I’m not involved in the same way you are, but reading the article gave me the same impression about what the place used to be. Things like no standard support platforms make me think that whoever came in was going to have some really tough choices to deal with. If you’re getting rid of every local chapter’s in house HR, Finance, IT, etc, you’re going to be making the people who do those jobs redundant. That’s the main way those changes save money.
Article seems to really skate around the underlying problem of the American Red Cross trying to do more than it has the funds to do, preferring to lump all the blame on McGovern. There’s everything about “the standard corporate playbook of cutting costs and centralising”, but even the bits mentioned in passing make it sound like they really needed a dose of that. There’s the other part that any redundancy savings or similar aren’t to do the standard “pay money to shareholders”, they’re to allow the charity so spend more on charitable activities.
Interesting thing, you can go to Charity Navigator and look at the historic data for them. McGovern took over in 2008. It’s a pain that the data only goes back to 2003, because there’s not as many ‘normal’ non-disaster years to look at in terms of income compared to program expenses as I’d like (given that they say that disasters improve general income from donations). Saying that, it does look like they have actually improved outside the disaster years. 2002 to 2008, admin expenses were running at an average of 5.11% of income and rising (and that’s with the increased disaster income), since then it’s 4.41% and falling. Same time period the program spending percentage has slightly trended upwards, along with the proportion spent on fundraising.
That’s the huge thing for me – unlike other charities, the Red Cross can’t just not help. A soup kitchen can run out of food and people understand. A homeless shelter can fill its beds and people understand. A free clinic can fill all its available appointments and people understand. But the Red Cross has to respond when called. We can’t just say, “Sorry, out of money, we’ll sit this hurricane or tornado or house fire out.”
That’s the part of the OP article that moved me to respond – our revenues were way down and more people needed help because of the 2008 recession. The organization’s response was to try to cut the hell out of its costs and increase revenues rather than cut services. The revenue increase didn’t work, in part because of decreased demand for blood (and some dumb health and service pricing decisions, apparently). But McGovern’s getting slammed for the cost cutting because what, she used to work for a crappy company like AT&T?
You referenced Charity Navigator. The numbers there that jump out at me are that “contributions” – donations, grants, government money, etc. – were roughly 1/4 of revenues. It’s easy to give the Red Cross leadership crap for being all corporate about revenue increases and cost cutting until you realize that three quarters of what the Red Cross provides for free in a disaster is funded by those revenues and only a quarter of it is from people’s donations. I’m sure they’d love it if they were able to raise enough money through fundraising to not have to run Blood Services.
rai·son d’ê·tre
ˌrāzôn ˈdetrə/
noun
the most important reason or purpose for someone or something’s existence.
“an institution whose raison d’être is public service broadcasting”
I got by with the skin of my teeth by remembering that phrase on a test once, thanks for the fond memory!
That is only true for some value of “run like a business”. They can be run as workers’ co-operatives, for instance, using the soviet system.
Before anybody starts screaming about kahm-yew-nizm, in the soviet system each working group elects a representative who goes to the next level of working group and so on to the top level. At each level the representatives participate in decision making and communicate both up and down with the next levels. It differs from English-style representative democracy in that in the English system each tier of government is directly elected, whereas in the soviet system each tier of government elects the next one.
A modified Soviet system was used in a Motorola phone factory in Scotland in the 1990s; it is used by some international bodies like the IEC. And it can be used for large scale volunteer organisations.
There are other business systems which are more democratic and accountable than the very monarchical ideas of the business schools - it’s odd that the US fought a war to get rid of kings and then re-introduced them in business.
In my limited experience the HBS system is crap for organisations with many volunteers. You cannot treat volunteers as “human resources” which are expendable, replaceable and there to do what they are told, as in the top-down-only HBS system. But these organisations need to be run like businesses from the point of view of not wasting resources and focussing on the core mission. If volunteers spend countless hours but achieve nothing, or people donate money and it is wasted, that is bad.
That’s another angle. Things get cut because they are done inefficiently, and that naturally upsets people. But sometimes an organisation needs that bastard to come in and shake it up
They can then leave after a couple of years and let someone else can be the softer and kinder CEO, but with a better running machine.
This is a good argument, if it was true. I don’t mind my money going to any disaster, I do mind my money getting sucked up into a black hole of “administration”. I want my money to help someone, and not just pay for management, or excessive advertising (this is why I hate most of the breast cancer charities), or anything else that does no directly,or indirectly,contribute to the aidof people who need it.
This is why I never give money to the Red Cross, and won’t until I can be assured I’m helping people, and not just supporting their top heavy nature.
That’s why I donate to the ICRC instead of the national Red Cross organisations - the umbrella org is already financed, the donations are (nearly) completely used for actual projects.
Of course. This is someone else’s blog and anything I post is unencumbered. But, if only I could remember who, I am of course quoting someone else. It isn’t an original thought.
Yes, volunteers tend to have very different motivations than employees…They’re often not easily replaced. That said, they’re often well meaning but not super effective. Some volunteers are STILL overpaid considering the amount to time spent training and supporting them. There is sometimes a tendency for charities to become “clubhouses” for the volunteers. OTOH they can bring energy and skills into an organization that paying for would eat into the care provided by the organization.
Anybody who has spent time in business could rewrite that with “volunteers” replaced by “employees” without any problems.
Senior managers in particular seem able to add little if any value, and regard the c-suite as being a private members’ club open to those of a similar background.
Overly broad generalisation sweeps more into the net than intended.
