Fewer donors, more choices put squeeze on agency: United Way struggles with identity

Milwaukee Journal-Sentinel ^ | 8/31/03 | BRUCE MURPHY

[Jean S]

First of three parts

Across America, there has been a quiet revolution by charitable givers since the early 1990s. Some 5 million donors have stopped giving to United Way, according to a study by two national groups that analyze philanthropy. Even those who remain loyal are increasingly likely to split their gift between United Way and alternative charities outside the agency's umbrella.

Divided Donations

Sue Dragisic

Photo/File

UPAF sold itself as critical to the quality of life in the community. It was about more than the arts. United Way wasn't doing
that.

- Sue Dragisic,
who took over as executive director of the United Way after leading UPAF

Charity

Graphic/Journal Sentinel

Charity

Quotable

It is a difficult thing for us. You need to have freedom of choice, but you also need enough money left over to change the community.

- Bill Kitson,
who is overseeing the United Way of Greater Milwaukee's fundraising campaign

The Series

Sunday: A quiet revolution by charitable givers has been taking place since the early 1990s, and United Way officials across the country feel that they need to redefine themselves - or fade from power.

Monday: United Way donors who designate a particular charity to receive their money probably have no impact on what that charity actually receives.

Tuesday: For the first time, United Way is facing stiff competition, and it's coming from private businesses.

Many of those donors still use the United Way as a conduit for their gift. But that role as a mere "pass-through" agency dramatically differs from United Way's central mission of determining and funding the community's needs.

In Pittsburgh, more than half of the money collected last year was designated to specific charities, mostly groups outside the United Way umbrella.

In Cleveland, so much money was falling into the donor choice category that in 1998, United Way's worried leaders decided the agency would pocket any donor designation of less than $100 and require that half of any larger designation must go to the unrestricted United Way pot.

In Nashville, by 1996, about 65% of the money collected fell into the donor choice category, some going to agencies under the United Way umbrella, but much going to alternative agencies as well.

"Our core reason for being was disappearing," said Mark Desmond, the group's executive director, noting that the situation has improved since then.

For the United Way of Greater Milwaukee, which opened its doors to donor choice in 1990, the change has come more slowly. Last year, about 28% of donations were designated to specific groups, mostly alternative charities. But the trend has local officials concerned.

On Friday, United Way will announce its total goal for this year's drive. But the organization has a second, unannounced goal: to begin quietly arresting the growth of donor choice.

"We need to raise as much unrestricted money as possible," said Bill Kitson, the newly hired vice president overseeing the annual campaign.

This year's slogan, "United Way, Think About It," is intended to provoke a dialogue about the organization's role in assessing community needs, evaluating member agencies and allocating grants to successful programs. The organization has also taken a controversial step to bolster its community fund and limit donor choice: This year, it will retain any gift of less than $50, rather than sending the money to the agency designated by the donor.

United Way officials say it is too cumbersome and costly to process such small donations. The leaders of alternative charities suspect that the move is really intended to take money from them and reserve it for United Way. But all sides agree that behind this change is a broader issue affecting United Ways both locally and nationally: How can they maintain their identity in the rapidly changing world of American philanthropy?

Sobering statistics from the United Way of America show that 35,000 new non-profits start up each year in this country. As this sector grows, the percentage of non-profits served by United Way continues to drop: today, less than 5% of non-profits nationally get funding from United Way, and even these groups, taken collectively, rely on United Way for less than 6% of their budget. Projections by the United Way show that these percentages will continue to decline in the future.

In the non-profit world, the alternatives have become the mainstream and United Way has become a minority player.

"I think United Ways can only keep going for so long based on their current model of operation," said Kevin Ronnie, the Milwaukee-based field representative of the National Committee for Responsive Philanthropy.

Ronnie's group, along with the National Alliance for Choice in Giving, were co-authors of a study called "Giving at Work 2003" that analyzed the latest trends in workplace giving.

