59–006 

110TH CONGRESS REPORT " ! HOUSE OF REPRESENTATIVES 1st Session 110–87 

THE AMERICAN NATIONAL RED CROSS GOVERNANCE 

MODERNIZATION ACT OF 2007 

APRIL 16, 2007.—Committed to the Committee of the Whole House on the State of 

the Union and ordered to be printed 

Mr. LANTOS, from the Committee on Foreign Affairs, 

submitted the following 

R E P O R T 

[To accompany H.R. 1681] 

[Including cost estimate of the Congressional Budget Office] 

The Committee on Foreign Affairs, to whom was referred the 

bill (H.R. 1681) to amend the Congressional Charter of The American National Red Cross to modernize its governance structure, to 

enhance the ability of the board of governors of The American National Red Cross to support the critical mission of The American 

National Red Cross in the 21st century, and for other purposes, 

having considered the same, report favorably thereon with an 

amendment and recommend that the bill as amended do pass. 

CONTENTS 

Page 

The Amendment ...................................................................................................... 1 

Summary .................................................................................................................. 7 

Background and Purpose ........................................................................................ 7 

Hearings ................................................................................................................... 9 

Committee Consideration ........................................................................................ 10 

Votes of the Committee ........................................................................................... 10 

Committee Oversight Findings ............................................................................... 10 

New Budget Authority and Tax Expenditures ...................................................... 10 

Congressional Budget Office Cost Estimate .......................................................... 10 

Intergovernmental and Private Sector Impact ...................................................... 11 

Performance Goals and Objectives ......................................................................... 11 

Constitutional Authority Statement ...................................................................... 11 

New Advisory Committees ...................................................................................... 11 

Congressional Accountability Act ........................................................................... 11 

Earmark Identification ............................................................................................ 11 

Section-by-Section Analysis and Discussion .......................................................... 12 

Changes in Existing Law Made by the Bill, as Reported ..................................... 14 

Red Cross Report on Corporate Compliance and Accountability ......................... 23 

mstockstill on PROD1PC66 with HEARING

2 

THE AMENDMENT

The amendment is as follows: 

Strike all after the enacting clause and insert the following: 

SECTION 1. SHORT TITLE. 

This Act may be cited as the ‘‘The American National Red Cross Governance Modernization Act of 2007’’. 

SEC. 2. FINDINGS; SENSE OF CONGRESS. 

(a) FINDINGS.—Congress makes the following findings: 

(1) Substantive changes to the Congressional Charter of The American National Red Cross have not been made since 1947. 

(2) In February 2006, the board of governors of The American National Red 

Cross (the ‘‘Board of Governors’’) commissioned an independent review and 

analysis of the Board of Governors’ role, composition, size, relationship with 

management, governance relationship with chartered units of The American 

National Red Cross, and whistleblower and audit functions. 

(3) In an October 2006 report of the Board of Governors, entitled ‘‘American 

Red Cross Governance for the 21st Century’’ (the ‘‘Governance Report’’), the 

Board of Governors recommended changes to the Congressional Charter, bylaws, and other governing documents of The American National Red Cross to 

modernize and enhance the effectiveness of the Board of Governors and governance structure of The American National Red Cross. 

(4) It is in the national interest to create a more efficient governance structure of The American National Red Cross and to enhance the Board of Governors’ ability to support the critical mission of The American National Red 

Cross in the 21st century. 

(5) It is in the national interest to clarify the role of the Board of Governors 

as a governance and strategic oversight board and for The American National 

Red Cross to amend its bylaws, consistent with the recommendations described 

in the Governance Report, to clarify the role of the Board of Governors and to 

outline the areas of its responsibility, including— (A) reviewing and approving the mission statement for The American National Red Cross; 

(B) approving and overseeing the corporation’s strategic plan and maintaining strategic oversight of operational matters; 

(C) selecting, evaluating, and determining the level of compensation of 

the corporation’s chief executive officer; 

(D) evaluating the performance and establishing the compensation of the 

senior leadership team and providing for management succession; 

(E) overseeing the financial reporting and audit process, internal controls, 

and legal compliance; 

(F) holding management accountable for performance; 

(G) providing oversight of the financial stability of the corporation; 

(H) ensuring the inclusiveness and diversity of the corporation; 

(I) ensuring the chapters of the corporation are geographically and regionally diverse; 

(J) providing oversight of the protection of the brand of the corporation; 

and 

(K) assisting with fundraising on behalf of the corporation. 

(6)(A) The selection of members of the Board of Governors is a critical component of effective governance for The American National Red Cross, and, as such, 

it is in the national interest that The American National Red Cross amend its 

bylaws to provide a method of selection consistent with that described in the 

Governance Report. 

(B) The new method of selection should replace the current process by 

which—

(i) 30 chartered unit-elected members of the Board of Governors are selected by a non-Board committee which includes 2 members of the Board 

of Governors and other individuals elected by the chartered units themselves; 

(ii) 12 at-large members of the Board of Governors are nominated by a 

Board committee and elected by the Board of Governors; and 

(iii) 8 members of the Board of Governors are appointed by the President 

of the United States. 

(C) The new method of selection described in the Governance Report reflects 

the single category of members of the Board of Governors that will result from 

the implementation of this Act: 

mstockstill on PROD1PC66 with HEARING

3 

(i) All Board members (except for the chairman of the Board of Governors) would be nominated by a single committee of the Board of Governors taking into account the criteria outlined in the Governance Report 

to assure the expertise, skills, and experience of a governing board. 

(ii) The nominated members would be considered for approval by the full 

Board of Governors and then submitted to The American National Red 

Cross annual meeting of delegates for election, in keeping with the standard corporate practice whereby shareholders of a corporation elect members 

of a board of directors at its annual meeting. 

(7) The United States Supreme Court held The American National Red Cross 

to be an instrumentality of the United States, and it is in the national interest 

that the Congressional Charter confirm that status and that any changes to the 

Congressional Charter do not affect the rights and obligations of The American 

National Red Cross to carry out its purposes. 

(8) Given the role of The American National Red Cross in carrying out its 

services, programs, and activities, and meeting its various obligations, the effectiveness of The American National Red Cross will be promoted by the creation 

of an organizational ombudsman who—

(A) will be a neutral or impartial dispute resolution practitioner whose 

major function will be to provide confidential and informal assistance to the 

many internal and external stakeholders of The American National Red 

Cross; 

(B) will report to the chief executive officer and the audit committee of 

the Board of Governors; and 

(C) will have access to anyone and any documents in The American National Red Cross. 

(b) SENSE OF CONGRESS.—It is the sense of Congress that—

(1) charitable organizations are an indispensable part of American society, 

but these organizations can only fulfill their important roles by maintaining the 

trust of the American public; 

(2) trust is fostered by effective governance and transparency, which are the 

principal goals of the recommendations of the Board of Governors in the Governance Report and this Act; 

(3) Federal and State action play an important role in ensuring effective governance and transparency by setting standards, rooting out violations, and informing the public; 

(4) while The American National Red Cross is and will remain a Federally 

chartered instrumentality of the United States, and it has the rights and obligations consistent with that status, The American National Red Cross nevertheless should maintain appropriate communications with State regulators of charitable organizations and should cooperate with them as appropriate in specific 

matters as they arise from time to time; and 

(5) while The American National Red Cross is and will remain a Federally 

chartered instrumentality of the United States, and it has the rights and obligations consistent with that status, The American National Red Cross nevertheless should maintain appropriate communications and collaborations with local, 

community, and faith-based non-profit organizations, including those organizations that work within minority communities. 

SEC. 3. ORGANIZATION. 

Section 300101 of title 36, United States Code, is amended—

(1) in subsection (a), by inserting ‘‘a Federally chartered instrumentality of 

the United States and’’ before ‘‘a body corporate and politic’’; and 

(2) in subsection (b), by inserting at the end the following new sentence: ‘‘The 

corporation may conduct its business and affairs, and otherwise hold itself out, 

as the ‘American Red Cross’ in any jurisdiction.’’. 

SEC. 4. PURPOSES. 

