Governance and administration as it relates to major appeals and philanthropy
Address by Robert Tickner, CEO, Australian Red Cross to Chartered Secretaries of Australia National Conference
Sydney, 21 November 2005
Friends one and all,
Thank you, on behalf of Australian Red Cross for giving me the opportunity to share with you some new and exciting developments in the work of Australian Red Cross, and the groundbreaking changes we are implementing to ensure we remain the leader in the delivery of humanitarian services and become a pacesetter for reform and innovation in the not for profit sector in Australia.
I am also pleased to report to you that last week at the International Conference of the International Federation of Red Cross and Red Crescent Societies held in South Korea Australian Red Cross was elected as a member of the Governing Board of the Federation. This will allow Australian Red Cross to play an enhanced role on the international stage working to improve the lives of vulnerable people.
I should state at the outset that I am still relatively new to Australian Red Cross, having taken the CEO role only nine months ago but I have deliberately sought to set a cracking pace to work with my Board, key managers including the Executive Directors in the Divisions and other Australian Red Cross people to drive the reform process within the organisation.
Before I speak to you about our administration of appeals I need to tell you something about the landmark governance reforms which have occurred within Australian Red Cross over the course of the last year and which will greatly contribute to our capacity to conduct and administer major appeals in the future as well as effect a wider transformation of our organisation and enhancing its capacity.
For over 90 years Australian Red Cross has operated on the basis that the National Board and the national CEO have a limited role in directing the work of the Society and the preponderance of day to day authority over the functions of the organisation rested with state and territory Divisions.
This was obviously not a sustainable situation in modern day Australia and over time the momentum for reform grew and culminated in a decision to change the Australian Red Cross Rules one year ago to enable the Board to determine what would henceforth be national functions and which would thereby come under the authority of the Board. While the reform process is a work in progress, over the course of the last year sweeping changes have occurred with the full support of the entire organisation across Australia. This has led to the overwhelming responsibility for the work of leading Australian Red Cross now resting with the national Board with a delegation to me as the CEO to manage the organisation. The national functions I have refered to include crucial areas such as: fundraising, marketing and communications; financial management; and human resource management which are of course critical areas for the management of appeals as well as so many more key initiatives on a daily basis.
I have to confess that when I started in this job it was a bit of a discovery even to me to learn of the sheer scale and scope of activities of Red Cross in Australia, and possibly even more so the strength and extent of its international network and capacity.
Let me give you a quick overview of just the disaster relief role of Australian Red Cross within Australia and internationally. We deliver some 70 plus domestic services as well as extensive additional overseas development programs.
Australian Red Cross is part of the largest humanitarian movement in the world, providing disaster relief in Australia and overseas since 1914.
At home, we have a key role in disaster and emergency plans at a federal, state and local level.
In international emergencies, we support the International Federation of Red Cross and Red Crescent Societies, the International Committee of the Red Cross and National Societies, as well as partnering with individual societies directly on some initiatives. We also have a distinct role in international emergencies affecting Australians such as the Bali bombings in 2002.
Australian Red Cross has significant experience in emergency appeals, and is increasingly regarded as the 'appeal agency of choice'. Our recent appeals have included:
- Bali Appeal 2002
- Farmhand Appeal 2002
- Bam Earthquake Appeal 2003
- SA Bushfire Appeal
- Sudan 2004
- Asian Quake and Tsunami Appeal 2005
- China Floods 2005
- Niger 2005
- Hurricane Katrina Appeal 2005
- Asia Quake Appeal 2005
With Hurricane Katrina we were one of only two non-government organisations in Australia granted tax deductibility status.
Governance arrangements for appeals can take various forms and be internally or externally driven.
- external restraints or requirements, imposed for example by AusAID or the Australian Council for International Development (ACFID)
- internal governance structures - developed by Australian Red Cross, or the International Federation of Red Cross Societies or the International Committee of the Red Cross
- appeals where Australian Red Cross undertakes direct responsibility for governance such as our Bali Appeal 2002 and more recently the Asian Quake and Tsunamis Appeal
- situations where Australian Red Cross contributes to appeals governed by other parts of the Red Cross and Red Crescent movement such as Hurricane Katrina earlier this year, where we raise funds and are accountable to donors but fund allocation and expenditure are undertaken through the Federation in support of the American Red Cross
- external governance arrangements, where for example we might run an appeal, but a State Disaster Recovery Committee makes all policy decisions
- appeals undertaken by Australian Red Cross with external organisations, like the Farmhand Appeal in 2002 where we did the fundraising and distribution but the Farmhand Foundation set the broad policy parameters.
At Australian Red Cross we are always trying to learn from past experience and continually fine-tuning governance arrangements. Let me give you some recent examples.
The Bali Appeal 2002
This was an international appeal with a domestic component. The ARC Board provided overall governance and appointed a Steering Committee which made decisions about policy, fund allocations and accountability arrangements.
External reviews following media criticism about fund allocations found governance arrangements were sound but this didn't prevent some media levelling criticism and some disclosure challenges in passing along key messages to stakeholders and despite concentrated media briefings, Australian Red Cross was forced to advertise to get those messages through to the general public.
We also held an exercise to identify 'lessons learned' which recommended enhancements to future governance arrangements including inclusion of external representation on Steering Committees to provide an added level of public confidence in decisions taken.
The level of support subsequently received by ARC for the Tsunami Appeal showed the organisation was still held in high regard and additionally a recent AusAID poll showed a large increase in the number of Australians personally contributing to overseas aid, a large increase in the strength of approval for overseas aid and a greater belief in its effectiveness. This is good news for the whole sector, but particularly satisfying for Red Cross which was the most recognised non-government agency by a huge margin. Unprompted awareness of Red Cross and its work grew from 30 percent in 2001 to 59 percent in 2005, and is almost double that of any other agency.
