Following criticism of its disaster-relief management in the wake of Hurricanes Katrina and Rita, the American Red Cross said today that it has approved the first major changes in 60 years to its board and governance structure.
Among the revisions, which were approved over the weekend, the Red Cross plans to gradually cut down the size of its board from 50 today to a maximum of 20 members. In addition, it plans to give the board more say in choosing its members, who are now selected in large part by local chapters. The charity also moved to restrict the board's responsibilities to general oversight and governance of the charity rather than day-to-day management.
Charity officials said the changes would modernize the Red Cross governance, which was last updated in 1947.
"We had a board that was designed and set up under guiding principles that are no longer relevant," said John F. (Jack) McGuire, the Red Cross's interim chief executive. "We needed to take that board and bring it up to today's expectations."
Congress must approve the board's action, since the Red Cross operates under a congressional charter as the nation's lead charity for disaster relief.
Sen. Charles E. Grassley, the chairman of the Senate Finance Committee, said he was pleased by the proposed changes and believes speedy action on them is possible.
"My hope is that we can move quickly and have Congress act to pass the necessary statutory changes to change the governance and board of the Red Cross in keeping with the board's actions," the Iowa Republican said in a statement.
Following reports that the Red Cross response to Hurricanes Katrina and Rita was inadequate and marred by fraud and mismanagement, Senator Grassley conducted an investigation of the charity. He concluded that the organization was plagued by a weak board, had overstepped its Congressional mandate, and fostered a culture that cared more about publicity than good deeds.
Senator Grassley also criticized the frequent changes in the management of the organization. Mr. McGuire has been serving as acting chief executive since Marsha J. Evans resigned last year. She was the third chief executive to step down since 1999.
Bonnie McElveen-Hunter, the chairman of the Red Cross board, said today that the organization had not yet selected a replacement for Ms. Evans and that the organization did not have a precise timetable for appointing a new leader.
The proposed changes could make it easier to attract a new leader, some observers say. Diana Aviv, president of Independent Sector, a coalition of charities and foundations, says they would clarify that the chief executive rather than the board chairman is in charge of managing the Red Cross. "You can't have two leaders running the organization," she said. "You have one leader running the organization."
Under the proposed changes announced today, within the next several months the Red Cross board would step back from direct management of the organization, leaving that work to paid staff. By 2009, the organization would reduce its 50-member board to 25, with further reductions by 2012.
In addition, the board would change the way it selects its members in the future. Rather than Red Cross chapters nominating some of the members, board members would name all of the nominees, and chapter delegates would vote on the selections at the organization's annual meeting.
President Bush would continue to appoint seven board members, but they would serve as advisers to the board rather than full members.