10/02/2008 05:12 am ET | Updated May 25, 2011

On Gustav: Obama, McCain and Bush Hit One Note

There's nothing like the Platinum brand of the American Red Cross.

People during or after a disaster suspend all critical faculties, forget all past scandals, ignore volumes of what has been written as well as embarrassing Congressional investigations and just go with what they feel....or fear.

Today, Barack Obama started and stopped with the American Red Cross in advising his millions of followers where to donate to help victims of Hurricane Gustav. President George Bush did likewise as he made joint appearances with his federal team and the new (and impressive) president of the American Red Cross, Gail McGovern; although Bush added the Salvation Army to his short (2 group) list of aid agencies. John McCain mentioned the Red Cross (as will the GOP at its convention) although he did add a generalized endorsement of local groups caring for evacuees.

The American Red Cross has had a miserable start in the 21st Century -- its brand helped it raise $1 billion after 9/11, $600 million after the Asian Tsunami and nearly $2 billion after Katrina and Rita. Subsequent problems programming all that private money effectively (plus additional government money for being a contractual First Responder) led to the firing of 3 Red Cross presidents on the alter of bad public relations and an inability to rein in its chaotic board of directors.

It's really too bad that Hurricanes Gustav and Hannah are striking before all of the helpful structural changes the Red Cross says it is making are firmly in place.

The basic needs of the American Red Cross from an admittedly outsider's perspective are these:

1. It desperately needs to spin off its $3 billion scandal-plagued blood supply business. This has been the major headache managing the Red Cross, much more so than its performance in disaster relief. There is no legal impediment to a nonprofit owning an independent for-profit business whose net profits can be poured back into supporting its charitable mission. It can also sell its blood supply business to a large health care company as long as prices and quality of blood collection are maintained (and improved). Volunteers basically have never realized their donated blood is sold ("cost-recovered") by the Red Cross to America's health care system. Prices for a unit of blood have skyrocketed in the past decade.

2. It needs to go further down its newly stated path of trying to involve more local non-Red Cross groups doing "Red Cross-type" activities after disasters. This means that "spare change" (hundreds of millions of dollars after 9/11 and $400 million after the Asia Tsunami) should be distributed to local groups doing most of the recovery work. This, after all, is why people gave to the Red Cross in the first place--with the expectation that their family's and company's compassion would be turned by the Red Cross into useful aid and for the recovery of afflicted people and communities. ..until one day they themselves may need that kind of help. To date, the Red Cross has acted as if it could just place unspent donations in its National Disaster Fund. This is an ethical dilemma for the Red Cross as it does indeed need funds for the thousands of small declared disasters which do not generate private funds from the public...although up to 30% of United Way funds go to local Red Cross chapters for just such "rainy days"

3. The American Red Cross is a unique institution in that it operates under a Congressional Charter. Up to nine cabinet members of each successive US presidential administration have seats on the Red Cross board. This is supposed to guarantee that the Red Cross is in effect a quasi-governmental institution rather than a philanthropy. It is part the matrix of First Responders at the national, state and local levels. As such, it is indispensable and important when there is a major disaster like Hurricane Gustav where over 2 million people have been temporarily displaced and need at least custodial care if not more. Having Bush, McCain and Obama advocate giving to the American Red Cross to the exclusion of most other local and national disaster relief efforts, follows a tradition where the Red Cross regularly pulls a huge percentage (in Katrina it was close to 70%) of all private giving to a major disaster. That it does not do recovery and rehabilitation phase community rebuilding with extra funds starves those groups with whom it could partner with effectively.

If not the American Red Cross (and Salvation Army), where can the public wisely direct its compassion and money after Gustav runs its course?

We have the luxury of looking at how well Katrina funds were spend and where the unmet needs are.

I recommend the community foundations (Foundation for the Mid South, the Baton Rouge Area Foundation, the New Orleans Community Foundation); the statewide nonprofit Primary Care Associations of Louisiana, Mississippi, Texas, Alabama and Florida representing hundreds of nonprofit community-based clinics; the Children's Bureau of New Orleans; the Institute of Mental Hygiene of New Orleans; Children's Hospital of New Orleans;; and others to which Operation USA, the Los Angeles-based relief group, can refer you to. I cannot recommend any of the housing groups as none have begun to earn (or significantly spend) the hundreds of millions of dollars they raised after Katrina. Far too few houses have been built and it's been three years.

Finally, watch out for the televangelists with their own charities, emboldened by McCain and Bush, who will say that they should be the recipients of your compassion. These people make every Red Cross bureaucrat look like Gandhi.