The Farmhand Appeal 2002
This was managed by an external group - The Farmhand Foundation - made up of seven key executives from major Australian companies. It was run in association with Australian Red Cross. The Foundation had its own external CEO, Secretariat and operational group and the CEO liaised between the Foundation Committee, the operational group and government, scientific and farmer organisations. Australian Red Cross had responsibility for collection and distribution of funds raised.
A joint coordinating committee was established to administer the appeal with representatives from both the Farmhand Foundation and Australian Red Cross.
Each Red Cross division involved formed State Distribution Committees with people drawn from external bodies, government departments, local community organisations and the Red Cross. These committees reviewed and prioritised applications and distributed funds in accordance with guidelines described in the National Distribution Criteria (developed by Australian Red Cross).
In some states local committees were established as they had direct links to drought affected areas and had the ability to confirm local conditions and become the local approving body for distributions.
Drought affected individuals applied to the Farmhand Appeal to receive funds, and then applications were reviewed and classified in accordance with the National Distribution Criteria
The Asian Quake and Tsunamis Appeal 2005
The National Crisis Executive Policy Group of Australian Red Cross discussed and made the initial decision to launch an Appeal. It reviewed the lessons learned from the Bali Appeal and implemented enhanced governance arrangements. This time it appointed a Steering Committee comprising members of the Red Cross Board and 'external experts' to assist us with advice on such issues as probity, communications and governance. These external members provide their services on a pro bono basis and demands on their time have been extensive given the size of the appeal and response. They also needed to be brought 'up to speed' pretty quickly in the details of the disaster and on Red Cross methods of work.
Worth noting too, is that technology has been harnessed in ways not foreseen in earlier appeals to support greater disclosure and transparency.
Direct communication with donors is facilitated by email (monthly) and regular mail (six-monthly) although our web site is updated regularly. The website is also playing a far greater role in providing transparency to the general public as well as donors. In another new initiative, ACFID also coordinates quarterly disclosure reports.
I should also stress to you that Australian Red Cross has adopted an extremely conservative approach in the administration of appeals. All interest from the funds which we hold is held within the appeal and thus boosts the amount of funds we will have to spend on beneficiaries.
We also adopt what we call the 'Overarching Test' which means for example, that in order for a cost to be classed as administration to the Tsunami Appeal then this cost in its entirety must be a new cost incurred as a result of the tsunami occurring. Hence, ARC has not and will not claim any portion of general overheads incurred in normal, non-tsunami operations.
We are also committed to full transparency in our relationship with the International Federation of Red Cross and Red Crescent Societies in respect of funds we remit to them for the purpose of delivering emergency relief. For appeal funds which Australian Red Cross directly spends on programs for beneficiaries we have committed ourselves to a maximum of 10% being spent on administration, as have other major aid agencies are we are tracking well to come in clearly below that ceiling and will do all we can to reduce it.
The current US Hurricane Relief Appeal 2005 (Hurricane Katrina)
Again the National Crisis Executive Policy Group discussed and made the initial decision to launch an Appeal and agreed on the broad intent. From a governance point of view, this appeal was much simpler. We raised funds and the Chief Financial officer oversaw funds distribution.
The current Asian Earthquake Appeal 2005
This, too, is an international appeal and drawing on lessons learned from our Tsunami Appeal, the National Crisis Executive Policy Group made the initial decision to launch an Appeal using new criteria developed to assist in the decision making process. The key role of the website in stakeholder communication continues to grow with over 60% of donations being received online and regular updates provided to donors.
And I should point out here that each one of our Appeals has been audited by independent auditors.
There are many challenges facing our organisation as we move into the future. One of the most obvious is our obligation to provide stability at a time that is often characterised by crisis and complexity.
- making sure public expectations match with the Appeal intent
- balancing the need for due process with responsive arrangements that enable fast and effective aid and program delivery to those in need. We must be careful not to create extra layers of bureaucracy
- carefully managing the line between recovery and future disaster preparedness and capacity building. While our first priority is to save lives and to provide emergency relief such as food, shelter and health care, we also have a responsibility to build back better and to increase a community's ability to prosper and withstand future disaster.
- recognising that having external 'experts' available to respond to a request for support in governance arrangements at very short notice is imperative, but those external members have other demands upon their time.
- responding quickly by implementing special Governance arrangements if required as soon as a decision is taken to launch an appeal.
- managing expectations that Appeal agencies are as accountable and efficient as large corporations, entirely transparent, but without expending appeal funds to achieve these outcomes. This was a particular problem with our Bali Appeal, largely because technology was less enabling than is now the case in updating stakeholders.
- involving affected people and communities in decision making where possible. It can be difficult to identify appropriate representatives, particularly in the early stages, when people are dealing with more pressing issues and may be severely traumatised by their experience.
- being careful not to undermine existing governance arrangements in an organisation.
- managing public expectations with regard to Appeal progress, speed of program implementation and dollars spent. Some journalists like to report on the progress of a particular appeal as if it were a race to see which aid agency can spend all of its money fastest. We have to educate them, and the public, to recognise that disaster relief is very often a long term project.
We have a big job ahead of us. As I said at the outset, Australian Red Cross is in the process of making major changes to the way we operate. To paint a word picture of my goal for Australian Red Cross it is that we will come to be seen both within Australia and around the world as an organisation which is entrepreneurial, outward looking and inclusive with a culture of collaboration and community engagement.
We have already moved a significant way down the road of reform but there is much further to travel as we move into one of the most exciting periods of its existence for Australian Red Cross.
Thank you for the opportunity to speak to you today.