Verbatim, as delivered

Statement of Chairman Tom Lantos at Hearing:

The American Red Cross Governance Reform

Wherever disaster strikes, the American Red Cross responds. In times of crisis, its staff of some 35,000 and more than a million volunteers take on the daunting task of translating the compassion of the American people into shelter, clothing, and food.

Be it a fire that puts a family out of its home or a tornado that tears through an entire community, it seems the Red Cross is always on the scene, answering the call at an astonishing 75,000 such incidents in the last year alone.

But disaster relief organizations such as the American Red Cross have come under heightened scrutiny after 9/11 and the Gulf Coast hurricanes. They must now demonstrate as never before that they are acting responsibly and in the best interests of the American people.

Hurricane Katrina in particular crystallized the need for reform, and thereafter the leadership of the American Red Cross wisely undertook a comprehensive review. It conducted a six-month, top-to-bottom governance audit, headed by one of our witnesses today, Karen Hastie Williams. After more than 100 interviews of past and present Red Cross officers, volunteer chapter leaders, donors and others, the verdict was in: the Board of Governors required a major overhaul.

It is worth noting here that when the Red Cross last reorganized itself, in 1947, local chapters gained influence by getting seats on the board. But over time the board swelled to 50 members. Its unwieldy size and parochial nature made the CEO’s job one of the least secure at any American charity.

Now the Red Cross board has decided to slim down to 20 members or less. Where previously some board members were selected by local chapters, some were elected by the board, and others were appointed by the President, the board will now be comprised solely of governors elected by delegates to the Red Cross annual meeting.

Among other important changes, the board approved ways to raise the profile of the whistleblower process for Red Cross employees and volunteers. While these changes, which require congressional action, would not directly affect the organization’s disaster response, it will undoubtedly help promote the kind of leadership necessary to make Red Cross management and operations run more smoothly.

Our hearing today is to examine these proposed governance changes. It is our intention to move forward with legislation that will address the deficiencies the Red Cross has identified, and this hearing is the first step in our legislative action.

The Red Cross has mobilized American citizens to help their neighbors for over 125 years. It is charged with the crucial role of helping the United States plan for and respond to emergencies, whether they are acts of terror or acts of God. The proposed changes that we will discuss today are an integral part of supporting the critical mission of the Red Cross in the 21st century.

I will now turn with great pleasure to my friend and colleague from Florida, the esteemed Ranking Member of the committee, Ileana Ros-Lehtinen.