Section 300102 of title 36, United States Code, is amended—

(1) by striking ‘‘and’’ at the end of paragraph (3); 

(2) by striking the period at the end of paragraph (4) and inserting ‘‘; and’’; 

and 

(3) by adding at the end the following paragraph: 

‘‘(5) to conduct other activities consistent with the foregoing purposes.’’. 

SEC. 5. MEMBERSHIP AND CHAPTERS. 

Section 300103 of title 36, United States Code, is amended—

(1) in subsection (a), by inserting ‘‘, or as otherwise provided,’’ before ‘‘in the 

bylaws’’; 

(2) in subsection (b)(1)—

mstockstill on PROD1PC66 with HEARING

4 

(A) by striking ‘‘board of governors’’ and inserting ‘‘corporation’’; and 

(B) by inserting ‘‘policies and’’ before ‘‘regulations related’’; and 

(3) in subsection (b)(2)—

(A) by inserting ‘‘policies and’’ before ‘‘regulations shall require’’; and 

(B) by striking ‘‘national convention’’ and inserting ‘‘annual meeting’’. 

SEC. 6. BOARD OF GOVERNORS. 

Section 300104 of title 36, United States Code, is amended to read as follows: 

‘‘§ 300104. Board of governors 

‘‘(a) BOARD OF GOVERNORS.—

‘‘(1) IN GENERAL.—The board of governors is the governing body of the corporation with all powers of governing and directing, and of overseeing the management of the business and affairs of, the corporation. 

‘‘(2) NUMBER.—The board of governors shall fix by resolution, from time to 

time, the number of members constituting the entire board of governors, provided that—

‘‘(A) as of March 31, 2009, and thereafter, there shall be no fewer than 

12 and no more than 25 members; and 

‘‘(B) as of March 31, 2012, and thereafter, there shall be no fewer than 

12 and no more than 20 members constituting the entire board. 

Procedures to implement the preceding sentence shall be provided in the bylaws. 

‘‘(3) APPOINTMENT.—The governors shall be appointed or elected in the following manner: 

‘‘(A) CHAIRMAN.—

‘‘(i) IN GENERAL.—The board of governors, in accordance with procedures provided in the bylaws, shall recommend to the President an individual to serve as chairman of the board of governors. If such recommendation is approved by the President, the President shall appoint 

such individual to serve as chairman of the board of governors. 

‘‘(ii) VACANCIES.—Vacancies in the office of the chairman, including 

vacancies resulting from the resignation, death, or removal by the 

President of the chairman, shall be filled in the same manner described 

in clause (i). 

‘‘(iii) DUTIES.—The chairman shall be a member of the board of governors and, when present, shall preside at meetings of the board of governors and shall have such other duties and responsibilities as may be 

provided in the bylaws or a resolution of the board of governors. 

‘‘(B) OTHER MEMBERS.—

‘‘(i) IN GENERAL.—Members of the board of governors other than the 

chairman shall be elected at the annual meeting of the corporation in 

accordance with such procedures as may be provided in the bylaws. 

‘‘(ii) VACANCIES.—Vacancies in any such elected board position and in 

any newly created board position may be filled by a vote of the remaining members of the board of governors in accordance with such procedures as may be provided in the bylaws. 

‘‘(b) TERMS OF OFFICE.—

‘‘(1) IN GENERAL.—The term of office of each member of the board of governors 

shall be 3 years, except that—

‘‘(A) the board of governors may provide under the bylaws that the terms 

of office of members of the board of governors elected to the board of governors before March 31, 2012, may be less than 3 years in order to implement the provisions of subparagraphs (A) and (B) of subsection (a)(2); and 

‘‘(B) any member of the board of governors elected by the board to fill a 

vacancy in a board position arising before the expiration of its term may, 

as determined by the board, serve for the remainder of that term or until 

the next annual meeting of the corporation. 

‘‘(2) STAGGERED TERMS.—The terms of office of members of the board of governors (other than the chairman) shall be staggered such that, by March 31, 

2012, and thereafter, 1⁄3 of the entire board (or as near to 1⁄3 as practicable) 

shall be elected at each successive annual meeting of the corporation with the 

term of office of each member of the board of governors elected at an annual 

meeting expiring at the third annual meeting following the annual meeting at 

which such member was elected. 

‘‘(3) TERM LIMITS.—No person may serve as a member of the board of governors for more than such number of terms of office or years as may be provided 

in the bylaws. 

‘‘(c) COMMITTEES AND OFFICERS.—The board— 

mstockstill on PROD1PC66 with HEARING

5 

‘‘(1) may appoint, from its own members, an executive committee to exercise 

such powers of the board when the board is not in session as may be provided 

in the bylaws; ‘‘(2) may appoint such other committees or advisory councils with such powers 

as may be provided in the bylaws or a resolution of the board of governors; ‘‘(3) shall appoint such officers of the corporation, including a chief executive 

officer, with such duties, responsibilities, and terms of office as may be provided 

in the bylaws or a resolution of the board of governors; and ‘‘(4) may remove members of the board of governors (other than the chairman), officers, and employees under such procedures as may be provided in the 

bylaws or a resolution of the board of governors. ‘‘(d) ADVISORY COUNCIL.— ‘‘(1) ESTABLISHMENT.—There shall be an advisory council to the board of gov- ernors. ‘‘(2) MEMBERSHIP; APPOINTMENT BY PRESIDENT.— ‘‘(A) IN GENERAL.—The advisory council shall be composed of no fewer 

than 8 and no more than 10 members, each of whom shall be appointed 

by the President from principal officers of the executive departments and 

senior officers of the Armed Forces whose positions and interests qualify 

them to contribute to carrying out the programs and purposes of the corporation. 

‘‘(B) MEMBERS FROM THE ARMED FORCES.—At least 1, but not more than 

3, of the members of the advisory council shall be selected from the Armed 

Forces. 

‘‘(3) DUTIES.—The advisory council shall advise, report directly to, and meet, 

at least 1 time per year with the board of governors, and shall have such name, 

functions and be subject to such procedures as may be provided in the bylaws. 

‘‘(e) ACTION WITHOUT MEETING.—Any action required or permitted to be taken at 

any meeting of the board of governors or of any committee thereof may be taken 

without a meeting if all members of the board or committee, as the case may be, 

consent thereto in writing, or by electronic transmission and the writing or writings 

or electronic transmission or transmissions are filed with the minutes of proceedings 

of the board or committee. Such filing shall be in paper form if the minutes are 

maintained in paper form and shall be in electronic form if the minutes are maintained in electronic form. 

‘‘(f) VOTING BY PROXY.—

‘‘(1) IN GENERAL.—Voting by proxy is not allowed at any meeting of the board, 

at the annual meeting, or at any meeting of a chapter. 

‘‘(2) EXCEPTION.—The board may allow the election of governors by proxy during any emergency. 

‘‘(g) BYLAWS.—

‘‘(1) IN GENERAL.—The board of governors may—

‘‘(A) at any time adopt bylaws; and 

‘‘(B) at any time adopt bylaws to be effective only in an emergency. 

‘‘(2) EMERGENCY BYLAWS.—Any bylaws adopted pursuant to paragraph (1)(B) 

may provide special procedures necessary for managing the corporation during 

the emergency. All provisions of the regular bylaws consistent with the emergency bylaws remain effective during the emergency. 

‘‘(h) DEFINITIONS.—For purposes of this section—

‘‘(1) the term ‘entire board’ means the total number of members of the board 

of governors that the corporation would have if there were no vacancies; and 

‘‘(2) the term ‘emergency’ shall have such meaning as may be provided in the 

bylaws.’’. 

SEC. 7. POWERS. 

Subsection (a)(1) of section 300105 of title 36, United States Code, is amended by 

striking ‘‘bylaws’’ and inserting ‘‘policies’’. 

SEC. 8. ANNUAL MEETING. 

Section 300107 of title 36, United States Code, is amended to read as follows: 

‘‘§ 300107. Annual meeting 

‘‘(a) IN GENERAL.—The annual meeting of the corporation is the annual meeting 

of delegates of the chapters. 

