The misapplication of modern business practices - including marketing, communications, stakeholder relationships and corporate governance – in the nonprofit sector may have no greater cautionary tale than what has been occurring to the American Red Cross recently. Caught up in the on-going investigations of the Hurricane Katrina disaster relief efforts, and echoes of its response to the attack on the World Trade Center Towers, the Red Cross is taking on water.
From the Washington Post yesterday -
In an Oct. 29, 2001 e-mail, board member Bill George warned Red Cross chairman David McLaughlin to resolve the group's disputes. At the time, the nation's largest charity was reeling from CEO Bernadine Healy's resignation amid charges it had mismanaged Sept. 11 donations. "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," the Medtronic Inc. executive wrote.
The documents released [Monday] by the Senate committee reveal an organization that is virtually at war with itself: local chapters fighting the national headquarters and the chief executive, board members pitted against board members and chief executives battling the board. The organization needs "radical surgery," said Bernadine Healy, a former chief executive who was forced out in 2001.
The documents being discussed are from the Red Cross and were delivered to the US Senate Finance Committee as part of an on-going investigation of the practices of the Red Cross in the wake of the 9-11 terrorist attacks.
After [Senator Charles E.] Grassley wrote the charity in December, questioning the adequacy of its response to Katrina, he received dozens of letters, e-mails and phone calls from current and former Red Cross employees and volunteers. Among other things, they complained about a lack of coordination between headquarters and workers in the field; the use of costly hotels, rather than shelters, to house volunteers; food orders far greater than what was needed; top officials using contributions to hire consultants to buff up the organization's image; and disdain for the local charities that provide needed links to the affected communities… "When they tried to raise concerns … volunteers were ignored, told to leave or otherwise made to feel like the skunk at the picnic," Grassley said in a statement released with the documents. "This type of culture, a culture that discourages people from coming forward, management that does not want to hear the bad news and is more concerned about good press than good results, is a theme that I am hearing too often." [Link to LA Times]
There are times when we become so focused on ‘the mission’ and the day-to-day challenges of ‘doing good’ that we forget that no effective and sustainable social marketing or change effort can be accomplished without a management structure that is competent, transparent and has public accountability and trust. Managing corporate [social] marketing functions is but one character in a larger story, and when that story darkens, it affects each and every chapter. Social change starts from within.
We must be the change we wish to see in the world. - Gandhi