The American Red Cross is an organization that functions solely on the donations it brings in from the public, as well as other forms of volunteer work in order to function. The primary focus of this organization is to help people who have been negatively affected by natural disasters, as well as to teach people how to be safe in a state of emergency. Despite the positive reputation of the company, ARC has partaken in several unethical practices over the years, a lot of which people might not consider when they think of this organization. These are things that can be solved simply by considering several ethical theories prior to making decisions, as well as thinking before acting.

A major issue that occurred at the ARC had to do with leadership capabilities, which was a major indication that the system itself needs to be adjusted. According to CBS News, there are several instances with local ARC chapters that indicate an astonishing level of misconduct: There was a fundraiser in Louisiana in which someone was caught putting money into her own account from donations; someone in the Maryland ARC forged signatures on orders that were supposed to go to disaster victims. These things are unacceptable within any corporation, and reflect a lack of leadership within ARC. When I read this, I immediately thought of Enron, and how they lied about how much money they had in their business in order to keep people investing their money. In both situations, there is clearly not a strong link between the leaders of the company and the employees, which contributes to an overall negative image and potential company failure. The ARC fell into the trap number seven, which is tyranny of goals. This trap states that the goals of a company drive people to cheat and make unethical decisions in their work. Every situation above demonstrated a complete disregard for what is right, and both employees were willing to cheat in order achieve their goal. The ARC failed to by falling into trap number 19, which is power, and falling into it might have been a good thing in this case. This trap states that the more a company utilizes their power, the more they can contribute to the success of their company. A higher lever of power needs to be used in this situation because these are actions that are not only affecting the company, but also the donors and the people who are receiving the donations. In the end, should things continue as they are, the effects on people outside the corporation could increase, and the main solution would be to set a stricter code of conduct that every employee must follow. If everyone was bound by the same set of rules and regulations, as well as warned of the potential consequences should any of those rules be broken, people might think twice before repeating these unethical actions. Secondly, I think that the leaders within the company should just be more aware of what is going on within the company. Whether they find a way to closely monitor computer activity, or find some other way to watch their employees' actions, keeping a close eye on them at all times (and telling them that they are doing so) is a great way to reduce the amount of unethical occurrences. Both solutions listed above will keep certain things from happening again because it strengthens the level of leadership, power, and control. If employees know that they will be closely watched from here on out, they will be less likely to make decisions that might negatively affect the company otherwise. After this news report, the reputation of the leadership capabilities within ARC has dwindled, and increasing the level of leadership will show people that the ARC is truly an all-around good company whose main goal is to help people in need. This is the main company goal, and having people think otherwise will give them less credibility, and people will be less likely to donate to their cause. Putting these solutions in place might even increase the amount of donations, and the ARC can then help more people in need. The case states that, ever since the unethical actions took place, the nonprofit went into a $200 million deficit, and fired 1,000 employees, all within the year 2008. Incorporating the solutions stated could bring back more people to work, and increase the overall strength of the company with more volunteers. Additionally, the level of deficit can decrease, and the fundraising efforts can improve as well

Another unethical instance occurred when the ARC was collecting money following the 9/11 attacks that would be sent to those affected by the catastrophe. They established a fund in which all donations would be given to people who needed help financially recovering from the tragedy, but the ARC only donated one third of it to that, saving the rest to help people in future catastrophes. This caused an uproar of anger from donors, for they donated under the impression that all of what they gave would go directly to the victims. When they found out that this was not the case, the ARC ended up in court, and Healy stated that it was obvious that not all of the donations received were given to the victims as promised. In this situation, the ARC had fallen into trap number four, faceless victims. It was easier for them to make the decision to not donate all of the money to the victims because they did not know them personally. This is wrong because there might have been some donors that knew the sufferers, and to find out that their money was not going to help them directly gives them a direct incentive to stop donating. They also fell into trap number 19, justification. While they did not donate all of the money to the victims, they did deliver what they considered a reasonable excuse as to why all of the money did not go there. However, just because they attempted to justify their actions, that does not make it OK because the public had expectations, and they were let down. In order to prevent something like this from happening again, the ARC should consider having a board of people that closely evaluate every decision the employees plan to make, and consider whether or not that decision is in the best interest of everyone involved. Additionally, they could have a group of people who oversee donation distribution, and the donations must go through this group for evaluation before being distributed. It is clear that the money was promised to go directly to the victims and nowhere else, so this type of board could prevent something like this from happening again. The main result of these solutions would an increase in the level of donations, for people can be assured that their money is going directly where it is promised to go. By increasing the level of donations, the ARC can continue to help more and more causes around the world, and gain a better reputation overall.

A final example of unethical actions taken by the American Red Cross is related to the people that they hire to work for them. When they were in the process of helping to reverse the damage done by hurricane Katrina, the ARC hired more people to help, but many of the people they hired were felons. The New York Times reported that the relief supplies were not divided properly, and hiring people with a criminal record is against the rules of the nonprofit. During the relief efforts, many things were reported missing, including 3,000 air mattresses and electrical generators. Several of the 235,000 volunteers in this effort were said to have been arrested, and have other felony charges against them. By doing this, the ARC fell into trap number one, which is obedience to authority. In order for an employee to keep their job in a company, he/she must do as they are told. Since hiring people who are felons is against the rules of the company, and yet they were hired anyway, whoever was in charge of hiring volunteers was not keeping the rules of the company in mind. Secondly, the ARC also fell into trap number two, which is called small steps. In this trap, it states that unethical behavior typically occurs in small increments, and will become more severe over time. In this situation, it started when the felons were hired in the first place. From here, things were stolen and work was not done properly in terms of dividing out the resources, and the ARC lost a large amount of credibility as a nonprofit organization. Additionally, the ARC fell into trap number three, which is indirect responsibility. While they were the ones who hired the felons, the corporation itself did not steal the supplies and work inefficiently. So, they were not directly responsible for any of the negative things that happened, but they did instigate them, which is something that affected the overall reputation of the company considering what happened. In my opinion, hiring people who are convicted felons is unethical to begin with. When a corporation hires someone to work for them, they are making a promise to customers that that employee will keep their best interests in mind, and that they are held to high company standards of ethics. Whether the applications were not properly reviewed, or the charges on the applicant’s records were disregarded, it was not an ethical business practice, and definitely not in the best interest of the company. One solution that the ARC could consider is promising to review the applications more carefully before hiring people. While people might need to see it before they believe it, it certainly is a good start in improving the reputation of the company. Secondly, they could publically apologize for the trouble caused by employees from their organization, and the overall mismanagement of the employees. This could potentially change people’s views of the company, for they can make it known that they recognize the error of their ways, and that they will do what they can to fix it. Finally, I think that the ARC should offer to replace the items that their employees stole. This will demonstrate that they are willing to take responsibility for what happened on account of their employees, and that they recognize that they truly did a poor job in hiring people, all of which also contributes to an improvement of their reputation.

In conclusion, while the American Red Cross is a nonprofit known for doing noteworthy things to help people in need, there are still several things that they are not doing correctly that have an effect on their credibility. Any company setting out to make a difference in people’s lives should place a higher value on ethics, and should think before they act or make decisions. While the ARC cannot erase what they have already done, there are steps that they can take to improve their image, and make people want to continue donating to their cause. In the end, it’s all about the changes they are willing to make, and that is something people should notice. I think that they will always be under the radar for their highly unethical actions, but making an effort to change is a great place to begin in altering their reputation as a nonprofit organization.