[Congressional Record Volume 153, Number 30 (Friday, February 16, 2007)]
[Senate]
[Pages S2166-S2168]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. GRASSLEY (for himself, Mr. Kennedy, Mr. Enzi, Mr. 
        Martinez, Mr. Akaka, Mrs. Dole, Mr. Brown, Mr. Lieberman, Mr. 
        Isakson, Mr. Nelson of Florida, and Ms. Landrieu):
  S. 655. A bill 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 Red Cross in the 
21st century, and for other purposes; to the Committee on the 
Judiciary.
  Mr. GRASSLEY. Mr. President, I ask unanimous consent that the text of 
The American National Red Cross Governance Modernization Act of 2007 be 
printed in the Record.
  There being no objection, the text of the bill was ordered to be 
printed in the Record, as follows:

                                 S. 655

       Be it enacted by the Senate and House of Representatives of 
     the United States of America in Congress assembled,

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

[[Page S2167]]

       (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:
       (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; 
     and
       (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.

     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)--
       (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:

     ``Sec. 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--
       ``(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 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

[[Page S2168]]

     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.

       Paragraph (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:

     ``Sec. 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.''.

     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:

     ``Sec. 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.

     ``Sec. 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.--The Office of the Ombudsman shall submit a 
     report annually to Congress concerning any trends and 
     systemic matters that the Office of the Ombudsman has 
     identified as confronting the corporation.''.
       (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.''.

  Mr. ENZI. Mr. President, I rise today to co-sponsor the American 
National Red Cross Governance Modernization Act of 2007. This 
legislation, a product of close cooperation with my colleagues Senator 
Grassley and Senator Kennedy, seeks to create a more efficient 
governance structure of the American Red Cross, and to enhance the 
Board of Governors' ability to support the critical mission of the 
American Red Cross in the 21st Century.
  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. This trust is fostered 
by effective governance and transparency, which are the principal goals 
of this legislation. The role of the American Red Cross is one of vital 
significance to the American people. The ability of the American Red 
Cross to meet its responsibilities requires a governance structure that 
reflects a need for clear mission and a culture of accountability.
  This past October the American Red Cross Board of Governors announced 
its unanimous support for a series of important changes to its charter 
and business practice. The American National Red Cross Governance 
Modernization Act of 2007 enables a number of those changes, including 
clarifying the role of the Board of Governors as one of governance and 
strategic oversight. As this bill facilitates these governance reforms, 
the American Red Cross is expected to continue to implement amendments 
to its bylaws consistent with those described in the Governance Report 
to clarify further the role of the Board of Governors and to outline 
areas of its responsibility.
  This bill ensures that the American Red Cross will remain a federally 
chartered instrumentality of the United States, and it has the rights 
and obligations consistent with that status. Consistent with that 
status Congress expects that the American Red Cross will maintain 
appropriate communications with State regulators of charitable 
organizations and to cooperate with them as appropriate in specific 
matters as they arise from time to time.
  Finally, we believe the effectiveness of the American Red Cross will 
be promoted by the creation of a Red Cross ombudsman to be a dispute 
resolution practitioner to provide confidential and informal assistance 
to the many internal and external stakeholders of the American Red 
Cross. The American Red Cross ombudsman will report to Congress, the 
American Red Cross chief executive officer, and the audit committee of 
the Board of Governors. The Red Cross ombudsman will have access to 
anyone and any documents in the American Red Cross. This is an 
important tool for improving processes and protections for those inside 
the American Red Cross who wish to express concerns about the 
organizations practices and procedures, and an important tool for 
Congress in providing oversight of the activities of the American Red 
Cross.
  I urge my colleagues to vote for the American National Red Cross 
Governance Modernization Act of 2007.
                                 ______