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August 21, 2008

American Red Cross Faces Deficit, Fund-Raising Woes

The American Red Cross is facing a $200-million deficit, a nearly empty disaster-relief fund, stagnant fund raising, and large loans it took out to help victims of recent disasters, reports The Wall Street Journal.

The paper criticizes the charity’s fund raising as outdated, saying “its fund-raising model of living from disaster to disaster no longer works well in a world where other charities constantly are competing for donor dollars.” The paper also points out that fund raising between many of the Red Cross’s local chapters and the national headquarters is out of sync, with some affiliates refusing to share donors with the national office.

The American Red Cross has been plagued by program, management, and money problems in the past few years, including the resignation of top executives and criticisms that it did not respond quickly enough to victims of Hurricane Katrina and the September 11 attacks.

“For the last year in particular, we’ve been living hand to mouth,” says Joseph Becker, the Red Cross’s senior vice president for preparedness and response.

Gail McGovern, the current chief executive of the Red Cross, believes that stronger communications will help the organization improve. She also said, “We just need to do steady fund raising. I believe we’re just now getting traction with programs that get us off episodic fund raising.”

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