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BUS401 Management Leadership

Published : 26-Aug,2021  |  Views : 10


For the signature assignment, choose a nonprofit organization that you are familiar with or would like to learn more about. Based on your chosen nonprofit organization, research, explore, and a case study in which you report on the following:
Discussed the history of the nonprofit

Discussed legal and policy issues that have impacted this nonprofit

Discussed how the recent recession impacted the nonprofit and its current state

Used one of the social theory models discussed, compared and contrasted the nonprofit using the chosen model



A Not for Profit Organization (NPO) is such an organization where the business or the work is not carried with the motive of earning profits for the owners (Green, 2017). Depending upon the jurisdiction, it is known as not-for-profit or nonprofit organization. The profits made, i.e., the money which is earned by these organizations is used for attaining the objectives of the organizations and to keep it running (Winston, Stevens & Loudon, 2013). This also includes the money which is donated to the not for profit organizations. Generally, the not for profit organizations are the type of public service organizations or the charities. These organizations are dedicated towards the furthering of a specific social cause or towards advocating of a particular view point (Drucker, 2012).

American Red Cross (ARC) is one of the top 100 nonprofits on the web and is ranked 14th. It has a large social media presence and is present on mediums like Facebook and Twitter (Top Non Profits, 2017). ARC is also famous as the American National Red Cross. It is often viewed as a humanitarian organization which provides disaster relief, education and emergency assistance in the United States of America. ARC is the designated as the International Federation of Red Cross and Red Crescent Societies’ US affiliate (Red Cross, 2017a).

In the following parts, the history of ARC has been presented, along with the range of issues, whether legal or policy based, which have an impact of this organization. The impact of recession over the ARC and its present state has also been elucidated. After this, the social theory model/ social origins theory of the three worlds of welfare capitalism has been discussed and a comparison and contrast of this theory with ARC has been carried on. Lastly, the future of ARC has been researched and evaluated.


ARC is one of the premier humanitarian organizations and NPOs of the US and is dedicated towards helping the people across the state (American Red Cross, 2008). Moreover, this is done beyond the borders of US through its association with the other Red Cross networks. ARC is dependent upon the generous contribution of money, time and blood from the general public of America to support its programs and services (Red Cross, 2017b).


The ARC was founded by Clara Barton and her circle of acquaintances on May 21st 1881 in Washington D.C. the Swiss inspired global Red Cross network was initially headed by Barton while she was visiting the Europe after the conclusion of Civil War (Hamen, 2010). After returning back home, she started a campaign for the ARC and also for the ratification of the Geneva Convention for the protection of the injured people due to the war, which was alter on ratified by the United States in 1882 (Red Cross, 2017b).

Red Cross was led by Barton for a period of twenty three years and during this time the ARC conducted its very first domestic, as well as, overseas disaster relief efforts. It also aided the military of the United States during the war of Spain and America and had successfully campaigned for the addition of peacetime relief work as a part of the Red Cross network globally. This was the so called American Amendment which was met by certain resistance initially in the Europe (Red Cross, 2017b).

In 1900, the first congressional charter was attained by Red Cross and the second one was attained in 1905, this was exactly one year after the resignation of Barton from the organization. In May 2007, the most recent version of this Charter was adopted, which reaffirms the conventional purpose of the ARC. This also stated that ARC was serving as a medium of communicating between the members of the armed forces of the US and their families, and that it provides the disaster relief and mitigation on both the national and international levels (Red Cross, 2017b).

Before the World War I, Red Cross had introduced its public health nursing, first aid and water safety programs. The organization experienced a phenomenal growth with the outbreak of this war. There was a sharp rise in the number of local chapters to 3,864 in 1918 from 107 in 1914. There was also a remarkable growth in the membership from a mere 17,000 members to over 20 million adults and 11 million Junior Red Cross members. The contribution of the public in the funds and material support to the programs of Red Cross was $400 million and this support included the one from civilian refugee and the American and Allied forces. Due to this, Red Cross recruited over 20,000 registered nurses, and staffed hospitals and ambulance companies to serve the military. To fight the global epidemic of influenza in 1918, additional Red Cross nurses had come forward (Red Cross, 2017b).

Issues impacting American Red Cross

Even though the ARC works for humanitarian cause, yet it has had fair share of legal, policy and ethical issues. In Johnson & Johnson vs. The American National Red Cross (2008) 528 F.Supp.2d 462, ARC was sued for using the Red Cross image, which were used in the first aid kits and the related products and Johnson & Johnson alleged that ARC competed with the products of the company (Leagle, 2008).