‘‘(b) TIME OF MEETING.—The annual meeting shall be held as determined by the 

board of governors. 

‘‘(c) PLACE OF MEETING.—The board of governors is authorized to determine that 

the annual meeting shall not be held at any place, but may instead be held solely 

by means of remote communication subject to such procedures as are provided in 

the bylaws. 

mstockstill on PROD1PC66 with HEARING

6 

‘‘(d) VOTING.—

‘‘(1) IN GENERAL.—In matters requiring a vote at the annual meeting, each 

chapter is entitled to at least 1 vote, and voting on all matters may be conducted by mail, telephone, telegram, cablegram, electronic mail, or any other 

means of electronic or telephone transmission, provided that the person voting 

shall state, or submit information from which it can be determined, that the 

method of voting chosen was authorized by such person. 

‘‘(2) ESTABLISHMENT OF NUMBER OF VOTES.—

‘‘(A) IN GENERAL.—The board of governors shall determine on an equitable basis the number of votes that each chapter is entitled to cast, taking 

into consideration the size of the membership of the chapters, the populations served by the chapters, and such other factors as may be determined by the board. 

‘‘(B) PERIODIC REVIEW.—The board of governors shall review the allocation of votes at least every 5 years.’’. 

SEC. 9. ENDOWMENT FUND. 

Section 300109 of title 36, United States Code is amended—

(1) by striking ‘‘nine’’ from the first sentence thereof; and 

(2) by striking the second sentence and inserting the following: ‘‘The corporation shall prescribe policies and regulations on terms and tenure of office, accountability, and expenses of the board of trustees.’’. 

SEC. 10. ANNUAL REPORT AND AUDIT. 

Subsection (a) of section 300110 of title 36, United States Code, is amended to 

read as follows: 

‘‘(a) SUBMISSION OF REPORT.—As soon as practicable after the end of the corporation’s fiscal year, which may be changed from time to time by the board of governors, the corporation shall submit a report to the Secretary of Defense on the activities of the corporation during such fiscal year, including a complete, itemized report of all receipts and expenditures.’’. 

SEC. 11. COMPTROLLER GENERAL OF THE UNITED STATES AND OFFICE OF THE OMBUDSMAN. 

(a) IN GENERAL.—Chapter 3001 of title 36, United States Code, is amended by redesignating section 300111 as section 300113 and by inserting after section 300110 

the following new sections: 

‘‘§ 300111. Authority of the Comptroller General of the United States 

‘‘The Comptroller General of the United States is authorized to review the corporation’s involvement in any Federal program or activity the Government carries 

out under law. 

‘‘§ 300112. Office of the Ombudsman 

‘‘(a) ESTABLISHMENT.—The corporation shall establish an Office of the Ombudsman with such duties and responsibilities as may be provided in the bylaws or a 

resolution of the board of governors. 

‘‘(b) REPORT.—

‘‘(1) IN GENERAL.—The Office of the Ombudsman shall submit annually to the 

appropriate Congressional committees a report concerning any trends and systemic matters that the Office of the Ombudsman has identified as confronting 

the corporation. 

‘‘(2) APPROPRIATE CONGRESSIONAL COMMITTEES.—For purposes of paragraph 

(1), the appropriate Congressional committees are the following committees of 

Congress: 

‘‘(A) SENATE COMMITTEES.—The appropriate Congressional committees of 

the Senate are—

‘‘(i) the Committee on Finance; 

‘‘(ii) the Committee on Foreign Relations; 

‘‘(iii) the Committee on Health, Education, Labor, and Pensions; 

‘‘(iv) the Committee on Homeland Security and Governmental Affairs; 

and 

‘‘(v) the Committee on the Judiciary. 

‘‘(B) HOUSE COMMITTEES.—The appropriate Congressional committees of 

the House of Representatives are—

‘‘(i) the Committee on Energy and Commerce; 

‘‘(ii) the Committee on Foreign Affairs; 

‘‘(iii) the Committee on Homeland Security; 

‘‘(iv) the Committee on the Judiciary; and 

‘‘(v) the Committee on Ways and Means.’’. 

mstockstill on PROD1PC66 with HEARING

7 

(b) CLERICAL AMENDMENT.—The table of sections for chapter 3001 of title 36, 

United States Code, is amended by striking the item relating to section 300111 and 

inserting the following: 

‘‘300111. Authority of the Comptroller General of the United States. 

‘‘300112. Office of the Ombudsman. 

‘‘300113. Reservation of right to amend or repeal.’’. 

SUMMARY

The ‘‘American National Red Cross Governance Modernization 

Act of 2007’’ (H.R. 1681) amends the Congressional Charter of the 

American National Red Cross (hereinafter ‘‘the Red Cross’’) for the 

purposes of modernizing its governance structure and enhancing 

the ability of the Red Cross Board of Governors to support the critical mission of the Red Cross in the 21st century. The bill explicitly 

delegates to Red Cross management the responsibilities for day-today operations; reduces the Board of Governors’ size by more than 

half; creates a single category of governors, changes the process of 

how members are selected; and transitions seven of the Presidentially-appointed governors into a newly created Cabinet Advisory Council. Finally, the bill requires the Red Cross to establish 

an Office of the Ombudsman to improve the whistleblower process 

within the organization. 

BACKGROUND AND PURPOSE

Wherever disaster strikes, the American Red Cross responds. In 

times of crisis, its staff of 35,000 and more than a million volunteers take on the daunting task of translating the compassion of 

the American people into shelter, clothing, and food. When a fire 

puts a family out of its home or a tornado tears through a community, the Red Cross is always on the scene. The Red Cross addressed the needs of people in crises in over 75,000 incidents last 

year alone. But disaster relief organizations such as the American 

Red Cross have come under heightened scrutiny after 9/11 and the 

Gulf Coast hurricanes. Such organizations must now demonstrate 

as never before that they are acting responsibly and in the best interests of the American people. 

The Committee notes that Hurricanes Katrina and Rita, in particular, crystallized the need for reform of the Red Cross. The Committee understands that while the Red Cross performed admirably 

in its relief response, there were also reports of shortcomings in its 

performance. Criticisms and questions were raised about the practicability of the Federal Government’s reliance on a volunteer organization to respond to mass disasters. The Committee notes that 

the Red Cross received numerous complaints about racial insensitivity by Red Cross volunteers toward disaster victims. The Red 

Cross was also criticized for miscounting the number of Hurricane 

Katrina evacuees who were residing in hotels. In addition, news reports stated that Red Cross relief funds were given to persons who 

did not qualify for aid. 

The Committee applauds the leadership of the American Red 

Cross for wisely undertaking a comprehensive review of its governance structure in the aftermath of such criticism. On February 17, 

2006, the Red Cross established the ‘‘Independent Governance Advisory Panel’’ which conducted a six-month, top-to-bottom governance audit to carefully examine Red Cross governance and to provide current examples of ‘‘best practices’’ in for-profit and nonprofit 

mstockstill on PROD1PC66 with HEARING

8 

corporations. The Red Cross asked the Governance Panel to focus 

on the following topics: the size and composition of the Board of 

Governors, participation by and independence of governors and the 

process for selecting candidates for the board; the organization and 

functioning of the Board of Governors, including the composition, 

structure and roles of the board’s committees; the roles and relationships of the Board of Governors and management; the Board of 

Governors’ oversight of the governance practices of the local chapters; and the relationships and lines of reporting between the Audit 

Committee of the Board of Governors, the outside auditor, and the 

internal audit functions, including the whistleblower process as its 

applies to Red Cross employees and volunteers, as well as constituencies served by the Red Cross. 

