Red Cross braces for huge staff cuts

updated 5:33 p.m. ET Feb. 1, 2008

In its freshest set of troubles, the American Red Cross is cutting a third of the 3,000 jobs at its national headquarters in an overhaul intended to eliminate a $200 million deficit within two years.

The charity's board of governors gave general approval to the cutbacks in January, and details of department-by-department layoffs will be presented to the board later this month, chief public affairs officer Suzy DeFrancis said.

"This is a difficult period, when people are anxious about their jobs," DeFrancis said. "At the same time, there's a realization that the financial realities we're facing have forced us to do this ... and we can become a stronger organization by going through it."

She said employees in each department are being informed of the cutbacks in individual and group meetings.

The budget crisis is the latest blow to the 126-year-old Red Cross, America's foremost disaster-response organization, which was criticized for its handling of donations contributed after the Sept. 11 attacks and for an inconsistent response to Hurricane Katrina in 2005.

In November, the board ousted the charity's president, Mark Everson, after just six months on the job for an extramarital affair with the director of a Red Cross chapter in Mississippi. A search continues for a new president, who will be the organization's sixth chief executive since 2002.

Nationwide, the Red Cross has 35,000 employees and hundreds of thousands of volunteers assisting at more than 700 local chapters.

'We'll still be there'
Stacy Palmer, editor of the Chronicle of Philanthropy, said the woes of the Red Cross have caused some frustration throughout the nonprofit sector.

"When something's amiss at the Red Cross, it reflects on the whole charity world," she said Friday.

The deficit has been attributed to several factors, including uneven fund raising and an oversized operation at the national office in Washington.

"We really need to reduce the size of our footprint in Washington and get back more to being a field-based volunteer-driven organization," DeFrancis said.

Red Cross officials say the staff cutbacks will not weaken emergency-response operations.

"I don't believe the public is going to see much impact from these reductions," DeFrancis said. "We'll still be there to feed, shelter and comfort victims of disaster."

Disaster relief fund takes a dip
She also acknowledged that the Red Cross struggles to find steady fundraising. Donations surge during huge disasters like Katrina or last year's wildfires in California but generally subside thereafter — and the charity says its general disaster relief fund is now low.

"It's a challenge to continually remind the public that every day in America there's a disaster, a house fire, and the Red Cross is there, even though not all of them get the attention the wildfires did," DeFrancis said.

Palmer said public goodwill toward the Red Cross remains high.

"Their deficit is significant, but it's something they can work their way out of," she said. "At least they're taking steps to say 'We need to do this differently,' and people applaud that. I don't think they're on the verge of collapse."

Sandra Miniutti, vice president of the independent watchdog organization Charity Navigator, said it now gets more donor feedback — positive and negative — about the Red Cross than any of the hundreds of other charities it evaluates.

"Their confidence in the organization has diminished," she said. "But people know they need the Red Cross."

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