They claimed punitive damages, in addition to legal fees and the destruction of the products bearing that sign. The federal judge, on 14th May 2008, ruled against Johnson & Johnson (Justia, 2017). In June later that year, a settlement was reached between the two, for using the symbol on shared basis (Saul, 2008). Another case which was initiated against ARC was by the FDA, for the deficiency in procedure followed by ARC for ensuring the safety of blood supply. The violation of federal law was outlined in the resulting consent decree, which covered the conduct in which ARC was engaged before 1993. Initially, FDA asked ARC to pay fines amounting to $4.2 million in 2006 (FDA, 2006). In 2010, ARC was fined $16 million for the failure in meeting the blood safety laws (FDA, 2010).

ARC has also dealt with policy issues. ARC introduced a new policy in 2006, which required the compulsory check of the backgrounds of its volunteers, which included their mode of living and credit check investigations (Revolvy, 2017). Due to the intrusive nature of these checks, in addition to the shortage in limiting the very use of the information attained, various objections were raised. A number of the longtime volunteers associated with ARC discontinued their association with the organization. Operators of Amateur radio resisted to the same and complained that the volunteers who were responsible for bringing the thousands of dollars in computer equipment and communications to an event had to worry more from the ARC in comparison to the other way round. In response to this, the deadline for compliance was extended by ARC and also stated that mode of living and credit check requirements were not mandatory. Though, as per the American Radio Relay League, the updated application forms still needed these authorizations (E-Ham, 2007).

ARC also had to deal with the Hurricane Katrina controversy. It was alleged that the temporary workers at the call centers of Katrina had stole from the assistance fund. As much as $400,000, as per MSNBC, was stolen from the ARC and because of this, forty-nine individuals were indicted. This was because an absurd range of individuals of the Katrina evacuees started applying for the assistance in Bakersfield, California, which is 2,000 miles away from Louisiana. In Bakersfield, the subcontracted employees for one of the staffing agency were attending the calls made to the ARC call centre. These contractors were appointed to speed up the financial assistance to the victims of the Katrina, through the portal of Western Union. These contractual employees used to call their relatives and friends and state a PIN number. Such friends or relatives would then go to the Western Union and take away the money (Costello, 2005).

The time, at which the article of Costello was published in 2005, an average of $1,000 per family, amounting to $1.4 billion, had been distributed to around 4 million Katrina evacuees. This problem arose as in time of crisis the volunteers are often not screened in the proper manner.ARC vowed to prosecute the wrong-doers after investigation and sought a court ordered restitution for the individuals who made an attempt to deceive ARC, and ultimately the general public of USA (McCarthy, 2009).

Another controversy in this regard was related to the political influence in the ARC policies. This controversy was raised when the than president, Elizabeth Dole, overruled the professional staff, plus made an order for the AIDS/HIV prevention manual to be written again in a manner, so as to make a reference to condom use, homosexuality, as well as, premarital sex in a more responsive manner to the conservative critics. The Nation reported that this was due to the political influence (Heller, 2005).

Impact of Recession on American Red Cross

The economic downturn, better known as the recession, had grave impact over the working of ARC. The worsening recession depleted the resources of a range of the ARC chapters. Due to the economic downturn, the ARC staff in Long Beach and San Diego in California, in addition to Tampa, Oregon and Minnesota’s Twin Cities. Not only the staff of ARC was laid down but the salaries were also trimmed down, the office hours were cut back and the training programs were altogether scrapped (Crary, 2009). In order to save the money, due to the fallen contribution by over 60% compared to 2008, the smaller chapters, like the Southwest Georgia chapter, which is located in Albany, Georgia, have turned down the heating systems in the office. Mari Wright, the executive director of this chapter informed that even the counterpart chapters were facing problem in maintaining the core disaster response services in the economically distressed 11-county region. The national operations also took a hit, as it relies on the various chapters to raise the money. The Washington headquarters laid off 1000 employees in 2008 due to the deficit which peaked to over $200 million (NBC News, 2009).

The recession also resulted in the decline in blood donation by the donors. Some volunteers even went on to say that ARC was after their blood, after the workforce was decreased (Harmon, 2009). This was evident from the decline in the number of donors in the summer of 2009. As a result of this, the official of ARC themselves had to be the blood donors to deal with the shortage. Due to the shortage in the availability of blood components, the life saving medical treatments take a toll, and facilities like cancer treatment, complicated surgical procedures and serious injuries cannot be treated on time. Earlier the businesses used to motivate their employees to donate more blood, but due to the economic downturn, they do not get the time to leave their station in order to donate blood (Wilson, 2009).

