One of the ideas that keep getting rediscovered is that if only we applied business principles to government and nonprofits like schools and charities, they would run much better, and the way to do this is to put business people in charge of them. This idea seems to never get old however many times it fails.
The latest victim is the Red Cross. The Red Cross has one of the best name recognitions of aid organizations, and is the group that most people expect to see turn up after any major disaster and provide aid to the victims. But the investigative journalistic group ProPublica has for some time been exposing the fact that the organization has been woefully mismanaged and its funds squandered. This led to a major housecleaning in 2008 that was supposed to set the organization back on the right track.
They now have a new report that the new management team of former private sector corporate executives is proving to not be up to the job either.
When Gail McGovern was picked to head the American Red Cross in 2008, the organization was reeling. Her predecessor had been fired after impregnating a subordinate. The charity was running an annual deficit of hundreds of millions of dollars.
A former AT&T executive who had taught marketing at Harvard Business School, McGovern pledged to make the tough choices that would revitalize the Red Cross, which was chartered by Congress to provide aid after disasters. In a speech five years ago, she imagined a bright future, a “revolution” in which there would be “a Red Cross location in every single community.’’
It hasn’t worked out that way.
McGovern and her handpicked team of former AT&T colleagues have presided over a string of previously unreported management blunders that have eroded the charity’s ability to fulfill its core mission of aiding Americans in times of need.
Under McGovern, the Red Cross has slashed its payroll by more than a third, eliminating thousands of jobs and closing hundreds of local chapters. Many veteran volunteers, who do the vital work of responding to local fires and floods have also left, alienated by what many perceive as an increasingly rigid, centralized management structure.
Far from opening offices in every city and town, the Red Cross is stumbling in response to even smaller scale disasters.
When a wildfire swept through three Northern California counties in September, the Red Cross showed up but provided shelter to just 25 of 1,000 victims at one site. Because of the charity’s strict rules and disorganization, many evacuees slept outside for over a week, even when the weather turned bad. “These families were sleeping in the rain with their children,” said Wendy Lopez, a local volunteer.
Local officials were so angry they relieved the Red Cross of its duties.
The idea that non-profit organizations should be run like businesses is popular among some people, despite the fact that the two cultures are so different and require different skills and talents.