Fundraising Strategies for the American Red Cross

Introduction

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 in times of extreme need. Today, the Red Cross faces the challenge of building on its reputation for caring in order 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 in using donors during disasters to raise funds, and to provide additional or alternative fundraising strategies based on a review of the relevant literature. First, a summary of the organization's success using donors during disasters is provided, followed by a description of two different fundraising strategies the Red Cross can use and how they would be implemented. Finally, a selection of the optimal fundraising strategy and the supporting rationale for that choice conclude the paper.

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 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, including maintaining a prominent presence on all major social media platforms, conducting high-profile blood drives with modest rewards for donors, airing public service announcements on mainstream media, and sending direct mail to potential money and blood donors. This combination of strategies generates significant revenue. For instance, total contributions to the Red Cross in fiscal year 2020 (the latest figures available) reached $749,000,000, and the organization received an additional $70 million in donated in-kind services and materials (American Red Cross report, 2020).

In addition, many Americans may not realize that the Red Cross also charges hospitals and other healthcare facilities for the blood and blood-based products it collects from willing donors. 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 federal and state governments for taxpayer appropriations when the costs of its mandated missions exceed its ability to pay for them, and it receives contractual reimbursements from 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 public in the form of both blood and monetary donations, its mission frequently costs more than public donations alone can satisfy, making the identification of additional fundraising strategies a timely and important undertaking.

Two Fundraising Strategies and Their Implementation

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 members of the Red Cross's top leadership team are already doing this to some extent. However, many of these executives may lack the specialized fundraising skills the organization needs today and in the future. This strategy could therefore be implemented by encouraging the organization's top leadership team to receive the training they need to become more effective fundraisers (Elsey, 2019).

Like many other successful nonprofit organizations, the Red Cross has used direct mail solicitations to good effect in the past. This strategy not only attempts to generate funds in the short term but also seeks to create lifelong donors who will provide ongoing support over time. As Ryzhov et al. (2015) report, "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 several ways the organization can use this strategy to generate more revenue in the short term and cultivate long-term donors without incurring significant additional costs. For example, the specific timing of direct mail solicitations has been shown to affect donorship, with requests for disaster preparedness and training initiatives proving more effective than calls for donations to assist with post-disaster remediation efforts (Ryzhov et al., 2015).

To its credit, the Red Cross has been an excellent steward of the personal data it has collected about its donors and holds data from more than 8.6 million donor contacts that could be used to greater effect for fundraising purposes. Among the highly cost-effective strategies available, the Red Cross could place donor cards in direct mail solicitations to identify recipients as supporters of the organization, rather than continuing to include personalized mailing labels or other modest rewards as gift items for donors and potential donors.