CEO's Resignation Punctuates Turmoil at Red Cross

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This is the busiest time of year for many American charities, which count on holiday giving to sustain them. But some worry that nonprofit organizations will be tainted by turmoil at the American Red Cross.

The nation's biggest disaster relief group lost another CEO this week — the group's eighth chief executive in the past 12 years. The resignation of Mark Everson is the latest in a series of troubles for one of the nation's most respected charities. Everson, the former commissioner of the Internal Revenue Service, stepped down after the Red Cross disclosed a personal relationship with a female subordinate.

"It really couldn't have come at a worse time in the organization's history," said Paul Light of New York University who monitors the Red Cross. "It looks to be the exclamation point at the end of a period of great turbulence and disappointment."

Chain of Events

The turbulence began after the Sept. 11, 2001, attacks, when the Red Cross raised a half-billion dollars for victims but designated much of the money for unrelated programs. Then came Hurricane Katrina, when the Red Cross failed to help desperate rural and minority communities. Now there's the scandal at the top, and it all adds up, says Ruth McCambridge, editor-in-chief at Nonprofit Quarterly.

"If this had been a single incident, I'm sure we could just chalk it up to a little personal failing. But it's not a single incident," McCambridge said. "The Red Cross has been really rocked by reputational and organizational difficulties. If I was to look at any nonprofit organization and I saw that they had had eight leaders in 12 years, I would know that there was a problem."

'More Than One Individual'

The Red Cross insists that its stability and credibility are intact.

"The Red Cross is more than one individual," spokeswoman Suzy DeFrancis said. "It's a very strong network of chapters and blood regions and hundreds of thousands of volunteers that do our work every day in communities across the country. That's where our real strength is."

But that's a nuance the public may not decipher, McCambridge said. She worries that other charitable organizations will suffer given the problems at the Red Cross.

"When people's confidence is eroded in these national nonprofits, it always affects the reputation of the rest of us," McCambridge said. "People will begin to say, 'Well, why should I put my money into these institutions when clearly they are not handling themselves?' "

The Red Cross begins its search for the next CEO immediately. The last search took more than a year.



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