WASHINGTON — The American Red Cross -- castigated in a recent House report for its disorganization in the aftermath of Hurricane Katrina -- had been warned for years that its management structure would plague future disaster response, according to documents released Monday by a Senate panel.
In a letter to the charity that also was made public Monday, Sen. Charles E. Grassley (R-Iowa) questioned the effectiveness of its massive organizational hierarchy. He released thousands of pages of internal documents describing long-standing inefficiencies within the Red Cross, the nation's primary provider of disaster relief.
After Grassley wrote the charity in December, questioning the adequacy of its response to Katrina, he received dozens of letters, e-mails and phone calls from current and former Red Cross employees and volunteers. Among other things, they complained about a lack of coordination between headquarters and workers in the field; the use of costly hotels, rather than shelters, to house volunteers; food orders far greater than what was needed; top officials using contributions to hire consultants to buff up the organization's image; and disdain for the local charities that provide needed links to the affected communities.
"We ask for the Red Cross to be more accountable for donor funds," wrote Christee Lesch, a Katrina volunteer from Adel, Iowa. "They tell the public how much money has been spent on disaster relief, but not how well it is spent."
"When they tried to raise concerns ... volunteers were ignored, told to leave or otherwise made to feel like the skunk at the picnic," Grassley said in a statement released with the documents. "This type of culture, a culture that discourages people from coming forward, management that does not want to hear the bad news and is more concerned about good press than good results, is a theme that I am hearing too often."
Grassley is chairman of the Senate Finance Committee, which has been investigating the corporate governance of charitable organizations. In his letter, he questioned whether a 50-member board was too large to govern effectively and noted that only a small group of board members who negotiated the severance agreement knew in advance about the resignation in December of the charity's president, Marsha J. Evans.
"The critical function of a board is whether to hire or fire the CEO," Grassley wrote. "That Ms. Evans' departure took place without any formal action or decision by the entire board is extraordinarily troubling."
In an e-mail on Oct. 29, 2001, shortly after Evans' predecessor, Dr. Bernadine Healy, resigned amid a dispute with the board over the allocation of Sept. 11 contributions, Red Cross chairman David McLaughlin thanked board member Bill George for his "concerns about the governance system and the structure of the organization." In his response, George noted: "In my opinion the worst thing we could do is to gloss over the split on the board, make some superficial changes in governance, and see the whole scenario repeated three or [four] years from now."
The National Response Plan, developed after the terrorist attacks, designates the Red Cross as the government's primary agency for providing food, housing and medical care after man-made or natural disasters.
Some members of the House Select Committee on Katrina have called for the Red Cross to be stripped of that responsibility. The Red Cross alone raised $2 billion for hurricane relief, but Katrina overwhelmed its organizational structure, according to the House report.
An examination in Monday's Washington Post of donations to nonprofit organizations found that the Red Cross and other charities already have spent two-thirds of the $3.2 billion in contributions received in the days following Katrina's landfall -- with the major work of rebuilding yet to come.
And in 2003 and 2004, the Post reported, the Red Cross paid consultants more than $500,000 to pitch the charity's name in Hollywood, recruit stars for its "Celebrity Cabinet" and give Evans a more high-profile image, even as she was laying off staff and cutting travel expenses.
The charity said those contracts were designed to raise the organization's visibility and boost contributions at a time when its disaster relief fund had been depleted by its response to the Sept. 11 attacks.
On Monday, the Red Cross said it was cooperating with the Senate committee. "The American Red Cross is committed to learning from our prior challenges and making the necessary changes to improve the delivery of services," a statement on the organization's website said.
"The Red Cross is known to all Americans as the main organization that responds to disasters," Grassley said. "It's important for the Red Cross to go the extra mile with governance reforms to ensure public confidence."