This was before my time, but I'm pretty sure the Red Cross didn't "collapse", but rather their legislated privilege of being the only agency in Canada able to collect blood was removed and given to the newly created Canadian Blood Services.
It was thought that rebranding an entirely new system would get the people out who were responsible, and encourage people to donate again.
It wasn't the only reason, but it was the trigger to drop the Red Cross out of blood donations entirely.
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