"I Am Well Suited for the Job"
Trent Stamp's interview with former American Red Cross CEO Mark Everson
July 9, 2007
On May 29, 2007, Mark Everson became president and CEO of the American Red Cross. Just six months later, he was ousted for engaging in an inappropriate sexual relationship with a subordinate. Prior to that, Mr. Everson sat down with Charity Navigator president Trent Stamp to talk about his qualifications for the job and to assure America’s donors that he was committed to restoring the world’s best-known charity to glory. The Red Cross is now looking for Everson’s replacement.
Here is a complete transcript of their discussion, which took place on July 3, 2007 at the offices of the New York City chapter of the Red Cross.
Trent Stamp: Here at Charity Navigator, whenever there is a natural disaster, donors turn to us for advice on who to give to. I was quoted on national TV during the days after both the Tsunami and Hurricane Katrina as saying "Find a charity with a proven track record of success with dealing with a disaster of this size and scope. Even well-meaning new organizations will not have the infrastructure, the experience, and the knowledge of the region to efficiently maximize your gift." This policy of ours has certainly benefited the Red Cross, as your group is invariably one of the non-profits with previous experience responding to disasters of this magnitude, and we have wholeheartedly recommended you in the past. And yet, with you taking over, if we followed the same philosophy, we would be recommending a group with a leader that has no non-profit or disaster-related experience. This seems incongruous to me and hard for me to logically defend. Explain to me why your lack of experience with non-profits and disaster response in particular shouldn't matter to America's donors.
Mark Everson: The way I would look at it is that the Red Cross is a large, complex organization with a series of relationships--there is the headquarters, the chapters, the volunteers, there are dependencies with governments and with private businesses. You could argue that someone with not-for-profit experience would be essential, but there are very few organizations of the size and scale of the Red Cross. You might say that someone could step up from a smaller organization and make that jump.
"The people who are doing the work are out there in the chapters, not in Washington, so you cannot afford to have a bloated bureaucracy that is unresponsive to the field."
Or you could look at someone with a proven track record of dealing with a complex, multi-disciplined organization, dealing successfully with governmental and private-sector entities, and with an international presence. Frankly, with the Red Cross, you have 35,000 employees and a million volunteers, not to mention the blood donors, but to run the tax administration system of the country, which touches everything, way beyond the charities, we had 100,000 employees and over a million tax practitioners. So I think there are a lot of similarities between the two organizations that make me feel comfortable that I can come in and take it over and help it improve. There's no perfect job description for any entity of the size and magnitude and importance of the Red Cross, so I think you could have gone a number of ways, and I think I am well suited for the job. Obviously, time will tell.
I would suggest that the governmental experience is increasingly relevant if you think about where the Red Cross exists on the disaster side. It's in a unique place. You have federal, state, and local governments on the one hand, and on the other hand, you have the private parties. The Red Cross is almost uniquely situated in the middle. I'm comfortable with those kinds of interactions, and have played at that level. Not a lot of people have.
Stamp: You know that I was critical of your selection of your former Chief of Staff at the IRS as your new ombudsman at the IRS. This was not based on her credentials or reputation, but on the fact that you and she had a prior working relationship, and I find it hard to believe that anyone could believe that she was truly independent, even if this is merely more perception than reality. According to the International Ombudsman Association, one of the first rules for appointment of ombuds is that they be "unaligned." Are you making the claim that your new ombudsperson is "unaligned" or were you unaware of this best practice for ombudspersons or were you aware and thought it was unimportant?
Everson: I carefully considered the appointment before I made it. We had experience with a National Taxpayer Advocate at the IRS, which is not unlike the ombudsman at the Red Cross. For an ombudsman to be effective, the person must be independent and able to work collaboratively with pieces of the organization, because if people throw up their arms and don't cooperate either in the production of information or opening up to saying what's going on, you're going to end up with a series of reports that will be critical of the organization, but no progress will be made.
"I would hope that people would say, if you can run the IRS successfully and do the things this guy has done, you'd have the perspective, the ability, and the stamina to take on an assignment like this."