The Committee notes that after more than 100 interviews of past 

and present Red Cross officers, volunteer chapter leaders, donors 

and others, the panel delivered to the Board of Governors a series 

of recommendations in a more than 150-page report, American Red 

Cross Governance for the 21st Century: A Report of the Board of 

Governors, calling for major reform in the Red Cross’ governance 

structure. On October 30, 2006, the Board of Governors unanimously approved the panel’s recommendations to reform its governance structure. The Committee finds that the last time the Red 

Cross reorganized itself was in 1947. At that time, local chapters 

gained influence by getting seats on the board; however, over the 

years, the board swelled to 50 members. Its unwieldy size and parochial nature made the CEO’s job one of the least secure at any 

American charity. In the past seven years, the Red Cross has had 

three chief executives and three interim executives. The Committee 

observes that the Red Cross managers find themselves at odds with 

a board dominated by local chapter representatives who lack the 

experience required to oversee a large corporation and who are protective of local chapter interests. 

The recommendations unanimously approved by the Board of 

Governors include reducing the size of the board, simplifying the 

board’s structure, eliminating appointed positions on the board and 

replacing them with a Cabinet Advisory Council, clarifying the 

board’s role to focus solely on governance, strategic oversight and 

direction of the Red Cross, and improving the whistleblower functions in the Red Cross. 

The Committee notes that such recommendations require congressional action. On March 15, 2007, the Senate passed the companion bill, S. 655, which was spearheaded by Senator Grassley 

and Senator Kennedy. The Committee held a hearing on March 14, 

2007 on American Red Cross Governance Reform with Chairwoman 

Bonnie McElveen-Hunter and Karen Hastie Williams who headed 

the governance panel. On March 26, 2007, Chairman Tom Lantos 

and Ranking Member Ileana Ros-Lehtinen introduced H.R. 1681, 

the ‘‘The American National Red Cross Governance Modernization 

Act of 2007’’. 

The ‘‘The American National Red Cross Governance Modernization Act of 2007’’: 

(1) Permits the Red Cross to conduct business as the ‘‘American Red Cross’’; 

mstockstill on PROD1PC66 with HEARING

9 

(2) Reduces the Board of Governors from 50 members to between 12 and 25 members by March 31, 2009, and to between 

12 and 20 members by March 31, 2012; 

(3) Reduces Presidential appointees to the Board of Governors from eight to one, with the President appointing the 

chairman of the board; 

(4) Abolishes local chapter selection of 30 board members 

and board selection of 12 members; 

(5) Requires each board member, except the presidential appointee, to be elected by delegates at the Red Cross annual 

convention; 

(6) Establishes a Presidentially-appointed advisory council of 

eight to ten members, who would be officers of executive departments that work with the Red Cross; 

(7) Eliminates the requirement that the number of trustees 

overseeing the Red Cross endowment be fixed at nine; 

(8) Authorizes the Comptroller General to review the Red 

Cross’ involvement in any Federal program or activity that the 

Government carries out by law; and 

(9) Requires the Red Cross to establish an Office of the Ombudsman, which would report annually to Congress. 

The Committee passed H.R. 1681 with a voice vote with two 

amendments to the findings section offered by Congresswoman 

Sheila Jackson Lee to ensure that the local chapters of the Red 

Cross are geographically and regionally diverse and that the Red 

Cross should maintain appropriate communications and collaborations with local, community, and faith-based nonprofit organizations, including those organizations that work within minority communities. 

In addition, the Committee has expressed concern about Red 

Cross’ transparency and accountability through accessibility and 

reporting, as reflected by Ranking Republican Member Ileana RosLehtinen’s inquiries at the March 14, 2007, hearing on this subject. 

After engaging in a dialogue with the Red Cross on ways to improve the transparency and accountability of the Red Cross, the 

Red Cross presented a paper on Red Cross practices to ensure corporate compliance and transparency through accessibility and reporting. The Committee is satisfied that the Red Cross has addressed the Committee’s concerns on transparency and accountability. 

While the changes in H.R. 1681 would not directly affect the organization’s disaster response, the Committee believes they will 

undoubtedly help promote the kind of leadership necessary to make 

Red Cross management and operations run more smoothly. 

HEARINGS

In the 110th Congress, the Committee held a hearing on March 

14, 2007, on American Red Cross Governance Reform with Chairman of the Red Cross, Bonnie McElveen-Hunter, and Chair of the 

Independent Governance Advisory Panel, Karen Hastie Williams. 

mstockstill on PROD1PC66 with HEARING

10 

COMMITTEE CONSIDERATION

The Committee marked up H.R. 1681 on March 27, 2007. The 

bill was reported favorably, as amended, by voice vote, a quorum 

being present. 

VOTES OF THE COMMITTEE

Clause (3)(b) of rule XIII of the Rules of the House of Representatives requires that the results of each record vote on an amendment or motion to report, together with the names of those voting 

for or against, be printed in the Committee Report. There were no 

votes during consideration of H.R. 1681. 

COMMITTEE OVERSIGHT FINDINGS

In compliance with clause 3(c)(1) of rule XIII of the Rules of the 

House of Representatives, the Committee reports that the findings 

and recommendations of the Committee, based on oversight activities under clause 2(b)(1) of rule X of the Rules of the House of Representatives, are incorporated in the descriptive portions of this report. 

NEW BUDGET AUTHORITY AND TAX EXPENDITURES

Clause 3(c) (2) of House Rule XIII is inapplicable because this 

legislation does not provide new budgetary authority or increased 

tax expenditures. 

CONGRESSIONAL BUDGET OFFICE COST ESTIMATE

In compliance with clause 3(c)(3) of rule XIII of the Rules of the 

House of Representatives, the Committee sets forth, with respect to 

the bill, H.R. 1681, the following estimate and comparison prepared 

by the Director of the Congressional Budget Office under Section 

402 of the Congressional Budget Act of 1974: 

U.S. CONGRESS, CONGRESSIONAL BUDGET OFFICE, Washington, DC, April 2, 2007. 

Hon. TOM LANTOS, Chairman, 

Committee on Foreign Affairs, 

House of Representatives, Washington, DC. 

DEAR MR. CHAIRMAN: The Congressional Budget Office has prepared the enclosed cost estimate for H.R. 1681, the American National Red Cross Governance Modernization Act of 2007. 

If you wish further details on this estimate, we will be pleased 

to provide them. The CBO staff contact is Sarah Puro, who can be 

reached at 226–2860. 

Sincerely, 

PETER R. ORSZAG. 

Enclosure. 

H.R. 1681—American National Red Cross Governance Modernization Act of 2007 

H.R. 1681 would make amendments to the Congressional charter 

of the American National Red Cross. CBO estimates that enacting 

mstockstill on PROD1PC66 with HEARING

11 

H.R. 1681 would have no impact on the federal budget. Enacting 

the legislation would not affect direct spending or revenues. 

H.R. 1681 contains no intergovernmental or private-sector mandates as defined in the Unfunded Mandates Reform Act and would 

not affect the budgets of state, local, or tribal governments. 

H.R. 1681 would amend the charter of the American National 

Red Cross by limiting the number of members of the Board of Governors to no more than 20 by 2012 and changing the process by 

which the members of the Board of Governors are appointed. The 

bill also would establish an Office of the Ombudsman within the 

Red Cross and an Advisory Council composed of eight to 10 senior 

federal employees. Because the operations of the Red Cross are not 

reflected in the federal budget, CBO estimates that enacting H.R. 

1681 would have no budgetary impact. 

The CBO staff contact for this estimate is Sarah Puro, who can 

be reached at 226–2860. This estimate was approved by Peter H. 

Fontaine, Deputy Assistant Director for Budget Analysis. 

INTERGOVERNMENTAL AND PRIVATE SECTOR IMPACT

H.R. 1681 contains no intergovernmental or private-sector mandates as defined in UMRA and would not affect the budgets of 

state, local, or tribal governments. 

PERFORMANCE GOALS AND OBJECTIVES

Pursuant to clause (3)(c) of House rule XIII, upon enactment of 

this legislation, the Red Cross should modernize its governance 

structure and enhancing the ability of the Red Cross Board of Governors to support the critical mission of the Red Cross in the 21st 

century. 

CONSTITUTIONAL AUTHORITY STATEMENT

Pursuant to clause 3(d) (1) of rule XIII of the Rules of the House 

of Representatives, the Committee finds the authority for this legislation in article I, section 8 of the Constitution. 

