Donor choice a negligible factor at United Way

Milwaukee Journal-Sentinel ^ | August 31, 2003 | BRUCE MURPHY

[sarcasm]

Last year, no group within United Way was more popular with local donors than Children's Hospital of Wisconsin. Voting with their checkbooks and using the option of donor choice, givers designated $258,000 to go to the organization.

Divided Donations

Graphic/Journal Sentinel

Charity

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.

How much extra money did this mean for Children's Hospital? Not one dollar.

Nor was this an exception. Of the $34 million donated to United Way last year, about $4 million was designated to specific member agencies. The result? Not one of the 80 member agencies of United Way saw any adjustment in its funding.

How is this possible? The United Way has a committee that spends many hours assessing the performance and determining the allocation for member groups. That allocation doesn't change unless designated donations exceed the grant total determined by United Way.

In the case of Children's Hospital, the allocation committee granted it $363,000, which was higher than the $258,000 designated to it by donors. So donor choice had no impact on the group's ultimate funding.

In the four years she has run United Way, President Sue Dragisic could think of only one group, Hunger Task Force, that had ever seen its grant adjusted because its donor-designated dollars exceeded the funding awarded it by the allocation committee. For the 79 other member groups of United Way, donor choice has made no difference in the money received over the last four years.

Bennett Weiner, chief operating officer of the Wise Giving Alliance, a national charitable watchdog group run by the Better Business Bureau, questioned this style of handling donor choice.

"As a donor, you're restricting that donation to that designated organization, and that's what should happen," Weiner said. "It should really be a separate pot of money. It is not to be pooled with other moneys. That is not a restriction."

Nationally, only about one-third of larger-city United Ways, those that raise more than $9 million, handle donor choice as Milwaukee does. The rest maintain two separate pots of money, one for designated donations and the other for undesignated gifts. The agencies in those cities make their allocations, then add the designated donations on top.

Dragisic argued that Milwaukee donors understand the policy here. "I don't think it is misleading," she said. "I think most people understand it. I could be wrong."

Ironically, donors to United Way who choose a group outside the United Way family, such as the American Diabetes Association, will see their donation go directly to that group (minus a 12% fee to cover administrative overhead and pledges lost as workers leave town or switch jobs). But donors who choose a specific member of United Way, such as Catholic Charities, are unlikely to see that group's funding increase.

If that sounds illogical, it is the direct result of the United Way history and mission, which places great emphasis on its allocation process. Last year, about $1.1 million of the $34 million raised by Milwaukee's United Way was spent on the allocation and outcome measurement process.

"The donor is giving their unrestricted gift with the expectation that we would spend it where it's needed most," noted Bill Kitson, a vice president with the Milwaukee United Way. "So we put a lot of effort into the allocation process."

Milwaukee, in fact, has been a national leader in measuring programs and their impacts on the community. It has accomplished that feat, moreover, while keeping administrative costs relatively low, mostly by keeping salaries lower than average for United Ways.

United Way will announce its total goal for this year's drive on Friday, and this year's slogan, "Think About It," is intended to sell people on the community fund and the organization's allocation process.

How it works

At the urging of the Milwaukee business community, United Way created an "outcomes measurement" process in the early 1990s to analyze the performance of its member groups. According to Katie Pritchard, who created the process for Milwaukee, less than a third of the 1,400 United Ways nationally have created such a process. Pritchard, in fact, now works for the national United Way, and has advised other local United Ways on how to measure outcomes.

As a result of this process, Milwaukee has dropped some groups as members to eliminate duplication, poor performers and other problems. Over the last decade or so, United Way's membership has dropped from about 120 groups to just 80.

Tradition and history still weigh heavily in the allocation process, as long-standing partner agencies such as the Red Cross, YMCA and Boys & Girls Clubs get some of the largest grants. Pritchard estimated that a member group was unlikely to see more than a 10% to 15% increase or decrease due to a given year's performance measurement.

Kevin Ronnie, of the National Committee for Responsive Philanthropy, refers to the allocation process of United Way as a "socialist planned economy" model of funding, which he contrasts to the pure marketplace model of donor choice. Ronnie is an advocate of donor choice, but concedes the value of what United Way does.

"There's hardly anyone who does such a thorough job of deciding allocations," he said. "It has a lot of flaws, but for what it does, it's as good as it gets."

The result is that groups may be allocated a grant that is wildly different from what donors designated to it. In 2003, the awards ranged from just 1.07 times the amount donors designated (Next Door Foundation Inc.) to 210 times more than the donor designation (Planning Council for Health and Human Services Inc.). The latter group works with non-profits in southeast Wisconsin to encourage collaboration and reduce duplication, which is not a cause likely to move the hearts of donors. The Planning Council was designated just $400 by donors last year, but United Way rewarded it generously.

Other groups that don't catch the attention of donors include the International Institute, which serves immigrants and refugees, and Wisconsin Community Services (formerly Wisconsin Correctional Service). WCS was designated less than $5,000 by donors, but awarded some $385,000 by United Way.

The grant to WCS pays for programs serving criminal offenders and the mentally ill. These programs can help reduce recidivism and cut costs by diverting clients from the criminal justice system or serving the mentally ill in the community rather than in a more expensive institutional setting. WCS has regularly exceeded goals set by United Way: Last year, for instance, 99% of mentally ill clients discharged by the program were not rearrested, a sign that clients were stabilized within the community.

But such programs are a tough sell to donors.

"The reality is that we as an agency have a very difficult time doing community fund raising because of who we are," said Steve Swigart, WCS executive director.