The new ombudsperson is a career attorney that worked at Justice and the IRS. She has absolute integrity. I was concerned upon taking this position that, as a leader can, I would be embracing or defensive of the organization. I trust her judgment implicitly because she has come to me before and told me things about the IRS that I needed to hear. If she comes to me and says there is a problem in XYZ unit, I will believe her and act on that. There won't be a dialogue or defensiveness on my part. I trust her integrity and ability to get something done. Time will tell.
Stamp: I don't think anyone's questioning her integrity. That's not my concern. Tom Kosakowski of the Ombuds Blog wrote after her appointment, "even if she practices to standards, she will surely be perceived as biased. Without the trust of stakeholders, her effectiveness is compromised from the start." Isn't that the bigger issue here, that employees will not feel protected enough to bring their concerns to the ombudsperson if they know she has been formally aligned with you? I'm not questioning that she'll bring things to you; you trust her. But why should employees bring issues to her, if they know that she's formally aligned with you?
Everson: I don't consider her to be aligned with me. She's signed on to do that job, to provide the independent advice. She's well aware from the structure we had at the IRS of her obligation to report up to Capitol Hill, and I think she'll fill that obligation well. And again, time will tell. I think she's an inclusive person who will build the relationships both within the Red Cross and externally that she should. I think she has great behaviors and will prove to be a strong appointment.
"I'm not worried about the tension that may have existed before between the board and the president. There are plenty of things here to be concerned about, but the governance structure is not one of them."
Stamp: You recently told the Chronicle of Philanthropy that one of your three biggest priorities would be "increasing support for Iraq war veterans and military families."
Everson: They misquoted me. I didn't specify Iraq or veterans. What I said was "military and members of their families." It's not a question about Iraq.
Stamp: That's not where I'm going here. My question is, why this priority and why now?
Everson: It was interesting to me that as I got to know the organization, there was a lot of attention on blood and disasters, but it was surprising to me, as I got to know the organization better through my reading, how the support to the military and their families, which had been an historic foundation of the organization, had atrophied. I do think that we can play a unique role in helping those who are making such a sacrifice for this country. We are in so many communities; we're already volunteering in the veterans hospitals. We do some things like pay for a brother or parents to attend funerals; the army only pays for direct relatives.
I'd like us to do more because the people who serve our country are essential to our fabric. I think it's needed. Look at the wounded coming back from this conflict. The ratio is 16 to 1, injured to killed, which is a different dynamic than we've seen before. They have special needs. This is one area where I think the charitable sector can step in and do more. I was told recently that there may not be financial support for us to do this, but I cannot believe that. In fact, in some of my early-stage discussions with companies, they've told me that, yes, they'd be interested in supporting that. People are very interested in supporting the military. I see this priority as a return to the historic roots of the organization.
Stamp: You don't worry that it could be perceived as some sort of mission-creep on your part, since there are other groups out there that have a stated goal of working toward this goal, and the Red Cross is seen as having a fundamentally different function?
"University presidents at major institutions that are of far less significance to the country are paid far more than I am."
Everson: I don't think it will be viewed that way. I think it will be welcomed. There are so many challenges if you look at military families and the demands they have. This includes the National Guard and the Reserves. I'm not sure what our plan will look like yet. We're just starting to think about it, but I think it's consistent with the historic role of the organization.
Stamp: Would you have joined the Red Cross under its previous governance structure?
Everson: I might have. I'm sort of a knucklehead when it comes to taking on a challenge. I love public service. I served twice, six years in the 80's and now another six years this time. It's been the greatest privilege of my life. I was interested in this opportunity when it came open because I regard this as a continuation of my public service, in another form.
Certainly, the fact that the board went through the process it did to resolve the governance issues, which I believe it did (resolve the issues), that was a lengthy, healthy process, and was worth the wait. I think the model they came to, with limited Congressional revisions, is a good platform going forward and I feel very supported by the organization at all levels. I'm not worried about the tension that may have existed before between the board and the president. There are plenty of things here to be concerned about, but the governance structure is not one of them.
Stamp: It seems as though the relationship between the chapters and the national office is strained. Why do you think that is? How do you plan to resolve that issue?