NEW ADVISORY COMMITTEES

H.R. 1681 establishes a Federal advisory council to the Board of 

Governors composed of eight to 10 presidential appointees, with at 

least one but no more than three from the Armed Forces. 

CONGRESSIONAL ACCOUNTABILITY ACT

H.R. 1681 does not apply to the Legislative Branch. 

EARMARK IDENTIFICATION

H.R. 1681 does not contain any congressional earmarks, limited 

tax benefits, or limited tariff benefits as defined in clause 9(d), 9(e), 

or 9(f) of rule XXI. 

mstockstill on PROD1PC66 with HEARING

12 

SECTION-BY-SECTION ANALYSIS AND DISCUSSION

Section 1. Short title 

This section states that the act may be referred to as the ‘‘The 

American National Red Cross Governance Modernization Act of 

2007’’. 

Section 2. Findings; Sense of Congress 

This section contains congressional findings describing the background and need for changes to the congressional charter of the 

Red Cross that would improve the governance structure of the organization. The findings note that substantive changes to the congressional charter of the Red Cross have not been made since 1947. 

It also details the results and recommendations of the independent 

governance audit that was commissioned by the Board of Governors of the Red Cross on the board’s role, composition, size, and 

relationship with management, governance relationship with chartered units of the Red Cross, and whistleblower and audit functions. 

The findings highlight the importance of improving the governance structure of the Red Cross, including the governance and strategic oversight of the Board of Governors of the organization. The 

findings also identify the importance of ensuring geographically 

and regionally diverse chapters. In addition, the findings include a 

provision stressing the need for the Red Cross to maintain appropriate communications and collaborations with local, community, 

and faith-based nonprofit organizations, including organizations 

that work within minority communities. 

This section also contains a Sense of Congress which states that 

charitable organizations are an indispensable part of American society, and they must maintain the trust of the American public 

which is fostered by effective governance and transparency. The 

Sense of Congress provisions discuss the important role Federal 

and State action play in ensuring effective governance and transparency of the organization by setting standards, rooting out violations, and informing the public; and recommends that the Red 

Cross should maintain appropriate communications and cooperate 

with State regulators of charitable organizations to ensure effective 

governance and transparency. 

Section 3. Organization 

Section 3 amends Section 300101 of title 36 of the United States 

Code by: (1) adding that the Red Cross is a Federally chartered instrumentality of the United States in the description of the organization; and (2) authorizing the organization to conduct its business 

and affairs under the name of the ‘‘American Red Cross’’ in any jurisdiction. 

Section 4. Purposes 

Section 4 amends Section 300102 of title 36 of the United States 

Code by making technical changes and providing an additional purpose for the Red Cross to conduct other activities that are consistent with the activities the Red Cross has been historically authorized to carry out. 

mstockstill on PROD1PC66 with HEARING

13 

Section 5. Membership and chapters 

Section 5 amends Section 300103 of title 36 of the United States 

Code by authorizing the corporation, rather than the Board of Governors as previously authorized, to prescribe the policies and regulations relating to the Red Cross chapters. In addition, the section 

amends the charter by providing that delegates will be selected to 

the annual meeting rather than the national convention as previously authorized. The section makes additional technical changes 

to Section 300103 of title 36 of the United States Code. 

Section 6. Board of Governors 

Section 6 amends Section 300104 of title 36 of the United States 

Code by amending the Board of Governor’s role, size, composition, 

and relationship with management. This section bestows on the 

Board of Governors ‘‘all powers of governing and directing, and of 

overseeing the management of the business and affairs of the corporation.’’ This section also reduces the size of the Board of Governors from 50 members to between 12 and 25 members by March 

31, 2009, and to between 12 and 20 members by March 31, 2012. 

It provides that the chairman of the Board of Governors will be appointed by the President with recommendations from the Board of 

Governors and that vacancies in the office of the chairman must be 

filled in the same manner. 

The chairman will act as a member of the Board of Governors 

and shall preside at the board meetings. The other members of the 

Board of Governors shall be elected at the Red Cross annual meeting and any vacancies in any elected board position and in any 

newly created board position may be filled by a vote of the remaining board members. The section determines the term of office of 

each board member as 3 years, with the exception of board members elected under the provisions of subparagraphs (A) and (B) of 

subsection (a)(2), and those board members elected by the board to 

fill a vacancy. It also provides for staggered terms such that, by 

March 31, 2012, and thereafter, one-third of the entire board must 

be elected at each successive annual meeting of the Red Cross, and 

term limits as provided in the Red Cross bylaws. The Committee 

notes that the changes reflected in this section are generally consistent with the relationship that national societies in other countries have to their governments as autonomous auxiliaries to public 

authorities in each such country. 

The section provides the board with the power to appoint an executive committee to exercise such powers of the board when the 

board is not in session and other committees or advisory councils 

with such powers as the bylaws or a resolution by the Board of 

Governors may provide. In addition, the board is required to appoint officers of the corporation, including a chief executive officer, 

and has the authority to remove members of the Board of Governors, other than the chairman, officers, and employees under the 

bylaws or a resolution of the Board of Governors. 

Section 6 also establishes a Federal advisory council to the Board 

of Governors composed of eight to 10 presidential appointees, with 

at least one but no more than three from the Armed Forces. The 

section does not confer any powers to the council. This section provides exceptions for when action by the Board of Governors may be 

taken without a meeting; in addition, it does not allow voting by 

mstockstill on PROD1PC66 with HEARING

14 

proxy at any meeting of the board or a chapter, or at the annual 

meeting except the board may allow the election of governors by 

proxy during an emergency. Finally, the section allows the Board 

of Governors to adopt bylaws at any time, including bylaws that 

would be effective in an emergency. 

Section 7. Powers 

Section 7 amends Paragraph (a)(1) of section 300105 of title 36 

of the United States Code by removing the power of the corporation 

to adopt bylaws, but instead to adopt policies. 

Section 8. Annual meeting 

Section 8 amends Section 300107 of title 36 of the United States 

Code by defining the annual meeting, designating the time and 

place of the annual meeting, and determining the voting guidelines 

and requirements for the annual meeting. 

Section 9. Endowment fund 

Section 9 amends Section 300109 of title 36 of the United States 

Code by eliminating the requirement that the number of trustees 

overseeing the Red Cross endowment be fixed at nine and gives the 

corporation, rather than the Board of Governors, the authority of 

prescribing the policies and regulations on the terms and tenure of 

office, accountability, and expenses of the board of trustees. 

Section 10. Annual report and audit 

Section 10 amends section 300110(a) of title 36 of the United 

States Code by requiring the corporation to submit a report at the 

end of the corporation’s fiscal year, which may be changed by the 

Board of Governors, to the Secretary of Defense on the activities 

of the corporation during such fiscal year. 

Section 11. Comptroller General of the United States and the Office 

of the Ombudsman 

Section 11 amends Chapter 3001 of title 36 of the United States 

Code by adding new sections 300111 and 300112. 

Section 300111 authorizes the Comptroller General of the United 

States to review the Red Cross’ involvement in any Federal program or activity the U.S. Government carries out under law. 

Section 300112 establishes an Office of the Ombudsman which 

reports annually to Congress on any trends and systemic matters 

that the Office of the Ombudsman identifies as confronting the Red 

Cross. The report would be submitted to the Senate Committee on 

Finance, the Senate Committee on Foreign Relations, the Senate 

Committee on Health, Education, Labor, and Pensions, the Senate 

Committee on Homeland Security and Governmental Affairs, and 

the Senate Committee on the Judiciary. The report would also be 

submitted to the House Committee on Energy and Commerce, the 

House Committee on Foreign Affairs, the House Committee on 

Homeland Security, the House Committee on the Judiciary, and 

the House Committee on Ways and Means. 

