Red Cross Overhaul, Job Cuts Aim To Bolster Work
By David Crary and Margery Beck
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.
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."
The network of chapters is still large - about 600 nationwide, compared to more than 800 five years ago.
The chapters operate with a core of paid staffers and many volunteers, and some have more than one office location in their service area. McGovern said only about 20 of the 1,200 locations nationwide will be closed completely, but many will have reduced staffs and functions.
Such is the case in far-western Nebraska, where the overhaul became acrimonious.
Plans to downgrade the nearly century-old Greater Nebraska Panhandle Chapter into a service center prompted volunteer board members to resign in protest, and its executive director was fired and escorted from the chapter's office in tears.
The upheaval began with an emailed memo in July, according to Rick Tuggle, a Scottsbluff banker and chairman of the chapter's board. The panhandle chapter - which served 11 counties over 14,000 square miles - was told it would be folded into a neighboring Nebraska chapter, Central Plains, with the local board ceding authority over how the money it raised would be spent.
"Keeping the money local did, and does, matter to people out here," Tuggle said.
Before Tuggle became chairman almost four years ago, the chapter was floundering financially. He recruited doggedly for volunteers, boosting the volunteer board from two to 13 members and helping hire a new executive director.
"About the time ... we were celebrating our victories as a chapter, after three years of operation in the black, we get the letter from regional that says, `Oh, guess what? You're not a chapter anymore,'" said Tuggle, who quickly wrote to McGovern, pleading for reconsideration.
Shortly thereafter, the Panhandle group was informed it could remain a chapter in name, but oversight would still go to Central Plains. In August, Panhandle board members met with the executive directors of the Central Plains and Omaha-based Heartland chapters, who said national officials would decide how money they raised would be spent.
By the end of the meeting, six board members had resigned. Some donors then withheld donations, including a $20,000 pledge rescinded by the local United Way. Next, the executive directors removed Panhandle director Jann Rouzee, having her escorted her from the building.
Scottsbluff's daily newspaper, the Star-Herald, took the side of the local board members in an editorial, saying the higher-ups from afar pushed through the changes "in a bumbling fashion that led to negative publicity and a loss of local support."
The national Red Cross defended the overhaul across the country as necessary for the organization's fiscal health. It also said the Panhandle region would continue to receive full Red Cross services.
Changes have been felt in most states. In Ohio, the Red Cross merged its Dayton and Cincinnati regions, and laid off at least 29 people - 15 percent of the work force.
In southern Virginia, eight chapters were consolidated into one new administrative region.
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.
Richard Lee, executive director of the Pioneer Valley chapter, said about 15 staffers in Western Massachusetts were laid off.
"None of them deserved to lose their jobs," he said. "That's what made it harder."
Paul Light, an expert on nonprofits and professor of public service at New York University, said the Red Cross deserved plaudits for undertaking a necessary but difficult task.
"It's exactly the right thing to do, but it is extremely controversial," he said. "Each one of these chapters has its own identity. Closing one is like closing the local library."
He said the consolidation should improve disaster response by reducing disparities that sometimes surfaced between relatively strong and relatively weak chapters.
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."
Some laid-off employees, such as Glenda Plunkett, 51, of Shelbyville, Ill., have maintained support for the Red Cross.
Plunkett had been with the Red Cross for 11 years, working in response to Hurricane Katrina and a dozen other disasters. Her position as service manager for Mid-Illinois Red Cross was eliminated when the Shelbyville office closed on Sept. 2.
Plunkett soon got a job with the local hospital, and gained permission from her new boss to continue with the Red Cross as a volunteer with clearance to go on out-of-state disaster relief missions twice a year.
"It hurt," she said of being laid off. "But my commitment never changed. For me it was never a job, it was a mission. I can't stand the idea that one of my neighbors might lose their home, and ask, `Where were you for me?'"
Don't Miss: Companies Hiring Now
Stories from CNN Money
- One in Five American Men Don't Work: Where's the Outrage?
- Job Market Underdogs
- Younger Bosses, Older Underlings