Everson: I've worked at headquarters and in field operations all my career. I was at HQ at the IRS and the Justice Department, and in the field at INS. When you go to the White House (or OMB) to the IRS, you might as well be going to Siberia. There is tension between headquarters and the field at any organization. That is a natural dynamic and the larger the organization, the greater the challenges. We are one 501 c3 organization, which is different than some other non-profit entities.
Stamp: Which I applaud you for. You have our support on that structural model.
Everson: That makes it imperative for us to have certain consistency standards and fiduciary responsibilities, among other things, that are important, but that's not unlike if you're franchising restaurants, or anything else. You have national standards that you want to follow to have a brand. We have that, and it's a great value to the Red Cross. Based on the disaster response, or the blood they gave, or the CPR course they took, people have an image, based on local circumstances, buttressed by their knowledge that there is a national organization that can step in and scale up the response. The trick here is to make sure the policy and priorities we set at headquarters are rational, the controls put into place are reasonable, and there is communication at a service mentality. The people who are doing the work are out there in the chapters, not in Washington, so you cannot afford to have a bloated bureaucracy that is unresponsive to the field.
One of my key jobs, obviously, is that we're looking at all our structures and making it as efficient as possible, so the people in the chapters, and in the blood regions, feel that they're getting value from headquarters. So far, I've been out in the field, and I think this is doable, and just like I feel supported by the board, I feel very supported by the field personnel. They want strong leadership, but they want a recognition that they're the ones doing the work.
Stamp: Everyday we hear from donors who no longer plan to support specific charities because they believe those organizations overpay their CEOs. In light of the fact that you recently announced that you plan to cut staff to make up for the ARC's shortfall in funding, I suspect we'll hear a considerable amount of criticism of your salary. How do you justify what you make when you're communicating with donors?
"I'm sort of a knucklehead when it comes to taking on a challenge. I love public service."
Everson: This issue hasn't come up yet. I made no salary demands. The outside folks got together and benchmarked what is an appropriate salary, compared to other entities of similar size. I was highly satisfied with where they landed. The Red Cross is not a small, local entity. It is a large entity. Where they landed, what it does is take compensation off the table for me. I don't have to go out there earning billions of dollars in outside engagements. There's the recent model of craziness at the Smithsonian. That's not something that will be a temptation; here there's a reasonable salary. It's not a salary you might command in the outside world or even at a university, as you well know. University presidents at major institutions that are of far less significance to the country are paid far more than I am.
The second part of your question goes back to what is the appropriate structure for our headquarters, and is it efficient and effective? We do have an obligation to operate as economically as possible, to keep our operation costs under control. So we're looking at that for two reasons. One, the cost side and two, the efficiency and productivity side. We haven't modernized the way we need to and we haven't leveraged technology the way we need to. This process was started well before I started. We need to modernize, and of course, there can be ramifications from that.
Stamp: Given your unique perspective as the former leader of both the IRS and the current leader of the Red Cross, I'm curious as to whether you think the Salvation Army should be required to file a 990? It's a billion-dollar organization with relatively no accountability to taxpayers.
Everson: I don't comment on things that are relevant to my former position as the Commissioner of the IRS.
Stamp: O.K., skip the first part. As the leader of the Red Cross, do you think the Salvation Army should be required to file a 990?
Everson: (Laughs) I think that would be foolhardy for me to venture into that territory, so I will stonewall on this answer.
Stamp: It has been said that your selection was cheered on Capitol Hill, especially in Senator Grassley's office. Why should it be celebrated on Main Street, USA?
Everson: The Red Cross is an enduring, vital American institution. It needs to be well-managed and deliver the services that it provides. I have a wide range of experiences in business and in government, here and abroad, and I have run successfully, in the most recent past, one of the most challenging organizations in the world. If you think it's hard to deal with the IRS, imagine trying to run it for four years. I would hope that people would say, if you can run the IRS successfully and do the things this guy has done, you'd have the perspective, the ability, and the stamina to take on an assignment like this.
This is one of the great institutions in America. We have to get this right.