CHANGES IN EXISTING LAW MADE BY THE BILL, AS REPORTED

In compliance with clause 3(e) of rule XIII of the Rules of the 

House of Representatives, changes in existing law made by the bill, 

mstockstill on PROD1PC66 with HEARING

15 

as reported, are shown as follows (existing law proposed to be omitted is enclosed in black brackets, new matter is printed in italic, 

existing law in which no change is proposed is shown in roman): 

TITLE 36, UNITED STATES CODE 

* * * * * * * 

SUBTITLE III—TREATY OBLIGATION 

ORGANIZATIONS 

CHAPTER 3001—THE AMERICAN NATIONAL RED CROSS 

Sec. 

300101. Organization. 

* * * * * * * 

ø300111. Reservation of right to amend or repeal.¿ 

300111. Authority of the Comptroller General of the United States. 

300112. Office of the Ombudsman. 

300113. Reservation of right to amend or repeal. 

* * * * * * * 

§ 300101. Organization 

(a) FEDERAL CHARTER.—The American National Red Cross (in 

this chapter, the ‘‘corporation’’) is a Federally chartered instrumentality of the United States and a body corporate and politic in the 

District of Columbia. 

(b) NAME.—The name of the corporation is ‘‘The American National Red Cross’’. The corporation may conduct its business and affairs, and otherwise hold itself out, as the ‘‘American Red Cross’’ in 

any jurisdiction. 

* * * * * * * 

§ 300102. Purposes 

The purposes of the corporation are—

(1) * * * 

* * * * * * * 

(3) to act in matters of voluntary relief and in accordance 

with the military authorities as a medium of communication 

between the people of the United States and the Armed Forces 

of the United States and to act in those matters between similar national societies of governments of other countries through 

the International Committee of the Red Cross and the Government, the people, and the Armed Forces of the United States; 

øand¿ 

(4) to carry out a system of national and international relief 

in time of peace, and to apply that system in mitigating the 

suffering caused by pestilence, famine, fire, floods, and other 

great national calamities, and to devise and carry out measures for preventing those calamitiesø.¿; and 

(5) to conduct other activities consistent with the foregoing 

purposes. 

mstockstill on PROD1PC66 with HEARING

16 

§ 300103. Membership and chapters 

(a) MEMBERSHIP.—Membership in the corporation is open to all 

the people of the United States and its territories and possessions, 

on payment of an amount specified, or as otherwise provided, in the 

bylaws. 

(b) CHAPTERS.—(1) The chapters of the corporation are the local 

units of the corporation. The øboard of governors¿ corporation shall 

prescribe policies and regulations related to—

(A) * * * 

* * * * * * * 

(2) The policies and regulations shall require that each chapter 

adhere to the democratic principles of election specified in the bylaws in electing the governing body of the chapter and selecting 

delegates to the ønational convention¿ annual meeting of the corporation. 

ø§ 300104. Board of governors 

ø(a) BOARD OF GOVERNORS.—(1) The board of governors is the 

governing body of the corporation with all powers of governing and 

managing the corporation. The board has 50 members. The governors shall be appointed or elected in the following manner: 

ø(A) The President shall appoint eight governors, one of 

whom the President shall designate to act as the principal officer of the corporation with the title and functions provided in 

the bylaws. The other governors appointed by the President 

shall be officials of departments and agencies of the United 

States Government, whose positions and interests qualify them 

to contribute to carrying out the programs and purposes of the 

corporation. At least one, but not more than three, of those officials shall be selected from the Armed Forces. 

ø(B) The chapters shall elect 30 governors at the national 

convention under procedures for nomination and election that 

ensure equitable representation of all chapters, with regard to 

geographical considerations, the size of the chapters, and the 

size of the populations served by the chapters. 

ø(C) The board shall elect 12 governors as members-at-large. 

Those governors shall be individuals who are representative of 

the national interests that the corporation serves, and with 

which it is desirable that the corporation have close association. 

ø(2) One-third of the members elected to the board shall be elected at each national convention, and take office at that time or as 

soon as practicable after the convention. 

ø(b) TERM OF OFFICE AND VACANCIES.—(1) The term of office of 

each governor is 3 years. However, the term of office of a governor 

appointed by the President (except the principal officer of the corporation) expires if, before the end of the 3-year term, the governor 

retires from the official position held at the time of appointment as 

a governor. 

ø(2) The President shall fill as soon as practicable a vacancy in 

the office of the principal officer of the corporation or in the position of another governor appointed by the President. The board 

shall make a temporary appointment to fill a vacancy occurring in 

mstockstill on PROD1PC66 with HEARING

17 

an elected position on the board. An individual appointed by the 

board to fill a vacancy serves until the next national convention. 

ø(c) EXECUTIVE COMMITTEE.—The board may—

ø(1) appoint, from its own members, an executive committee 

of at least 11 individuals to exercise the powers of the board 

when the board is not in session; and 

ø(2) appoint and remove, or provide for the appointment and 

removal of, officers and employees of the corporation, except 

the principal officer of the corporation. 

ø(d) VOTING BY PROXY.—Voting by proxy is not allowed at any 

meeting of the board, at the national convention, or at any meeting 

of a chapter. However, the board may allow the election of governors by proxy at the national convention if the board believes a 

national emergency makes attendance at the national convention 

impossible.¿ 

§ 300104. Board of governors 

(a) BOARD OF GOVERNORS.—

(1) IN GENERAL.—The board of governors is the governing 

body of the corporation with all powers of governing and directing, and of overseeing the management of the business and affairs of, the corporation. 

(2) NUMBER.—The board of governors shall fix by resolution, 

from time to time, the number of members constituting the entire board of governors, provided that—

(A) as of March 31, 2009, and thereafter, there shall be 

no fewer than 12 and no more than 25 members; and 

(B) as of March 31, 2012, and thereafter, there shall be 

no fewer than 12 and no more than 20 members constituting the entire board. 

Procedures to implement the preceding sentence shall be provided in the bylaws. 

(3) APPOINTMENT.—The governors shall be appointed or elected in the following manner: 

(A) CHAIRMAN.—

(i) IN GENERAL.—The board of governors, in accordance with procedures provided in the bylaws, shall recommend to the President an individual to serve as 

chairman of the board of governors. If such recommendation is approved by the President, the President shall appoint such individual to serve as chairman of the board of governors. 

(ii) VACANCIES.—Vacancies in the office of the chairman, including vacancies resulting from the resignation, death, or removal by the President of the chairman, shall be filled in the same manner described in 

clause (i). 

(iii) DUTIES.—The chairman shall be a member of 

the board of governors and, when present, shall preside 

at meetings of the board of governors and shall have 

such other duties and responsibilities as may be provided in the bylaws or a resolution of the board of governors. 

(B) OTHER MEMBERS.—

mstockstill on PROD1PC66 with HEARING

18 

(i) IN GENERAL.—Members of the board of governors 

other than the chairman shall be elected at the annual 

meeting of the corporation in accordance with such 

procedures as may be provided in the bylaws. 

(ii) VACANCIES.—Vacancies in any such elected board 

position and in any newly created board position may 

be filled by a vote of the remaining members of the 

board of governors in accordance with such procedures 

as may be provided in the bylaws. 

(b) TERMS OF OFFICE.— (1) IN GENERAL.—The term of office of each member of the 

board of governors shall be 3 years, except that— (A) the board of governors may provide under the bylaws 

that the terms of office of members of the board of governors elected to the board of governors before March 31, 

2012, may be less than 3 years in order to implement the 

provisions of subparagraphs (A) and (B) of subsection 

(a)(2); and 

(B) any member of the board of governors elected by the 

board to fill a vacancy in a board position arising before 

the expiration of its term may, as determined by the board, 

serve for the remainder of that term or until the next annual meeting of the corporation. 

(2) STAGGERED TERMS.—The terms of office of members of the 

board of governors (other than the chairman) shall be staggered 

such that, by March 31, 2012, and thereafter, 1⁄3 of the entire 

board (or as near to 1⁄3 as practicable) shall be elected at each 

successive annual meeting of the corporation with the term of 

office of each member of the board of governors elected at an 

annual meeting expiring at the third annual meeting following 

the annual meeting at which such member was elected. 