That's where United Way steps in, funding a community need that might otherwise go unmet.

This process, however, has not always pleased member agencies that do well with donors.

"We are a poster child of the United Way drive except when it comes to the funding we get," said Sherry Tussler, executive director of Hunger Task Force. "People care about this issue and think they are making a difference by giving to us. If we are the fifth most popular agency, then why aren't we in the top 20 of agencies in funding from United Way?"

Carol Bergmann, development director with Catholic Charities, previously worked with Meta House. Both organizations do well on donor choice but have seen no impact on their allocations.

"I don't think donors understand that," Bergmann said.

If donors do feel misled, that may sour them on giving, noted Rich Cowles, executive director of the Charities Review Council in Minnesota.

"The act of giving depends upon public trust," he said. "The more the non-profit can be open about how their money is used and where it's going, the more that donors are likely to keep giving."

Among the cities that keep donor designations strictly separate from the general fund are Pittsburgh, Boston, Chicago, the Twin Cities and Nashville, Tenn.

Mark Desmond, president and CEO of Nashville's United Way, said it's misleading to combine the restricted and unrestricted donations into one pot. "I think it's bogus for any United Way agency that does it that way," he said.

But Desmond said he understands the pressures that United Ways are under. As the general pot of money becomes smaller and smaller, it becomes harder to justify the staff time and costs spent measuring outcomes and determining allocations. Groups such as the one in Pittsburgh, which controls only half the money it raises, are struggling to justify their mission.

"It does deplete the resources that are available for the community fund," said Lyn Corbett Fitzgerald, spokeswoman for United Way of Chicago.

And the community fund, both in Milwaukee and nationally, remains the true heart of the United Way mission.

[mtbopfuyn]

We don't need the likes of a United Way. Don't give to a middle man; give directly to the charity of your choice.

[dhuffman@awod.com]

I agree. I have not donated to UW for many years, since I discovered that my designations did not alter the dollars received by their *racist* 'charities'. I began then giving time and money to charities that I wanted to support. THEN I had to abandon the Red Cross after four hundred donations when then posted against my legally carried CCW. too bad for them

[Drango]

The United Way should be shut down under the RICO statutes.

[Dudoight]

Absolutely! I select the charities I want to receive my $ and I give the $ directly to them. I quit United Way LONG before their stance on the Boy Scouts of America.

[FreePaul]

United Way, or whatever it has been called at other times, has established a policy of lying to people about how their contributions are distributed. Any other organization doing this would be prosecuted for fraud. United Way is above the law. If you want your money to go to your preferred charity give it to them directly. Don't let the scammers skim their share and ignore your wishes.

[Conservababe]

I haven't given to United Way since the seventies because of employers tactics to gain pledges.

[IncPen]

My wife works in social services, and her (and many other) organization refuses United Way money, because they are embargoed from fundraising during United Way drive periods.

They've found that they can do better by targeting their donors year-round than by accepting what UW deems them worthy to receive.

[Proud Legions]

Good for your wife and her comrades. I did not trust UW for many years, because I had heard of how they shuffle money like this article states. Then I saw where lots of their money went to groups I just could not stomach supporting, and finally the Boy Scout problems. I now give the money I used to give to UW straight to the local Boy Scouts.

[big'ol_freeper]

ping

[neutrino]

Great article! I despise the United Way - the strong-arm tactics used in the workplace approach thuggery.

[upchuck]

What you said!!

Thank you, sarcasm, for posting this. I realize this is part two of a three part series. I hope in part three the author will get into UW salaries. Unbelievable! And remember, every dollar they are paid, either as salaries or administrative costs, is a dollar not going to a charity.

Last year, about $1.1 million of the $34 million raised by Milwaukee's United Way was spent on the allocation and outcome measurement process.

So they spent 1.1 Mil just deciding who gets what? Seems pretty outrageous to me

Dump United Way; give direct.

And remember United Way are the folks who quit supporting the Boy Scouts because the Boy Scouts refused to let their organization be corrupted and overrun by queers and faggots.

[WhiteGuy]

Keep your money.

Pay off your debt.

Save for your future.

[Drango]

I hope in part three the author will get into UW salaries

I know in the SF Bay Area the United Way head crook CEO makes about $220,000. Remember charity begins at home :-)

[MissAmericanPie]

I was talking to some girls at work the other night and they were relating how they or their husbands, or a friend, had been strong armed by their company into donating to the United Way under threat of firing.

I would think that this would call for a class action law suit.

[Paul_B]

Good to see this exposed. Money is fungible. Designated funds don't mean anything unless, as this article points out, previous allotments run less than their totals. The oldest financial trick in the book for governments and nonprofits.

Thanks much, I'll be posting this to http://groups.yahoo.com/group/ChristianInvesting/

pb

[SandRat]

Take a look at Fewer donors, more choices put squeeze on agency: United Way struggles with identity for some interesting replies to an almost identical areticle.

[Redleg Duke]

Exactly! I see a future America where the deserving charities receive from the donors and the bureaucrats from the deceased United Socialist Way are sitting on street corners with tin cups of pencils for sale.

[SandRat]

Pass this litle gem along to your friend

I did this once when there was a big push to get 100% participation in UW giving -- when the UW Collector came around I pulled out a penny and gave it to him.

He gave me a dumb look and asked "What's this?"

I told him "My contribution and what I think the UW is worth. Now you have 100% participation."

The next year they changed it to 100% contact to "offer" employees the chance to support the UW.

Nasty but effective.

[gitmo]

I always suspected that allocating donations to particular agencies was meaningless. I never give to Untied Way.