Changes in the operation of the American Red Cross have led to the dissolution of the local chapter director position and prompted the chapter board to take matters into its own hands.
In a letter received by The Advocate-Messenger, Emanual Gray, board chairman of the Danville-based Central Kentucky chapter of the Red Cross, which serves Boyle and Mercer counties, detailed what he said are troubling financial and administrative changes over the past several years.
Winn Stephens, development director for the Bluegrass Area chapter in Lexington confirmed the position of local executive director Dr. Ruthann Phillips will be eliminated and the finances for the local chapter will now be administered at the regional level. Any disaster response will be coordinated by the Lexington office.
Phillips, who had served in the position for about a decade, acknowledged the changes Monday but declined to comment further.
Gray, now in his third term as local chapter director, details in his letter how changes in philosophy at the national level have stripped what had been a largely autonomous, volunteer-driven body of its control.
Gray said chapters in smaller communities were instructed to turn over all books and bank accounts to Cincinnati after decades of managing their own budgets. Gray said the chapter, which always has controlled its own finances, was forced to turn over about $70,000 in a trust fund that had been in Farmers National Bank for more than 50 years.
Gray also lamented that safety classes, including CPR and first aid, now will be arranged through the Cincinnati office at double the cost and no longer be staffed by local volunteers.
Stephens said the moves mirror what is being done with local chapters throughout the state and country for purely financial reasons. Contributions intended for local Red Cross assistance will now go to a regional center in Cincinnati and be distributed by state and regional officials for local disaster relief.
Stephens said the changes have nothing to do with issues at the local level and everything to do with an overall change in Red Cross philosophy.
“Nationally, they realized we could save a lot of money if we centralized the accounting functions,” Stephens said. “It is not just in Boyle or Mercer county, it is for Lexington as well.”
In an effort to maintain local leadership and ensure there is still prompt response to disaster, Gray said members of the Central Kentucky chapter will form a separate group.
Gray refers to the group in the letter as “an independent local association governed totally by a local board made up of Boyle and Mercer citizens to ensure continuance of timely service to our fire victims, disaster preparation set within the parameters dictated by local needs instead of by someone in Washington, continuance of the in-kind program which is bringing in thousands of dollars of extra needed resources to our people, affordable health and safety instruction, and addressing some other community needs not presently being addressed.”
Gray said there was a consensus among the local board members to form an autonomous non-profit, and the process of setting up the organization already has begun. Details, including where the group will have its headquarters and who will run the day-to-day operations, are still being decided.
“What I can say at this point is we are all upbeat about it, and we are working to move forward with it,” Gray said.
Although there appears to be a major rift between the local chapter and the Red Cross of America, Stephens said the chapter is not being dissolved and the Lexington office intends to continue working with a local board to determine local needs.
Stephens said it has not been determined how the office on Third Street in Danville, which was only completed a couple of years ago, will be run. Once Phillips is no longer on the job after this month, Stephens said people will still be able to call the same local number and if there is no answer, the call will be forwarded to Lexington.
“This should not affect the way we provide services to individuals or how we mobilize for disasters,” Stephens said.
Local chapter stripped of money, control
Editor’s Note: Emanuel Gray, outgoing board chairman of the local Red Cross chapter, wrote this letter of explanation to The Advocate-Messenger.
I have been active in the work of the local chapter of the American Red Cross for over 20 years, serving three terms as board chairman. For the majority of the time, the board set the policy for the chapter, oversaw its finances, co-signed all checks, and supervised and evaluated the work of the executive director. We built a new office facility and looked forward to the new services this would enable us to offer. Almost immediately, we instituted an in-kind donation program which yielded over $65,000 yearly in inkind donations of new materials which we distributed to those in need in the community, the only Red Cross chapter in the state to have such a program. We kept our focus local although we saw change come and go at the national office in Washington; one new initiative after another, five different CEOs in eight years.
About three years ago, a new regime took charge in the national office and started an initiative they called “One Red Cross.” Chapters in small communities were dubbed “community chapters,” and we were told to report to the “regional” chapter in Lexington. The next step was to dilute power of the local boards of directors, making them advisory only, followed by a demand that our books and bank accounts be turned over to a “Center of Expertise” in Cincinnati.
Our board strongly objected to that, sent a letter to the CEO in Washington, and instructed our director to hold our books until we got a definitive answer from the CEO to our questions. Our reply was a call to me from the director in Lexington demanding that the books be turned over in three days or he would fire our director and send someone in who would turn them over. We relented and turned them over, but six months later he was back demanding that we even turn over the $70,000 in our trust fund that Farmers National Bank had administered for over 50 years with the same threat. They claim that money is in a “restricted” account for the chapter, but we are not allowed to spend it, and they keep the proceeds from it to help fund the “Center of Expertise.” Doesn’t sound like it is our money to me.