(3) TERM LIMITS.—No person may serve as a member of the 

board of governors for more than such number of terms of office 

or years as may be provided in the bylaws. 

(c) COMMITTEES AND OFFICERS.—The board— 

(1) may appoint, from its own members, an executive committee to exercise such powers of the board when the board is 

not in session as may be provided in the bylaws; 

(2) may appoint such other committees or advisory councils 

with such powers as may be provided in the bylaws or a resolution of the board of governors; 

(3) shall appoint such officers of the corporation, including a 

chief executive officer, with such duties, responsibilities, and 

terms of office as may be provided in the bylaws or a resolution 

of the board of governors; and 

(4) may remove members of the board of governors (other 

than the chairman), officers, and employees under such procedures as may be provided in the bylaws or a resolution of the 

board of governors. 

(d) ADVISORY COUNCIL.— (1) ESTABLISHMENT.—There shall be an advisory council to 

the board of governors. 

(2) MEMBERSHIP; APPOINTMENT BY PRESIDENT.— 

(A) IN GENERAL.—The advisory council shall be composed 

of no fewer than 8 and no more than 10 members, each of 

mstockstill on PROD1PC66 with HEARING

19 

whom shall be appointed by the President from principal 

officers of the executive departments and senior officers of 

the Armed Forces whose positions and interests qualify 

them to contribute to carrying out the programs and purposes of the corporation. 

(B) MEMBERS FROM THE ARMED FORCES.—At least 1, but 

not more than 3, of the members of the advisory council 

shall be selected from the Armed Forces. 

(3) DUTIES.—The advisory council shall advise, report directly to, and meet, at least 1 time per year with the board of 

governors, and shall have such name, functions and be subject 

to such procedures as may be provided in the bylaws. 

(e) ACTION WITHOUT MEETING.—Any action required or permitted 

to be taken at any meeting of the board of governors or of any committee thereof may be taken without a meeting if all members of the 

board or committee, as the case may be, consent thereto in writing, 

or by electronic transmission and the writing or writings or electronic transmission or transmissions are filed with the minutes of 

proceedings of the board or committee. Such filing shall be in paper 

form if the minutes are maintained in paper form and shall be in 

electronic form if the minutes are maintained in electronic form. 

(f) VOTING BY PROXY.— (1) IN GENERAL.—Voting by proxy is not allowed at any meeting of the board, at the annual meeting, or at any meeting of 

a chapter. 

(2) EXCEPTION.—The board may allow the election of governors by proxy during any emergency. 

(g) BYLAWS.— (1) IN GENERAL.—The board of governors may— (A) at any time adopt bylaws; and 

(B) at any time adopt bylaws to be effective only in an 

emergency. 

(2) EMERGENCY BYLAWS.—Any bylaws adopted pursuant to 

paragraph (1)(B) may provide special procedures necessary for 

managing the corporation during the emergency. All provisions 

of the regular bylaws consistent with the emergency bylaws remain effective during the emergency. 

(h) DEFINITIONS.—For purposes of this section—

(1) the term ‘‘entire board’’ means the total number of members of the board of governors that the corporation would have 

if there were no vacancies; and 

(2) the term ‘‘emergency’’ shall have such meaning as may be 

provided in the bylaws. 

§ 300105. Powers 

(a) GENERAL.—The corporation may—

(1) adopt øbylaws¿ policies and regulations; 

* * * * * * * 

ø§ 300107. Annual meeting 

øThe annual meeting of the corporation is the national convention of delegates of the chapters. The national convention shall be 

held annually on a date and at a place specified by the board of 

governors. In matters requiring a vote at the national convention, 

mstockstill on PROD1PC66 with HEARING

20 

each chapter is entitled to at least one vote. The board shall determine on an equitable basis the number of votes that each chapter 

is entitled to cast, taking into consideration the size of the membership of the chapters and of the populations served by the chapters. 

The board shall review the allocation of votes at least every 5 

years.¿ 

§ 300107. Annual meeting 

(a) IN GENERAL.—The annual meeting of the corporation is the 

annual meeting of delegates of the chapters. 

(b) TIME OF MEETING.—The annual meeting shall be held as determined by the board of governors. 

(c) PLACE OF MEETING.—The board of governors is authorized to 

determine that the annual meeting shall not be held at any place, 

but may instead be held solely by means of remote communication 

subject to such procedures as are provided in the bylaws. 

(d) VOTING.— (1) IN GENERAL.—In matters requiring a vote at the annual 

meeting, each chapter is entitled to at least 1 vote, and voting 

on all matters may be conducted by mail, telephone, telegram, 

cablegram, electronic mail, or any other means of electronic or 

telephone transmission, provided that the person voting shall 

state, or submit information from which it can be determined, 

that the method of voting chosen was authorized by such person. 

(2) ESTABLISHMENT OF NUMBER OF VOTES.— (A) IN GENERAL.—The board of governors shall determine 

on an equitable basis the number of votes that each chapter 

is entitled to cast, taking into consideration the size of the 

membership of the chapters, the populations served by the 

chapters, and such other factors as may be determined by 

the board. 

(B) PERIODIC REVIEW.—The board of governors shall review the allocation of votes at least every 5 years. 

* * * * * * * 

§ 300109. Endowment fund 

The endowment fund of the corporation shall be kept and invested under the management and control of a board of ønine¿ 

trustees elected by the board of governors. øThe board of governors 

shall prescribe regulations on terms and tenure of office, accountability, and expenses of the board of trustees.¿ The corporation 

shall prescribe policies and regulations on terms and tenure of office, accountability, and expenses of the board of trustees. 

§ 300110. Annual report and audit 

ø(a) SUBMISSION OF REPORT.—As soon as practicable after July 

1 of each year, the corporation shall submit a report to the Secretary of Defense on the activities of the corporation during the fiscal year ending June 30, including a complete, itemized report of 

all receipts and expenditures.¿ 

(a) SUBMISSION OF REPORT.—As soon as practicable after the end 

of the corporation’s fiscal year, which may be changed from time to 

time by the board of governors, the corporation shall submit a remstockstill on PROD1PC66 with HEARING

21 

port to the Secretary of Defense on the activities of the corporation 

during such fiscal year, including a complete, itemized report of all 

receipts and expenditures. 

* * * * * * * 

§ 300111. Authority of the Comptroller General of the United 

States 

The Comptroller General of the United States is authorized to review the corporation’s involvement in any Federal program or activity the Government carries out under law. 

§ 300112. Office of the Ombudsman 

(a) ESTABLISHMENT.—The corporation shall establish an Office of 

the Ombudsman with such duties and responsibilities as may be 

provided in the bylaws or a resolution of the board of governors. 

(b) REPORT.—

(1) IN GENERAL.—The Office of the Ombudsman shall submit 

annually to the appropriate Congressional committees a report 

concerning any trends and systemic matters that the Office of 

the Ombudsman has identified as confronting the corporation. 

(2) APPROPRIATE CONGRESSIONAL COMMITTEES.—For purposes of paragraph (1), the appropriate Congressional committees are the following committees of Congress: 

(A) SENATE COMMITTEES.—The appropriate Congressional committees of the Senate are—

(i) the Committee on Finance; 

(ii) the Committee on Foreign Relations; 

(iii) the Committee on Health, Education, Labor, and 

Pensions; 

(iv) the Committee on Homeland Security and Governmental Affairs; and 

(v) the Committee on the Judiciary. 

(B) HOUSE COMMITTEES.—The appropriate Congressional 

committees of the House of Representatives are—

(i) the Committee on Energy and Commerce; 

(ii) the Committee on Foreign Affairs; 

(iii) the Committee on Homeland Security; 

(iv) the Committee on the Judiciary; and 

(v) the Committee on Ways and Means. 

§ ø300111.¿ 300113. Reservation of right to amend or repeal 

Congress reserves the right to amend or repeal the provisions of 

this chapter. 

