New Fundraising Strategies for the American Red Cross

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 Cross’s 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 social media platforms, conducting high-profile blood drives with modest rewards for donors, public service announcements on mainstream media and direct mail contacts with potential money and blood donors. This combination of solicitation strategies generates significant amounts of money. For instance, the total calculated contributions to the Red Cross in fiscal year 2020 (the latest figures available) was $749,000,000, and the organization received another $70 million in donated in-kind services and materials (American Red Cross report, 2020).

In addition, many Americans may not realize it, but the Red Cross also charges hospitals and other health care facilities for the blood and blood-based products it collects from willing donors. In this regard, the organization reports that, “We receive our financial support from voluntary public contributions and from cost-recovery charges for some of our services, such as the provision of blood and blood products and health and safety training courses” (Our Federal Charter, 2022, p. 2). Further, the Red Cross also petitions the federal and state governments for taxpayer appropriations when the costs of their mandated missions exceed its ability to pay for them. Likewise, the organization also receives contractual reimbursements from federal and state government agencies when responding to major disaster situations (Our Federal Charter, 2022). In sum, while the Red Cross enjoys the widespread support of the American taxpaying public in the form of literal blood and treasure, its mission frequently costs more than public donations are able to satisfy, making the identification of other fundraising strategies a timely and important enterprise as discussed further below.

Different Strategies to Acquire Funding and Their Implementation

Strategy #1:

Many nonprofit organizations have been able to leverage the influence of their top executives with major corporations and affluent individuals in the private sector to generate more donations (Elsey, 2019). Although not widely publicized, it is reasonable to suggest that at least some of the members of the top leadership team at the Red Cross are already doing this to some extent at present, but many of these executives may lack the specialized fundraising skills that are needed by the organization today and in the future. Therefore, this strategy could be implemented by encouraging the organization’s top leadership team to receive the training the need to become more effective fundraisers (Elsey, 2019).

Strategy #2:

Like many other successful nonprofit organizations and as noted above, one of the strategies that the Red Cross has used to good effect in the past for fundraising is direct mail solicitations. This strategy not only attempts to generate funds in the short-term, but to also create lifelong donors who will provide ongoing support to the Red Cross over time. In this regard, Ryzhov et al. (2015) report that, “Nonprofit organizations use direct-mail marketing to cultivate one-time donors and convert them into recurring contributors. Cultivated donors generate much more revenue than new donors, but also lapse with time, making it important to steadily draw in new cultivations” (p. 1).

Although the Red Cross’s budget for direct mail solicitations is limited, there are some different ways the organization can use this strategy to not only generate more revenues in the short-term but to also cultivate long-term donors without incurring significant additional costs. For example, the specific timing of direct mail solicitations has been shown to have an effect on donorship, with direct mail requests for disaster preparedness and training initiatives being more effective than calls for donations to help with post-disaster remediation efforts (Ryzhov et al., 2015).