Even though the economic downturn has lapsed, but the organizations are yet to recover from the after effects. This coupled with the other factors have regressed the recovery of economy. The fundraising had reached an all time low of sixteen years and due to this the ARC posted a deficit of $159 million for the year 2015. The audited statements revealed the donations at $604 million, which was a decline of $120 million in comparison to 2014, and was also the lowest one since the year 2000. In 2015, ARC lost $71 million. This clearly depicts that even the current state of ARC had not recovered (The Chronicles of Philanthropy, 2016).

Social Theory Model

The Three Worlds of Welfare Capitalism is a major social origins theory and was given by Esping-Andersen in the year 1990 (Bambra, 2007). This theory denotes that there are three broad classifications of the welfare states, the liberal ones, the conservation or the corporatist ones, and the social-democratic ones. As per the liberal welfare state, the social wellbeing of the citizens, in addition to the protection and promotion of the economy is done by the state (Esping-Andersen, 2013). Under the conservation or corporatist, the benefits are more of means-tested. And so, instead of social assistance, social insurance is featured more. The last one is the social democratic welfare state under which, the sections are integrated in a universal system (Marquardt, 2008). Unlike corporatist welfare state, the focus here is not to make the dependency over the family maximum; instead it is to maximize the individuals’ independence capacities (Bartholomew, 2011).

The social origins theory of welfare state can be easily applied to the ARC. ARC is, on one hand a liberal welfare state and on the other, it is not. ARC, as a state, works for the social wellbeing of the citizens; however, it does not offer any protection and promotion of the economy. ARC as an organization, is not bound to itself or any particular nation. Even though it is indulged in working towards social wellbeing for the calamities in America, it is not bound to provide such relief efforts only in the nation. Further, with the help of it other chapters present across the globe, it contributes in the relief efforts for the other nations too.

In the same manner, it is a corporatist welfare state as it focuses over maximizing of the dependency on family. This is done as for such relief efforts, it clubs up with the other Red Cross channels, thus, sticking to the family as one. However, it is also a social-democratic welfare state as it does try to maximize its own individual independence capacity. This is the reason for the numerous blood donation drives, in addition to the request for raising the money for ARC. In short, it can be stated that upon comparison and contrasting with the Three Worlds of Welfare Capitalism, it appears that ARC has the features of all the three form of the welfare states defined by Esping-Andersen. This is in line with the criticism drawn of the social origins theory, which necessitates the inclusion of a fourth type of welfare state. In case, one of the welfare state types had to be stated for the ARC, it would be the liberal welfare state, due to its focus over the welfare of the citizens.

Future of American Red Cross

In 2012, the President and CEO of ARC brought forward a report covering the future of ARC. For the ARC, the most beneficial trend has been in the growth of its partnerships with the corporate sectors, as well as, the other nonprofits. These partnerships have paved way for sending millions of greeting to the families of the military personnel due to the Heroes program initiated by the ARC. These efforts also helped in increasing the blood donations, and made certain that ARC was prepared for the future disasters. Such partnerships also resulted in training of newer volunteers, to assist in dealing with calamities. For the future, ARC hopes to maintain and grow more partnerships, so as to cope up with the problems it is facing as a result of the economic depression (McGovern, 2012).

The key challenge for ARC in the coming years is to deal with the major financial instability and pave a path towards growth (McGovern, 2013). The company seeks to eliminate the deficit which is currently its biggest headache. This can be done through boosting of fundraising results. Through the cost cutting efforts, the financial condition can further be improved. There is also a need to keep the costs in line, along with the generation of revenue. There is a need to make certain that the long-term financial stability is concentrated over decreasing the dependency over the episodic disaster funding. ARC seeks to expand the giving circles for the major individual donors. ARC is also working towards diversifying of the fundraising through meeting the requirements of donors who take an interest in the other programs of ARC (McGovern, 2012).

Due to the problems it had faced in the past, regarding ensuring the safety of blood supply, ARC now has its focus over providing safe blood products. 40% of the blood is supplied in the USA by ARC and so, ARC makes sure that the blood supply remains the safest in the world, furthermore it also ensures that the manner in which the blood is collected from the donors, is improved. Efforts are also laid down for improving the IT system of ARC, by modernizing the entire systems (McGovern, 2012).

ARC is now in its 136th year and it is leveraging its history and at the same time, is trying to be modern. In doing so, it is facing certain challenges and is trying to rise up from such challenges at the same time. With the support of the people of USA, it plans on growing and fulfilling the mission of ARC (McGovern, 2012).


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