A closed club

United Way has more than a century-long history, most of that under the name Community Chest. But the idea behind it has always been the same: to have a unified drive that would eliminate duplication and reduce fund-raising expenses for local charities. In thrifty Milwaukee, that goal was implicit in the group's original name: the Central Council of Philanthropies.

By the mid-20th century, United Way had become a bedrock institution in local communities, with boards of directors often dominated by representatives of area corporations and legal firms. Traditional groups such as the Red Cross, the Boys & Girls Clubs, YWCA and YMCA were major beneficiaries.

But by the 1970s, critics began charging that United Way was a closed club that would not admit newer and emerging charities. Ultimately, these groups began organizing to gain access to workplaces that were open only to United Way.

Community Health Charities was formed in 1972 to represent the American Diabetes Association, Easter Seals and other health groups devoted to research and education that did not fit the United Way mission. A CHOICE, now called Community Shares, was created in 1980, with an emphasis on advocacy groups such as Citizens for a Better Environment and community groups such as Journey House.

Through lawsuits and community pressure, such consortia gradually gained access to public workplaces from which they were barred, giving federal, state and local employees wider donor choice. By the late 1980s, local United Ways began allowing these alternative charities into the private-sector workplace, extending donor choice to those employees.

Locally, the business leadership of the Greater Milwaukee Committee did a study recommending that United Way open its doors to donor choice, and the change was made beginning in 1991. But even without such pressure, United Ways had been opening their doors.

"The giving to United Way was flat or even dropping," Kitson said. "You had to question your business model."

The hope was that with more choice, total donations would increase, and all boats would rise, from flagship United Way to the tiniest alternative charity.

Money going elsewhere

In Milwaukee, in the early going, that did not happen. Between 1990, when there was no donor choice, and 1999, giving to United Way grew from $24 million to $28 million. Almost all of that growth, however, had gone to groups outside United Way, which reaped some $4 million of the annual drive by 1999.

This left giving flat for United Way groups over a period when inflation had risen 26%, meaning their funding had declined in real dollars. Meanwhile, donor choice dollars had grown so quickly that the Wisconsin chapter of Community Health Charities became the fourth biggest of these consortia in the country in total dollars raised.

Another more entrenched competitor, the United Performing Arts Fund, was also enjoying tremendous success. Under the leadership of executive director Sue Dragisic, giving to UPAF had skyrocketed, from $2.3 million in 1984 to $9.5 million in 1999.

"UPAF sold itself as critical to the quality of life in the community," Dragisic said. "It was about more than the arts. United Way wasn't doing that."

Recognizing her abilities, the United Way hired Dragisic as executive director in 1999. Since Dragisic took over, giving to United Way jumped, growing to $34 million by last year. That included a 6.2% increase in 2002, which was the highest growth of any big city United Way in America.

Even Ronnie, a frequent critic of United Way, conceded Dragisic's talent. "She's a brilliant fund-raiser," he said.

But Dragisic has run smack into an alarming national trend: middle-class givers, long the backbone of United Way, are gradually abandoning it. Between 1991 and 2001, there was a 9% decline in gifts of less than $1,000 to United Way.

Increasingly, United Way is relying on the community's more well-to-do givers: During this same period, "leadership" gifts of more than $1,000 grew by an astounding 200%.

Nationally, leadership gifts from the community's elite now account for 28% of the money raised by United Ways nationally, compared with 9% 10 years ago.

What has begun to emerge is a class system, where a community's elite are most loyal to United Way. This is an alarming trend for United Way, because there are far more lower- and middle-class givers to charity, and they tend to give a much higher percentage of their income to charity than wealthy givers. Over the long haul, United Way cannot survive if it loses their loyalty.

A classic case is Pittsburgh, where 41% of the money raised last year was designated to alternative charities, leaving a shrunken pot of money for traditional charities.

"In the last three years, allocation to our partner agencies has fallen 26%," said Bob DeWitt, a spokesman for Pittsburgh's United Way. "We're very concerned that United Way has to be more than a convenient pass-through for donors. We need to make a stronger case for unrestricted giving."

