Identifying Opportunities to Improve Fund-Raising Activities at the American Red Cross

During its nearly century and a half existence, the congressionally chartered American Red Cross (hereinafter alternatively the organization or the Red Cross) has provided timely assistance to millions of Americans during time of extreme need. Today, the Red Cross is faced with the need to build on its reputation for caring to raise scarce funds amid a seemingly interminable global Covid-19 pandemic and an epidemic of mass shootings across the country. The purpose of this position paper is to discuss the past and current success of the American Red Cross using donors during disasters to raise funds and to provide additional or alternative fund-raising strategies that this organization can use based on a review of the relevant literature. First, a summary of the success of the organization using donors during disasters is followed by a description of two different fundraising strategies the Red Cross can use as well as how they would be implemented. Finally, a selection of the optimal fundraising strategy and supporting rationale for this choice conclude this position paper.

Summary of the Success of Using Donors During Disasters

The historical record confirms that Americans are incredibly generous people, and many immediately think of donating blood and/or money to the Red Cross during disasters as a way to help others in need. It is important to note, however, that although the organization collaborates with government agencies at various levels and the Red Crosss congressional charter assigns it the sole responsibility for ensuring compliance with the Geneva Convention, it is an autonomous tax-exempt organization. In this regard, the Red Cross reports that, The Red Cross is not a government agency; it relies on generous donations of time, money and blood to do its work. An average of 91 cents of every dollar the Red Cross spends is invested in humanitarian services and programs (American Red Cross Guide to Services, 2011, p. 3).

The organization currently uses a combination of highly cost-effective solicitation strategies for donations including maintaining a prominent presence on all major...…including the personalized mailing labels or other modest rewards it currently uses as a gift item for donors and potential donors.

Selecting the Optimal Fundraising Strategy and Supporting Rationale

Given its broad-based congressionally chartered mandate, the Red Cross faces multiple challenges in generating sufficient revenues to meet all of its funding requirements. Based on the foregoing review, the second strategy of using its existing donor database in more efficient ways represents the optimal fundraising strategy for the organization at present. In fact, the research by Ryzhov et al. (2015) indicates that requesting the same amount as previous donations or another specific amount tied is more effective with recently cultivated donors; however, this strategy diminishes in effectiveness when it is used with donors that have a long history of contributions. By taking these factors into account when designing its direct mail solicitations, the Red Cross could nearly double its response rate from its current strategy (Ryzhov et al., 2015).