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  •   Dole: Managing an Agency and an Image

    By Charles R. Babcock and Judith Havemann
    Washington Post Staff Writers
    Tuesday, February 16, 1999; Page A1

    As the just-retired president of one of the nation's largest charities, Elizabeth Hanford Dole portrays herself as a bold reformer who rescued a critically injured blood program and delivered "real-life miracles" to victims of natural disasters around the world.

    Her work as president of the American Red Cross, she told an audience in New Hampshire last week, gave her experience "overseeing 32,000 employees and 1.3 million volunteers. I undertook a seven-year, $287 million transformation of the way the organization collects, tests and distributes half of the nation's blood supply." The system is now the best in the world, she proclaimed.

    This image of confident leadership and superlative performance as head of a huge and complex organization is central to Dole's pitch as she positions herself for a possible Republican presidential candidacy, her first run for public office.

    But some who closely watched Dole's management of the Red Cross during a period of turmoil and controversy offer a mixed assessment of her performance and what it suggests about her possible presidential leadership style.

    She is a manager of great strengths and broad vision, competently overseeing a charity with $2 billion a year in revenue and missions as diverse as a Fortune 500 company, her admirers say. At a time when the Red Cross, like many charities, had seen its United Way funding plunge, Dole not only made up the difference but used her own tenacity and persuasive charm to increase public donations by 9 percent. But she also has intertwined politics and philanthropy in a way that gave fuel to her critics in the nonprofit world.

    At times, Dole seemed more interested in her own image than that of the Red Cross, some observers inside and outside the charity say. Even in managing the crisis involving the safety of the Red Cross blood supply which Dole cites as her greatest achievement she first launched what federal regulators later viewed as a public relations effort and her reform proceeded at a slow and costly pace until a federal agency finally sued the Red Cross to force serious top-to-bottom change.

    In a schedule laced with paid speeches to civic and political groups, Dole spent so much time on the road that she left herself open to criticism that no one was overseeing the organization's routine operations. A 1996 independent study of the Red Cross by KPMG Peat Marwick criticized Dole's management style and reliance on a "shadow staff" of consultants. Critics complained that she added her political allies to the payroll (including Mari Masing Will, the communications director for Robert J. Dole's 1996 presidential bid, who served as a consultant on the blood program). Dole also installed important GOP donors (such as Inez Andreas, the wife of agribusiness giant Dwayne Andreas, a longtime Dole supporter) on the Red Cross board of directors.

    Always mindful of image, she occasionally tried to distance herself from controversies the Red Cross faced, according to those inside and outside the organization, leaving others to take the public heat.

    "She delivers the good news," said Paul Clolery, editor of the Non-Profit Times, which has closely monitored Red Cross operations for years. "The bad news is delivered by someone else."

    An event late last year showed how she sometimes left the impression that she was using the Red Cross job to better position herself politically, charity watchdog groups say.

    Dole was prominently featured on a prime-time television Christmas Eve "spectacular" showcasing the charity's achievements. "People were thrilled," said Red Cross spokeswoman Josie Martin, who left her post last week. The show raised $25,000 through a national toll-free number and may have brought in more to the Red Cross's 1,300 local chapters.

    The telecast cost the Red Cross $1.3 million to produce and was planned by Red Cross consultant Melinda Farris, who had helped organize special events for Dole at the 1996 Republican National Convention.

    Farris came to the Red Cross in 1994 after doing political image consulting work for Republican women. She said she and Dole never discussed her possible presidential candidacy during the preparation for the Christmas Eve television show.

    Robert O. Bothwell, president of the National Committee for Responsive Philanthropy, said the program may have had a legitimate purpose but its timing also gave it "the appearance of being a launching show" for a Dole presidential bid.

    Eleven days after the show aired, Dole announced that she would resign to consider a run for the White House.

    The purest indicators of Dole's performance as Red Cross president are the numbers that nonprofit groups use to measure success.

    Money magazine rated the Red Cross the nation's best-run charity in 1996, based on the proportion of its income, 92 percent, that went directly toward helping the public.

    Norman R. Augustine, longtime chairman of the Red Cross board, said he thinks Dole ranks high as a Red Cross leader. "If I was speaking in business terms, I'd say she's done 'a turnaround.'"

    In fund-raising, Dole was battling against a $67 million cutback in money received annually from the umbrella agency, United Way. She fought back, but it was an expensive proposition: The costs of fund-raising doubled from $33 million in 1991, the year she arrived, to $67 million last year.

    Overall, however, it was a successful effort. The 9 percent increase in public donations that Dole achieved translated to a total of $567 million last year.

    Corporate and other nontraditional donations more than doubled during her tenure. She called on business leaders she knew from her previous political jobs. Many of them gave generously to the Red Cross for the first time.

    When floods hit California early in 1997, for instance, Dole persuaded Alex G. Spanos, a wealthy builder and developer, to donate $1 million for the victims. Spanos said in an interview that he had never before given significant amounts to the Red Cross, but he knew Dole from Republican politics and wanted to help.

    Dole also lobbied personally to get Congress to give the Red Cross $170 million, to the chagrin of less well-connected charities. Getting such money "smacks of inside dealings," said James MacPherson, head of America's Blood Centers, the group of nonprofit blood banks that competes with the Red Cross.

