Regional American Red Cross officials find they are having to use emergency relief measures to keep one of their own chapters operating in Arcadia.
A potential board member revolt could shut down the chapter for good.
This year, and mostly in the last several months, finances at the chapter went from being in the black to a whopping deficit of $140,000 on an annual budget well in excess of $500,000, according to people closely associated with the situation. And the $50,000 in reserves had fallen to about $15,000.
Managers and staff from other local chapters in Los Angeles and the Pasadena office for the San Gabriel Pomona Valley Chapter are overseeing the Arcadia Chapter temporarily after all ten staff at the Arcadia chapter were released from their jobs last Wednesday without any warning to the staff, the board of directors, or the community.
But the future remains uncertain and will likely continue that way for weeks or months. Some angry board members were discussing resigning en masse over the recent turn of events, but cooler heads have prevailed for the moment as they realized that such a move would ensure the demise of the non-profit organization that cannot legally exist without a board of directors.
Aiming for seamless continuation
Board chairman Sandhya Ravichandran and SGPV chapter CEO Ben Green say their intent is to maintain Arcadia chapter services such as Meals on Wheels and the popular volunteer groups without any noticeable difference to the community for the time being until a new staffing and services plan can be worked out between Green and the board.
Green said he is currently the “immediate supervisor in charge of Arcadia” and that anyone with questions may reach him by e-mail at Green@sgpvarc.org or call 376-4523.
Despite dropping off a financial cliff, Green characterized the Arcadia chapter as “very strong, a gem.” And despite axing the entire staff, he said “the future will be bright; we’re going to save that chapter.”
Immediate future
Addressing several immediate questions following the unforseen developments last week, Green and his family will be in attendance Monday night at the annual Taste of Arcadia, where he said Arcadia chapter student volunteers are anxious to work to support the event, and where Green will accept a donation from the Chamber of Commerce that will come from event proceeds.
A staff member from the SGPV office is temporarily acting as liaison for the very active youth clubs at the Arcadia chapter.
Meanwhile, Green and staff from other chapters will work on rotating schedules to staff the Arcadia chapter office on Huntington Drive.
Goals for future of Arcadia chapter
But Green’s intent is to implement a new long-term strategy for the Arcadia chapter that would perhaps mean eventually re-staffing with new permanent employees, but only two or three instead of ten or 11, and covering the rest of the jobs with volunteers. The volunteer board’s role would primarily be fund-raising, he said.
Back-office operations such as accounts receivable and payable for all nine area chapters are already being consolidated into a single chapter in Los Angeles, Green said, and a new system to merge the monthly reports of each local chapter has been implemented.
Much of this approach has become the strategy at many Red Cross chapters nationwide, Green said, with 97% of Red Cross workers volunteers. The SGPV chapter has reduced its staff from 34 to 11 paid employees, he said.
The mission of the streamlined Arcadia chapter would become more of a sales-oriented business outreach approach to line-up more “out-of-office sales” of health and safety classes such as workplace development programs and even nursing training to individuals and businesses. This approach is already in use in Antelope Valley, Glendale and Los Angeles, Green said.
But all of that is yet to be approved or even fleshed out for Arcadia and is something that Green will work on in the coming weeks and months with the board of the local chapter, which includes about eight local residents and others who work in the community.
What happened and how did it go so bad so quickly?
Red Cross operations
So, what happened that sparked this dramatic financial spiral and drastic firings last week that has shaken the community as news dribbled out over the weekend?
First of all, most Red Cross chapters operate as somewhat autonomous non-profit organizations — there are about 3,000, according to Charlie Sardou, spokesman for the Los Angeles region of the American Red Cross.
Although each chapter has its own board that Green says carries “primary responsibility — along with the staff — for managing the budget,” he said he and the SGPV chapter have oversight responsibility for the Arcadia chapter and three others in Glendale, Claremont, and Antelope Valley. All the entities also collaborate with chapters in Los Angeles and Santa Monica.
Green answers to a national Red Cross regional director.
Important to closely monitor financial reports
The Arcadia chapter staff provided monthly financial reports to the board and regional SGPV office but apparently no one looked closely enough or acted quickly enough to what was happening.
The fiscal year runs July 1 – June 30. Green said as his group was preparing the year-end reports and budget for the national office they realized for the first time the crisis that had developed. “We had relied on local boards to watch and manage but suddenly we were paying much closer attention to it,” he said. “Ideally, the board would have seen it and taken corrective action. My board looks at financials all the time and has fiduciary responsibility to monitor the budget and take action to right the budget when needed.” But he said everyone involved is accountable. “We all should have looked at it more closely.”
The Arcadia chapter board typically does not meet in July or August but had already been implementing employee furloughs and planning for some layoffs. “We knew we were in trouble,” said one board member.
The deficit accelerated so dramatically that Green said he decided on his own authority to take swift action because there was not enough money to meet payroll and other expenses, he said. “They were out of money.”
New strategy worked until it didn’t
Ironically, re-staffing to a level of two or three employees would be somewhat of a return to the staffing levels at the Arcadia chapter up until this year, when about seven additional employees were brought into the chapter. That’s because Green said that former Arcadia chapter executive director Bob Deao told him last year, before Deao retired this past February, that he was projecting a budget deficit for the Arcadia chapter this year.
Green and Deao decided the best strategy would be to swap the disaster relief services provided by the Arcadia chapter with the health and safety classes offered by other regional chapters. That meant Arcadia would no longer be as involved with disaster relief efforts but would be responsible for offering classes in 13-14 regional cities, which required nearly tripling the staff.
Some wondered at the time about that strategy since the Arcadia chapter was already about $50,000 in the hole with only three employees, according to one source.
But the new strategy seemed to work initially, with the chapter in the black for awhile. But the number of classes being booked began to dwindle, perhaps due to the poor economy as well as competition for similar classes by numerous entities other than the Red Cross. Class sizes began to shrink too. Green said each class needed to have at least eight people just to break even on the costs of maintaining the chapter operations. Some classes he observed had only four people. “We were in trouble financially,” he said.
Red Cross, Inc.?
Green intends to meet with the current board in the coming days and weeks and try to develop, with the board’s input, a new business model-type of approach in which “sales would be the key,” according to Green. That would begin with studying the needs of the community to develop services and programs that would sell well. That will require a different set of skills than were required of employees in the past. He said that employees let go last week could re-apply for the fewer number of newly defined jobs and their skillsets would be considered and they could possibly be hired back at the Arcadia chapter eventually.
But all of that will take time, he noted.
Green envisions expanding the board of directors to include members of all the biggest businesses in town and emphasizing the volunteer board’s need to keep a close eye on financials, be willing to “ask tough questions,” and, in compliance with a 2007 change in the Red Cross bylaws, to be “more responsible for fund-raising.” “The board is very important in the process and they need to start raising money in the community,” he said. “We look at them to bring in resources and revenue.”
Finally, Green said the reorganized agency will also seek local supporters who want to donate their time and money to the more sales-oriented Arcadia chapter of the American Red Cross.
— By Scott Hettrick