Grants:APG/Funds Dissemination Committee/Benchmarking analysis/The American Red Cross

Benchmarking Interview with the American Red Cross

Date: April 26, 2012

Introduction

The American Red Cross is a premier organization focused on providing Emergency Assistance Services to its clients. In addition to disaster relief, the American Red Cross offers services in multiple other areas - ranging from community services, the processing of blood and blood products, and international relief and development programs. The Red Cross must manage many of the same challenges as the Wikimedia Foundation – with geographically dispersed operations that have varying abilities to fundraise and varying need for funds.

We had the opportunity to speak to two representatives from the American Red Cross chapter for the Capital – which spans 23 counties around Sacramento, California region. We spoke to Matt Lingo, the Director of Resource Development and Dawn Lindblom, the CEO for the region. Matt manages donations, coordinates special events, and addresses all other elements involved in meeting revenue targets. Dawn, as CEO, focuses 50% of her time on fundraising and community outreach while the other 50% of her time is used towards managing the organization.

We identified a number of takeaways from our discussion with the American Red Cross, namely:

• Their budgeting process is focused on ensuring resources get to the places of greatest need, regardless of where money is raised
• The Sacramento chapter makes budgeting decisions aligned to their strategic plan, which is tied to the National organization’s goals and priorities
• While the Chapters do have a President’s Advisory Council that serves as their voice with the CEO, ultimately Chapters feel comfortable interacting and collaborating in informal ways with their Division/National offices

Interview Notes

Could you please describe the American Red Cross’ funds distribution model?

• We’ve gone through many of changes organizationally over the past year.
  • We used to have to meet our target P&L on our own. What this meant was that each chapter had to balance its own books – thus chapters were restricted by their ability to raise revenues – not the demonstrated need in their area. Smaller chapters in poorer areas were really struggling while some chapters were able to raise a lot more.
  • Now we receive a revenue and expense target from National that is based on the needs and opportunities in our area. It isn’t just tied to how much you can raise in your own area.
• We are a chapter that has greater expense than revenue targets. So the National organization helps us balance our P&L.
• We work with National to set our annual revenue target:
  • It’s based on our past performance, market potential, and what other organizations have done in similar markets
  • We are responsible for raising that target within our 23 counties. We get some staff and resources support from National efforts to help meet this.
• Our expense target is sent to us from national, and it’s generally based on the demonstrated need in our area as well as the broader priorities of the organization.

Who is involved in the process of setting revenue and expense targets?

• The Chapter Network is divided into 9 divisions. We’re in the West Division. I report to the Division Vice President. She works with me to set targets and ensure I meet them.
• Each year, the national finance team gives us an expense number, which is based on past performance and the broader needs of the organization. There’s usually not that much flexibility in this number, unless there is a particularly significant extenuating circumstance.
• For revenue, we work with finance and resource development to understand the market potential and opportunities and identify a target revenue number for the year. We’re in constant contact with the National development team, particularly the major gifts officer for our area. We have a back and forth conversation in each category to ensure that our targets are realistic. They are really partners with us.
• We are a single 501c3. Local Boards are Advisory Board members, not decision-makers. Our local Board does not approve the budget or financial statements, they support them. They are ambassadors in the community—we have to be clear about what their authority is.

What representation do chapters have at the national level and how does that play into this process?

• We have a President’s Advisory Council with 23 representatives that work directly with the CEO to provide input on important issues.
• But our organization feels so collaborative and open. I can reach out to whomever I need at National to get my questions answered or concerns heard. There isn’t much of a need for a formalized structure.

How are your revenue and fundraising targets tied to strategy?

• We have five primary goals set at the National level and we are responsible for translating them to our local level.
  • Our three-year strategic plan was developed locally and lays out what our priorities are along the five primary goals.
  • Our financial resources are guided by our strategic plan, so our P&L needs are directly tied to our strategy.

What due diligence and evaluation processes are done as part of this process?

• Every month we report financial statements and everyone from the local level to the regional and national level keeps a close eye on things. We do a LOT of tracking both on the revenue and expense side.
• We discuss our progress on the strategic plan with our Board at the local level.