The Red Cross is in Dire Need of Financial First Aid

By any measure, 2011 was a very big year for natural disasters in the United States. Tornadoes, blizzards, floods, wildfires and droughts were among the weather releated clamities the country suffered this year. With extreme weather events become more common due to climate change, there has never been a greater need for disaster assistance. Which is what makes this report about budget cuts and job layoffs at the American Red Cross all the more distressing:

For the American Red Cross, it has been a doubly challenging year.

While coping with a relentless series of natural disasters, the organization has carried out a nationwide overhaul that slashed more than 1,500 jobs, pared down many local offices, and left some former loyalists with badly bruised feelings.

President Gail McGovern says the 130-year-old Red Cross had little choice but to restructure in order to ward off a projected deficit. It has merged and consolidated many chapters to reduce duplication, and given the national office control over local fundraising so all funds can be spent as strategically as possible.

"We have remarkably loyal donors, and they're also demanding," McGovern said in an interview. "They want to be sure their hard-earned dollars are being used to optimize the mission and are going to help the people we serve."

During the year, McGovern said, the Red Cross has eliminated roughly 1,000 positions at its local and regional chapters and about 170 positions at its Washington headquarters — in each case about 10 percent of the work force. In addition, about 400 posts out of roughly 20,000 were eliminated in the biomedical and blood services division.

It was also distressing to see that the Red Cross president is not above engaging in a little corporate FlackSpeak:

McGovern insists that the core missions — notably disaster relief, blood banks and assistance to military families — will not be impaired. She said the Red Cross responded vigorously to this year's nationwide onslaught of tornadoes, floods, hurricanes and wildfires.

"If there was any doubt in anyone's mind that we would be able to fulfill the mission, that doubt was removed," she said. "If anything, we're doing it better."

I'll take that bet, Ms. McGovern. Because that is the kind of statement you can make that cannot easily be verified or refuted. In fact, the article then goes on to list a number of instances where the Red Cross is not actually doing it better. For example:

In Western Massachusetts, the overhaul was complicated by a decision to cut several programs deemed to be outside the core Red Cross mission. An HIV/AIDS support program was shifted to a regional hospital, but there were hitches finding new agencies to provide non-emergency medical transport.

Digging a little deeper into the article, it becomes apparent that the agency's financial troubles really began at the time of the market crash:

It's the second major Red Cross overhaul in recent years. In 2008, faced with a deficit of about $210 million, it laid off one-third of the 3,000 employees at its Washington headquarters.

Under the leadership of McGovern, who became president in 2008, the deficit was eliminated, but she says the new cutbacks were needed to prevent fiscal problems from resurfacing. The Red Cross estimates that this year's restructuring will save $80 million, including salaries and centralizing administrative operations.

"We did not lightly go ahead and make these decisions," McGovern said. "Layoffs are very difficult in the nonprofit area, because they're not here for the money, they're here because of their hearts."

Which is exactly why you shouldn't be absurdly claiming that you are "doing it better" despite the layoffs, because that is obviously an insult to those who are losing their jobs. Just be honest, Ms. McGovern. The Red Cross is shrinking because the money to fund it is drying up. Fewer people with good jobs means fewer donors to give to charitable organizations like the Red Cross. It's an important truth that people need to hear so that they can prepare themselves for the eventual day when the Red Cross will no longer be there for them when disaster strikes.