    The blood program, not fund-raising, first occupied Dole's attention when she arrived at Red Cross headquarters across the park from the White House in February 1991. The program, which draws donor blood at 400 locations for sale to hospitals, was under attack from Congress and federal regulators. Annual sales of blood accounted for about half of Red Cross revenue.

    The AIDS epidemic had devastated the nation's blood supply, and as cases like that of tennis star Arthur Ashe demonstrated, the disease could be transmitted directly by impure blood. Nine days into Dole's tenure, a CBS "60 Minutes" report charged the Red Cross with using inadequate safety procedures. Within three months, Dole announced a two-year, $120 million "transformation" of the blood testing and distribution system.

    Two years later, however, federal regulators sued the Red Cross to force it to meet detailed safety procedures under court supervision.

    Normally in such legal action, the Food and Drug Administration names an organization's president as a defendant to hold him or her responsible for carrying out the court order. But when the FDA papers were filed, Dole's name was not listed.

    "It was on the first draft, and then it disappeared. She did not want to be named," said one source familiar with the episode. Instead, the Red Cross general counsel and an outside attorney signed the "consent decree" that settled the lawsuit.

    David A. Kessler, the Yale Medical School dean and former FDA head who filed the lawsuit, said he believes it is immaterial whether Dole was named. He credits her with charging ahead on reforms and said she "turned around" a blood program made up of dozens of independent fiefdoms.

    "I have to say," he said, "I think she gets an 'A.'"

    The Red Cross now acknowledges that Dole's reforms consumed seven years and cost $278 million and, even now, the criticism has not been stilled.

    "It took the Red Cross a very, very long time to make changes agreed to in that consent decree," said Jonathan Wadleigh, former president and founder of the Committee of Ten Thousand, a group of people with hemophilia and AIDS. "She was made director of the Red Cross, in part, because of the contaminated blood scandal, and changes were not made in a timely fashion. It leads one to question her ability as an administrator."

    Rivalry between the Red Cross and other nonprofit blood banks for donors intensified when Dole's blood program left her group's biotechnology division deeply in debt.

    To reduce the shortfall, officials pushed to increase volume. With Dole as a "strong supporter," they set a goal of moving from the current 46 percent share of the blood supply to 65 percent by 2001.

    Rivalry among blood banks grew so heated that the Red Cross sued the Palm Beach Blood Bank, charging that it had stolen a trade secret its list of blood donors. Last year, competitors asked the Justice Department to start an antitrust investigation of the Red Cross after it signed an exclusive agreement for a new blood cleansing product.

    At times the very political skills that Dole used to help the Red Cross made her motives suspect. In 1995, for example, some Red Cross chapter officials accused Dole of caving under pressure from conservative groups her husband was courting for support in his GOP presidential campaign.

    The controversy was over AIDS teaching materials, and whether they should be encouraging abstinence as part of their prevention message. While complaints had been voiced for years, Dole quickly moved the sensitive issue from her staff to the Board of Governors, which ordered that the materials be toned down.

    "Her mistake was taking her cues from those with a political agenda," said Daniel Zingale, executive director of AIDS Action, a national lobbying group. "The key to AIDS prevention is to present the unvarnished truth. When an issue is pushed up to the level of the board of directors, politics can get in the way of public health, which is what happened."

    While Dole took 1996 off to campaign for her husband, the KPMG Peat Marwick study of Red Cross headquarters criticized the management practices she had put in place. It concluded that the charity needed "a more robust leadership team," including a chief operating officer. It also discovered that some departments relied so heavily on consultants that they amounted to a "shadow staff."

    When newspapers obtained the study and identified some of the consultants with political backgrounds, Dole was unavailable for comment.

    Veteran Red Cross staff members viewed Dole as a demanding taskmaster, and some were offended that her inner circle included staff and consultants with political backgrounds. Besides Farris and Will, Robert Davis, a Washington attorney who was Elizabeth Dole's top lawyer at the Labor Department, did Red Cross legal work and was a Bob Dole '96 campaign adviser. Stewart McLaurin moved from the campaign to the Red Cross in 1997 and now runs Dole's new office in Washington.

    Gene Dyson, who as acting president commissioned the report, said board members told him Dole interpreted the study "as criticism of her." Dyson and Augustine said a review of the consulting contracts found nothing irregular.

    Another possible public relations disaster loomed last December, when Minnesota Attorney General Hubert Humphrey III charged that the Red Cross had collected but not spent $4.3 million in disaster funds earmarked for the victims of 1997 floods in Minnesota and North Dakota.

    The Humphrey report criticized the Red Cross for refusing to answer queries from a state attorney general and hiding behind its special 1905 congressional charter.

    Dole delegated the issue to vice president John Clizbe, who has announced that the Red Cross will spend $100,000 on advertisements seeking qualified flood victims and will devote the entire $4.3 million to Minnesota and North Dakota needs.

    Red Cross spokeswoman Martin said the issue "was handled at the appropriate level."

    None of these controversies surfaced in New Hampshire last week as Dole recapped her Red Cross years in what was billed as a speech on "the values of volunteerism" but which quickly took on the feel of a prelude to a presidential announcement.

    Bill Hamilton, vice president of the Manchester Chamber of Commerce, said he scheduled the paid speech last fall when Dole was at the Red Cross and felt deceived that it veered away from the expected topic of volunteerism.

    The talk she delivered, he said, "was a little more political than most people thought it was going to be. Maybe I was naive."

    Researcher Mary Lou White contributed to this report.

    © Copyright 1999 The Washington Post Company

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