| BUSINESSWEEK ONLINE : FEBRUARY 8, 1999 ISSUE | |||||||||||||||||||
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Readers Report
Thanks To Elizabeth Dole, The Red Cross Is In The Pink I would like to set the record straight about "Red Cross wonder woman?" (Government, Jan. 25). The Red Cross has never been healthier, and 1998 was the best fiscal year in the organization's history, with $194 million net of expenses to roll into fiscal 1999. Since 1991, when Elizabeth Dole became president, the Red Cross has raised $3.4 billion. Public support to the Red Cross, separate from $650 million of disaster relief and decreased United Way funding, has grown 174%--from $113 million in 1990 to $310 million in 1998--which is far more than the 10% increase in public support you reported. The modernization of Red Cross Blood Services was initiated by Dole in 1991, two years prior to the Food & Drug Administration consent decree, which ratified her "transformation" initiative, placing timelines on the Red Cross and milestones against which to measure progress. Health & Human Services Secretary Donna Shalala and former fda Commissioner David Kessler hailed the transformation as a success. It is inaccurate to conclude that blood-banking competition resulted from efforts to recover modernization costs. Hospitals, operating under cost controls imposed by managed care, have spurred competition, to which Red Cross and independent blood centers have responded aggressively. Red Cross expansion has resulted from hospitals' recognition of our state-of-the-art system and demand for our products and services. Red Cross biomedical operations are financially stable. We have managed our $1.3 billion biomedical expenses, nearly offsetting revenue for the past two years while continuing to invest in new technologies to keep blood safe. Red Cross absorbed significant business risk to bring to market plasma treated by V.I. Technologies [in Melville, N.Y.]. To date, Red Cross has realized no financial advantage by offering it to the public but remains dedicated to bringing safer products to market as soon as feasible. As with any $2.2 billion corporation, the Red Cross utilizes consultants and seeks board members who can bring needed expertise to the organization. Contrary to your KPMG reference, the fees paid to auditors, lawyers, and other professionals amount to 5% of the total compensation, not the 50% reported. Your allegation that consultant Mari Will was added to Dole's personal staff is false. While many dynamic individuals joined our Board of Governors during Dole's tenure, the president of the Red Cross cannot unilaterally appoint members. Only the Red Cross Board, which includes eight appointees of the President, can elect the other 42 members. Elizabeth Dole's tenure brought us: a transformation of blood services to the best system in the world, a transformation of disaster services, a rechartering of chapters for the first time in Red Cross history to meet high standards of excellence, the creation of a highly successful fund-raising operation to replace an almost total dependence on United Way, a new and more efficient field structure, and the initiation of a consolidated financial management system and the use of technology to modernize the organization's Armed Forces Emergency Services. If Business Week considers such accomplishments as these to be purely image-building, this organization would welcome more of the same. Matt Branam Chief Operating Officer American Red Cross Washington Editor's note: Business Week's 10% calculation was based on contributions from all sources, including United Way. On consulting fees, Business Week did misstate that consulting fees were half the total payroll. The KPMG study puts fees at 45% of payroll at two headquarters office units, not the entire organization. Mari Will did serve as a consultant to Elizabeth Dole over a three-year period. Elizabeth Dole faces serious challenges if she tries to gain the Republican nomination for President in 2000. In addition to having never run for elective office, Dole's two Cabinet posts were not exactly high-profile. On the other hand, Dole has high name recognition, and she has shown she can raise large amounts of money for her causes. If Dole takes the more likely path of running as the Vice-Presidential candidate with George W. Bush or someone else, she might have a shot for the top job in eight years, when she will be 71 years old. Whether she runs for President or Vice-President, Liddy Dole will be breaking a glass ceiling for Republican women. George A. Dean
Southport, Conn.  Proud At Ziff-Davis "Ziff-Davis is printing in red ink" (The Corporation, Jan. 25) is misleading about the financial health of our company. Let me set the record straight on at least two important points. First, Ziff-Davis has more than enough cash flow to cover its debt obligations. Although we have revised our bank covenants, as many companies do, we have never been in violation of those covenants. Second, we believe it is absurd to suggest that the transactions mentioned between Ziff-Davis and Softbank were somehow improper or have been harmful to Ziff-Davis. These transactions were not only fully disclosed prior to Ziff-Davis going public but were a necessary part of consolidating Ziff-Davis' unique strengths across its many media platforms. We are convinced these transactions--which brought into Ziff-Davis the first 24-cable channel focused on the Internet and related technologies, ZDTV; the computer Web site ZDnet; leading magazines; and our entire European operations--were extremely favorable to the company. We are proud of our leading platforms in print, events, TV, and the Internet and are confident that we have the resources to continue to build on these platforms for the future. Timothy C. O'Brien
Chief Financial Officer Ziff-Davis New York Why Women Pros Are Lagging: Try Chauvinism There are a number of reasons why women's pro sports have not reached the same level of commercial acceptance as their counterparts in men's athletics ("Few leagues of their own," Sports Business, Jan. 18). First and foremost, the majority of attendees at sports events are men, with women usually accompanying them as an accommodation. Second, women have only recently become involved substantially in their own athletics, and thus there is not a captive audience of women interested in a particular segment of women's pro sports. However, there is an even more compelling reason from a chauvinistic viewpoint--namely that the only women's sports that currently attract large numbers of male spectators are the ones that demonstrate the femininity of women, such as figure skating and ice dancing. It's a sad commentary on our culture. Nelson Marans
Silver Spring, Md. Jail Time For Every Crime? There's Another Way Gary S. Becker makes some valid observations regarding the declining crime rate ("How the U.S. handcuffed the crime rate," Economic Viewpoint, Dec. 28). However, he seems untroubled about the nation's exploding prison population of 1.7 million, which, with the possible exception of China, is the world's largest. While he laments that so many people must be jailed in order to curb crime, Becker apparently assumes there is no alternative. America's crime problem could be better addressed by sentencing nonviolent offenders to community corrections and drug users to treatment programs via drug courts instead of stuffing them into overcrowded prisons. Using imprisonment as a one-size-fits-all response to crime is uneconomical and in many cases unjust. California's infamous three-strikes law, for example, which imposes a sentence of 29 years to life, is more often applied to petty thieves than to murderers or armed robbers. Becker should realize that incarceration is a short-term solution: As long as prisoners are released from prison--and 97% of them eventually will be--America's crime problem is being postponed, not remedied. We are merely passing the crime and punishment buck to the next generation. Alex Friedmann
Tiptonville, Tenn.
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