* * * * * * * 

mstockstill on PROD1PC66 with HEARING

mstockstill on PROD1PC66 with HEARING

(23) 

AMERICAN RED CROSS CORPORATE COMPLIANCE AND ETHICS

A REPORT TO THE HOUSE COMMITTEE ON FOREIGN AFFAIRS—MARCH

2007

Over the past several years, and particular since passage of the 

Sarbanes Oxley Act in 2002 (Pub. L. No. 107–204, 116 Stat. 745), 

the American National Red Cross has taken a holistic approach to 

voluntarily implement corporate ethics and compliance practices. 

To achieve this, the American Red Cross has incorporated some 

of the best practices from the corporate and nonprofit sectors, 

which include the refinement of its internal and independent external audits, whistleblower reporting and protections, enterprise risk 

management, a unit focused on Investigations, Compliance and 

Ethics (ICE), and most recently, the creation of the Office of the 

Ombudsman. 

At the center of corporate compliance is the Board of Governor’s 

Audit and Risk Management Committee, which receives and reviews reports presented by these independent units. 

Through these internal and external functions, the American Red 

Cross endeavors to achieve system-wide corporate compliance. In 

addition, the organization strives to meet the expectations of transparency and accountability of the United States Congress, internal 

employee and volunteer stakeholders, and external stakeholders 

such as clients, donors, suppliers, partners, and the American public. As an independent 501(c)(3) nonprofit organization, the American Red Cross relies on the generosity of the American public to 

fulfill its mission. The American Red Cross takes seriously all allegations of waste, fraud and abuse as well as other complaints 

against the organization. Allegations of illegal and unethical activities are fully investigated and, if necessary, reported to appropriate 

authorities for further action. Fostering such faith, trust and confidence with the American public is an imperative. 

This document will identify the various aspects of corporate compliance, as well Red Cross practices to ensure transparency 

through accessibility and reporting. 

Red Cross Board of Governor’s Audit and Risk Management Committee 

The Audit and Risk Management Committee of the American 

Red Cross Board of Governors oversees the integrity of the financial statements of the organization, the qualifications and independence of the organization’s independent auditors, the performance of the external and internal auditors, investigations, the organization’s enterprise risk management functions, the organization’s 

compliance with legal and regulatory requirements, and the Ombudsman. It is composed of entirely independent directors of the 

Red Cross, and members of the Committee must possess qualificamstockstill on PROD1PC66 with HEARING

24 

1The Red Cross also has a Biomedical Response Line (BRL), which allows individuals to report anonymously and confidentially any issues involving biomedical services or FDA compliance 

issues. These issues are addressed by the Biomedical Services Quality and Regulatory Affairs 

group. 

tions and financial knowledge that enable them to discharge the responsibilities of the committee. At least one member is required to 

be a ‘‘financial expert.’’

Audits 

Both internal and external audit functions of the American Red 

Cross report directly to the Audit and Risk Management Committee of the Board of Governors. 

The internal audit services, led by a Chief Audit Executive, is authorized to examine all aspects of the American Red Cross including but not limited to national headquarters, blood services and 

chapters. During their review, the auditors are given complete access to manual and electronic records, properties and personnel. 

Moreover, to ensure impartial and unbiased actions, they are fully 

independent of the activities they audit. The Chief Audit Executive 

has direct access to the Audit and Risk Management Committee 

and reports functionally and directly to the Committee and administratively to the CEO. 

The external audit services, conducted by KPMG LLP, review the 

financial statements and related financial controls of the American 

Red Cross. To ensure impartiality, the lead partner rotates every 

five years. 

Investigations, Compliance and Ethics (ICE) 

The Investigations, Compliance and Ethics (ICE) Unit at the 

American Red Cross is the central investigatory unit charged with 

investigating allegations of waste, fraud and abuse. The ICE unit 

is led by a Vice President, who reports to the organization’s General Counsel, and consists of more than 40 investigators and compliance and ethics specialists. 

The American Red Cross encourages all employees and volunteers to alert their supervisors directly if they suspect a dishonest 

act. If employees or volunteers are not comfortable contacting management, they may call the 24-hour, toll-free Concern Connection 

Line (CCL), which is overseen by ICE. Through this toll-free number, the CCL allows any employee or volunteer to report confidentially and anonymously any allegation of waste, fraud or abuse. 

The Red Cross provides whistleblower protections and a ‘‘no retaliation’’ policy to all Red Cross employees and volunteers.1

The American Red Cross is committed to the highest standards 

of ethics and workplace conduct. All staff and volunteers are required to read and sign the Code of Business Ethics and Conduct, 

which provides the guidance necessary for Red Cross employees 

and volunteers to maintain an environment of integrity. In that regard, ICE oversees Red Cross ethics policy and training programs, 

including the aforementioned Code of Business Ethics and Conduct. 

Through training, volunteers and employees will be more familiar 

with a culture of values and ethics and will know how to report instances of unethical behavior. 

mstockstill on PROD1PC66 with HEARING

25 

The ICE unit also manages the Office of Corporate Compliance 

(which handles grants compliance). In conducting investigations, 

the unit has unfettered access to all organizational records, physical properties, and individuals. The Vice President of ICE reports 

regularly to the President and Chief Executive Officer, senior management, and the Audit and Risk Management Committee of the 

Board of Governors. 

Enterprise risk management 

In an effort to mitigate risk by the corporation, the American 

Red Cross has appointed a Chief Risk Officer who is charged with 

developing an enterprise risk management (ERM) program for the 

entire organization. Modeled on the best practices of corporate 

America as a means to better protect corporate assets, enterprise 

risk establishes a disciplined approach for the organization’s various business units to identify, evaluate, manage and report risks 

and opportunities. 

The Red Cross ERM Unit provides counsel to business units to 

identify, evaluate, and mitigate risk; enhance decision-making at 

all levels by requiring a clear articulation between business objectives and risk versus reward; assist in identifying insufficient internal controls (particularly in the areas of waste, fraud and abuse); 

and provide the Board’s Audit and Risk Management Committee 

with information regarding the corporate level risks and mitigation. 

Office of the Ombudsman 

Most recently, the American Red Cross has created an Office of 

the Ombudsman. This office will act as a neutral and impartial dispute resolution center whose major function will be to provide confidential and informal assistance to the many internal and external 

constituents with concerns or complaints about the American Red 

Cross. The Office of the Ombudsman will have unfettered access to 

the entire corporation and all personnel, corporate reports, documents, and will report directly to the organization’s Chief Executive Officer and on a regular basis to the Audit and Risk Management Committee of the Board of Governors. 

In addition to conflict resolution, the Office of the Ombudsman 

will report annually to the U.S. Congressional Committees of jurisdiction, areas and types of concerns, including trends and systemic 

matters that the Ombudsman determines to be confronting the organization. As a practice, these reports will also be made available 

to the public through the Red Cross external website, 

www.redcross.org. 

American Red Cross transparency 

The American Red Cross endeavors to achieve enhanced corporate transparency and accountability to internal and external 

stakeholders. One mechanism is the public website, 

www.redcross.org. The American Red Cross will make available on 

that public website detailed information of the programs described 

above explaining the Red Cross corporate compliance and ethics 

programs, including audits, investigations (ICE), the Office of the 

Ombudsman, the Concerned Connection Line (CCL) and Biomstockstill on PROD1PC66 with HEARING

26 

2To protect the confidentiality and integrity of clients to the Ombudsman and ICE investigations, the American Red Cross will redact any confidential, identifying, or proprietary information as necessary. 

medical Response Line (BRL), and Enterprise Risk Management 

(ERM), as well as contact information for each of these units. 

Additionally, the Red Cross will fulfill reporting requirements to 

the U.S. Congress and regulatory agencies and will make these reports available to the American public through its external website, 

www.redcross.org.2

The American Red Cross is committed to be transparent and accountable to the American public. As such, the American Red Cross 

already makes available, in its entirety, the annual IRS Form 990, 

external independent audit, and consolidated financial statements 

on its external website, www.redcross.org. In addition, the Red 

Cross requires chapters to share copies of their annual audit and/ 

or annual report in response to any public inquiries about local Red 

Cross activities. The Red Cross will continue to provide this information on its public website. 

Æ 

mstockstill on PROD1PC66 with HEARING