Oct. 30 (Bloomberg) -- The American Red Cross, provider of emergency blood supplies and disaster aid, proposed an overhaul that will cut the number of seats on its board and put day-to-day operations clearly in the hands of management.

The anticipated changes would trim the board to between 12 and 20 seats from 50, and also include delegating day-to-day control of operations to management and putting seven of the president-appointed governors into a new Cabinet Council that would be strictly advisory. Some proposals will require adjustments to the Congressional charter granted in 1947.

The changes come after a six-month review of governance, prompted by fines over blood-collection procedures and criticism about distribution of disaster aid. The Washington-based organization also had trouble handling its bureaucracy and communicating with other aid groups and the U.S. agencies during the aftermath to Hurricanes Katrina and Rita last year.

``The board will also now be able to ask management and hold management accountable to a series of tough questions,'' Ross Ogden, the first vice chairman on the Board of Governors, said in an interview. ``Questions like readiness for national disasters and having a secure blood supply for the nation.''

The group's board also told management to improve and expand awareness of the ``whistleblower'' process among employees and volunteers.

60-Year-Old System

The changes were unanimously approved by the 50-member board of governors at a meeting on Oct. 27, Ogden said.

The review involved more than 100 interviews with non-profit scholars and governance experts, current and former Red Cross workers and government officials. The organization sought to ``update and modernize what was for us a 60-year-old system of governance,'' Ogden said.

Peter Dobkin Hall, one of those interviewed and an expert on non-profits at Harvard University's John F. Kennedy School of Government, said the review was in part because of pressure from Senator Charles Grassley, a Republican who represents Iowa, and the Senate Finance Committee to review its governance structure.

``They had Senator Grassley breathing down their neck,'' Hall said, adding that he doesn't believe the changes go far enough. ``Fixing the governance just isn't going to be enough; you have to fix the problems of the organization.''

In September, the Red Cross was fined $4.2 million by the Federal Drug Administration, on top of $5.7 million it already had to pay, for violating a 2003 agreement to ensure the safety of the U.S. blood supply.

To contact the reporter on this story: Dakin Campbell in New York at dcampbell18@bloomberg.net

Last Updated: October 30, 2006 16:44 EST