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CEO's Resignation Punctuates Turmoil at Red Cross

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CEO's Resignation Punctuates Turmoil at Red Cross

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CEO's Resignation Punctuates Turmoil at Red Cross

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MELISSA BLOCK, host:

This is the busiest time of year for many American charities which count on holiday giving to sustain them. But some worry that nonprofits in general will be tainted by turmoil at the American Red Cross. The nation's biggest disaster relief group lost another CEO this week. It's eighth chief executive in the last 12 years.

NPR's Howard Berkes reports on the ongoing problems at the Red Cross.

HOWARD BERKES: Six months ago, Ira Millstein thought the American Red Cross had finally got it right when it named former IRS Commissioner Mark Everson as its new CEO.

Mr. IRA MILLSTEIN (Member, Chairman's Council, American Red Cross): He was a good team leader. There was every reason to believe that he was going to be quite successful. I thought it was extremely hopeful.

BERKES: Millstein is an expert on corporate governance who helped guide the Red Cross through a major reform effort.

Mr. MILLSTEIN: They seemed to have picked the right person. And the right person just fell off the cliff in a totally unexpected way.

BERKES: Mark Everson stepped down this week after the Red Cross disclosed a personal relationship with a female subordinate.

Paul Light of New York University monitors the Red Cross.

Dr. PAUL LIGHT (Wagner School of Public Service, New York University): It really couldn't have come at a worst time in the organization's history. It really, right now, looks to be the exclamation point at the end of a period of great turbulence and disappointment.

BERKES: The turbulence began after the September 11th attacks, when the Red Cross raised half a 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.

Ms. RUTH McCAMBRIDGE (Editor-in-chief, The 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. The Red Cross has been really rocked by reputational and organizational difficulties. And if I was to look at any nonprofit organization and I saw that they had had eight leaders in 12 years, I would know there was a problem.

BERKES: Blame that on a congressional charter a century old, says Red Cross adviser, Ira Millstein.

Mr. MILLSTEIN: And the original creation simply didn't match what was going on currently because the mission was complicated. And leading it was even more complicated because it just wasn't clear how it was supposed to be led. So the fact that there was turnover was no surprise to me.

BERKES: Millstein insists that turnover is a thing of the past due to the reforms of the present. He considers Everson's scandalous affair an isolated incident.

Mr. MILLSTEIN: How do you go about interviewing a new, potential leader to find out whether or not he or she has this kind of proclivity? So I don't blame the Red Cross for this at all.

BERKES: The Red Cross insists its stability and credibility are intact.

Suzy DeFrancis is the group's spokeswoman.

Ms. SUZY DeFRANCIS (Spokeswoman, American Red Cross): The Red Cross is more than one individual. It's a very strong network of chapters and blood regions and hundreds of thousands in volunteers that do our work every day in communities across the country. And that's where our real strength is.

BERKES: But that's a nuance the public may not decipher, says Ruth McCambridge at Nonprofit Quarterly. She worries that other charitable organizations will suffer given the problems at the Red Cross.

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

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

Howard Berkes, NPR News.

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