The American Red Cross has agreed to reform fundraising disclosure and executive compensation practices in California under a formal agreement reached with the Attorney General. Violations of the agreement are subject to lawsuits for damages caused by the breach of contract.
The agreement resolves an investigation initiated in 2002 by the Attorney General’s charitable trust section into allegations of improper handling of disaster relief funds for victims of the 2001 Alpine-Viejas Fire.
The investigation found that ARC and its San Diego and Imperial Counties Chapter (SDIC) used misleading solicitation practices to generate donations in the wake of the fire that were not earmarked for the fire disaster relief. The investigation also found that ARC’s policies and procedures governing executive compensation were wholly inadequate and provided virtually no national oversight of local chapters and former SDIC CEO Dodie Rotherman was substantially overpaid during fiscal years 1997-2001.
After presenting the investigation’s findings to ARC and SDIC officials, ARC agreed to distribute roughly $55,000 to Alpine-Viejas fire victims. ARC also now requires greater oversight of initiative pay, merit salary adjustments and bonuses of executives in California and is applying the new procedures nationwide.