To increase unrestricted giving, Cleveland instituted its $100-minimum designation for donors choosing groups outside United Way. Detroit allows no donor choice whatsoever and San Antonio allows it only for donations of at least $1,000. By contrast, Boston, Chicago, the Twin Cities and Pittsburgh have no minimum requirement for a donor designation.

"We find from our surveys that donors want more and more control over their donations," DeWitt said. "We'd rather take a positive approach to increase our base of educated donors to United Way."

Too much choice?

Milwaukee United Way officials said they settled on a $50 minimum for donor designations after a survey of workplaces it serves found strong support for the new rule.

Last year, gifts under $50 brought about $30,000 to Community Health Charities and $15,000 to Community Shares.

"A lot of our smaller agencies bank on those dollars," said Neidre North, executive director of Community Shares.

United Way already charges a 6% administrative fee for handling donations to outside groups, but United Way officials said it was simply too costly to process donors who, in the most extreme cases, have split their small donations among a laundry list of groups. Still, they have not put a price tag on that process.

To the National Committee for Responsive Philanthropy, this decision raises the issue of "transparency," whether United Ways are being completely forthright.

"They may be taking an appropriate action, but when you can't even tell how much it costs to process a pledge, that doesn't build trust," Ronnie said. "Any time groups have fairly direct questions about cost, process, general transparency, they can't get any answers. There's no reason for anyone to trust them."

The issue of trust may be inevitable for a group that after all, is collecting money for its competitors. The rise of donor choice has left United Way with a contradictory purpose, trying to honor the donor's wishes for which agencies should be funded while selling its own expertise in making this decision for givers.

"It is a difficult thing for us," Kitson said. "You need to have freedom of choice, but you also need enough money left over to change the community."

That's what United Way will be asking donors to think about.

From the Aug. 31, 2003 editions of the Milwaukee Journal Sentinel

[Theodore R.]

Some right-to-lifers won't give to the United Way because it collects gifts for NARAL, Planned Parenthood, and other such "reproductive choice" organizations. The United Way will not filter contributions to the various Right to Life groups. Few conservative groups are included under the banner of UW.

Some UW organizations have also expelled the Boy Scouts, but not the more liberal Girl Scouts, from their lists.

[dandelion]

I stopped giving to the United Way when they stopped giving to the Boy Scouts - ESPECIALLY when they insisted on putting out a press release every time they dropped a region.

For years, I worked with the Boy Scouts to collect donations for the United Way. Now, I take my money directly to the Boy Scouts, and leave the United way out of the loop altogether. I also tell everyone I know about the corruption of United Way Executives, as often and as loudly as possible.

I wonder when the United Way is going to get the picture - maybe after they go bankrupt...

[GOP_Proud]

I stopped giving when they took the side of the homosexuals in the Boys Scout issue. Their money does not go to Boys Scout troops that refuse admission to homosexuals.

[Bobby777]

I haven't given 10 cents to the United Way since they tried to force the Boy Scouts to elect gay leaders ... and I won't ever give them another nickel ...

pick your charities, folks, and give to them directly ...

[McGavin999]

Maybe the problem is the community didn't like the changes the United Way had in mind. The Boy Scout fiasco comes to mind.

[boycott]

I stopped giving when they took the side of the homosexuals in the Boys Scout issue. Their money does not go to Boys Scout troops that refuse admission to homosexuals.

That's when I quit giving to the shake-down artists.

[Jean S]

I've never donated and never will. In the early 70's I had my first "real" job at a brokerage house. I didn't have much money so I decided not to donated when the company was having it's annual United Way drive. There was so much pressure from management on supervisors to get everyone to donate that my boss gave in my name.

I decided then that I would never give them a cent.

