonomy can come into conflict with the desirability of uniform, disciplined service delivery.
In other words, if a local Y is managed poorly or a local American Cancer Society chapter has an embezzlement scandal, it's pretty much a local issue. But if there's a problem with blood delivery or mishandling of a large scale disaster, it's a national scandal.
The fundraising angle is how it can come to pass that a local Red Cross chapters can be headed up by a former television news reporter, like Ms. Roberts in Mississippi, rather than by people with a background in emergency response or blood services. I think the solution for the local chapters is similar to the one I suggest for the national level. The local operations should have two COOs for disaster services and blood services, reporting to other technical managers at a regional and national level. Fundraising efforts should be the local (advisory) board's primary responsibility, headed up by an honorary (unpaid) board chair. The local board is thus more clearly defined as an advisory and fundraising body, with limited say over policies and no involvement in technical supervision of services.
The ARC is not a charity in the ordinary sense. On a local and national level it is more akin to a volunteer fire department in that it provides an essential community service based on volunteers. The ARC is not "them" in some huge bureaucracy in Washington. It is "us" taking care of our neighbors. The ultimate question is not how they at the Red Cross can get their act together—it is how we can come together to help each other out in stressful times.