We tried to be an active board; we attended every meeting that our director attended in Lexington, sat in on all conference calls to hear first hand what was going on, and acted accordingly. Yet, the Lexington director told our director and me that she would be held responsible for any actions we took.
He invited us to leave the board more than once. However, we felt our job was to act independently, to try to protect resources, every dime of which was supplied by the local community. Board directors across the country were dropping off boards like flies, but we decided to stay the course to try to protect the community’s investment. To our director’s credit, she never tried to interfere with any action we as a board decided to take.
We had always tried to provide affordable health and safety instruction for the local community. We made a small profit which helped finance the chapter’s activities. We were told last month that as of July 1 national headquarters would run all health and safety programs and collect all of the fees. The first aid/CPR class we charged $55 for increased to $110. If someone wants to take a class, he will have to call a call center in Cincinnati and arrange for the class which will be taught here.
They claim this will quadruple the revenue from the health and safety program, but what the people in Washington are not considering is that these courses are a necessity for a lot of low-income individuals and small businesses who can’t afford these kind of prices. Armed Forces Emergency Service was also sent from the chapters to a national call center.
Most disturbing was that we no longer have a say in our budgeting. We are told what we can spend and how much revenue we must deliver. We were already getting very sketchy financial reports even though we and several other chapters had requested more detailed reports. Now, we will get no report on chapter expenditures at all; only a report on “regional expenditures” and how we are progressing toward our individual “revenue goals.” We told our director to keep up with our expenditures and make a report to us locally. If we were to collect monies, we needed to know how they were being spent.
Now, we won’t even have that. Our executive director was our only paid staff. Without the board even being consulted as indicated in the bylaws, we learned that the executive director position here is being abolished even though the bylaws indicate that chapters “shall” have an executive director. Instead, someone will be sent over from Lexington “one or two days a week” to open our office.
This occurred even though we had always paid our bills from our own funding and even sent a required $10,000-$12,000 annually to national headquarters. The $70,000 alone would have paid the salary of our director for nearly 2 1/2 years aside from the other monies we supply. With her gone, we have no way of knowing how our money is being spent. The Lexington director claims that Red Cross service will still continue in Boyle and Mercer counties, but he admitted that it would not be the same level that we currently are providing. Don’t think they are interested in getting up and going out to a fire at 2 a.m. on a remote country road.
They first took board authority and local governance, then our money, and now our personnel. Everything is being moved from the local level to a regional or national level. They claim that the national organization is fighting for its “economic survival,” but according to their Form 990, they have over a million dollars for a compensation package for their CEO, and they are adding a number of vice presidents to run the health and safety program.
Of the eight community chapters in the eastern half of the state, only the one in Ashland still has an executive director. In reality, we are only branch offices of Lexington, but we are still called “chapters” so they can qualify for certain local monies, in our case our share of a perpetual trust fund administered by Farmers Bank whose provisions demanded that if the chapter fails to exist, that money will go elsewhere. In addition, we were told at the June meeting that the amount we would be allowed to give to our disaster victims would probably be decreased, and if a major disaster strikes this community, we are responsible for raising the first $50,000 before national monies kick in.
Thus, our current and some former board members have decided to take acton before the situation deteriorates further. Though the Red Cross mission statement claims it is “governed by volunteers,” that is just no longer the case. The 10 or 12 corporate big wigs and the million dollar CEO that make up their board of governors just don’t substitute as volunteers for the local boards throughout the country.
We just can’t stand by any longer and wait for the next shoe to drop. Thus, we have formed an independent local association governed totally by a local board made up of Boyle and Mercer citizens to ensure continuance of timely service to our fire victims, disaster preparation set with the parameters dictated by local needs instead of by someone in Washington, continuance of the in-kind program which is bringing thousands of dollars of extra needed resources to our people, affordable health and safety instruction, and addressing some other community needs not currently being addressed.
I wish the Red Cross well, but the needs of our community have to come first. I for one expect the Red Cross to continue to provide some level of service here as long as it gets the money from that perpetual trust and has that $70,000, but I just don’t see pouring more of our resources into that common pot in Lexington to be spent as they see fit. Monies collected here need to be focused on local needs, which are many.
I want to thank our director, Dr. Ruthann Phillips, for the work she did for us for nearly 10 years. She always did as we asked, was never reluctant to go out regardless of the hour to aid fire victims, and strove to try to increase our service to the community. Thanks also to my fellow board members who served beside me over the years, the donors, and our loyal volunteers. It was a good ride, but this train is derailing fast, and it’s time to make a new beginning.
Outgoing Chapter Chairman
59 Valley View Road