[justanotherfreeper]

Its interesting the article mentions the disconnect between the elites (read: liberal scum) who run United Way and the average lower and middle class donor who actually give to them. United Way gives to every left-wing, trendy cause you can think of, including lots of baby killers. The Boy Scouts was just the last straw in a whole bale of reasons not to give to these boneheads. I give directly to charities and my church, and wouldn't throw water on UW if they were on fire.

[lilylangtree]

Won't ever give to United Way because of their stance on the Scouts. Hope the organization drops out of sight. Or at least eliminate these leftist organizations they support.

[southernnorthcarolina]

I see the article is the "first of three parts," so I'll won't be too critical, yet. But I see no mention of the decision by some United Way chapters to fund Planned Parenthood, and to defund the Boy Scouts (among other "politically correct" decisions); I see no mention of the high-on-the-hog donation-funded lifestyle of former United Way officers; and I see no mention of the United Way's sleazy, near-extortion method of fundraising.

There is no reason to give to this outfit -- unless your job depends on it, which it just might. Sadly, the only reason many people give is because they are pressured to do so by their corporate superiors. Of course, your promotion or even your continued employment won't depend on your making a pledge, or agreeing to serve as a United Way fundraiser (shaking down your fellow employees), you understand. Of course not.

[PeterPrinciple]

"But the organization has a second, unannounced goal: to begin quietly arresting the growth of donor choice."


Stupid People, they should be encouraging more donor choice. Yes, they know better where to spend my money than I do.

Having said that, I don't give as much as I used to to institutions. Churches seem to have forgotten their orginal purpose and just want to build buildings and hire services.

[RJL]

United Way has been following the far left liberal line. They have long been a supporter of abortion through Planned Parenthood and recently they have been cutting money to the Boy Scouts.

By donating directly to your favorite charity you eliminate the 6% fee to the United Way.

[friendly]

Don't support the United Way's campaign to let NAMBLA pedophiles run Boy Scout Troops, or to murder American babies by the abortion killing industry.

Not one penny to the United Way. I support a lot of charities, but on a case by case individual basis.

[duckbutt]

This article was dishonest in that it didn't discuss the constant problems UW has had with directors on the national level embezzling funds; it also didn't discuss the atrocous way the United Way treats the Boy Scouts.

I'm 52 and I don't cave to the pressure at work to support UW. I give directly, via payroll deduction, to the local boy scout council. They can stick that in their pipe and smoke it.....

I'm all for "choice" in this regard.....why can't these liberals in sheep's clothing be for individuals exercising their "choice" in what charities they want to support? Hypocrites!!

[Robert A Cook PE]

Gee - This drop in donations wouldn't have anything to do with the democrat's consistant increase in taxes?

With the liberals in the United Way's HATRED of the Boy Scouts, any right to life groups, and simple (christian) virtues of morals, ethics, and honesty?

[Paul Atreides]

Dear United Gay,

I am one of those people who doesn't believe in turning the Boy Scouts into a homosexual delicatessen. Therefore, you can do without my money. I suggest that you make up for my lack of giving by asking a homosexual for a double donation.

Sincerely,

Paul Atreides

[Paul Atreides]

Which charity was it that was taking donations for the 9-11 victims and using it for P.C. tolerance ads? Was it United Way?

[Paleo Conservative]

United Way has more than a century-long history, most of that under the name Community Chest. But the idea behind it has always been the same: to have a unified drive that would eliminate duplication and reduce fund-raising expenses for local charities. In thrifty Milwaukee, that goal was implicit in the group's original name: the Central Council of Philanthropies.

With the internet becoming ubiquitous, it ist very easy and inexpensive to send money to groups whose missions are in agreement with my philosophy. I don't need to send money to middlmen like the United Way who skim off a hefty percentages to pay bloated six-figure salaries to their board of directors and impose leftist ideology on the recipient organizations. I would like to see high traffic conservative website start to post links to worthy but lesser known conservative charitable organizations.

[meenie]

Give to the Salvation Army and USO in the national organizations. They support our armed forces and veterans hospitals wholeheartedly. Let your desire govern local charities.