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Donor choice a negligible factor at United Way
Milwaukee Journal-Sentinel ^ | August 31, 2003 | BRUCE MURPHY

Posted on 09/01/2003 5:52:19 AM PDT by 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.

29589Divided Donations
Charity
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.


TOPICS: News/Current Events; US: Wisconsin
KEYWORDS: giving; unitedway
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To: gitmo
No, that is not quite correct- most UW's DO honor donor designation, and distribute this money separately (minus their "cut" for overhead).

That said, I only give to UW (always via a designated gift) because it is a big deal for my company. When I become a contractor (soon) I will just give directly to the charity, and they will get the full amount.

I have noticed quite a bit of "downsizing" of the UW campaigns, at least in my (very large, multinational) company over the past couple of years. This may be a trend.

21 posted on 09/01/2003 7:43:20 AM PDT by RANGERAIRBORNE ("Oderint dum metuant" -CALIGULA)
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To: RANGERAIRBORNE
So some Untied Ways lie to their donors and others don't? How does one distinguish between the two?
22 posted on 09/01/2003 7:50:48 AM PDT by gitmo (Americans are learning world geography ... one war at a time.)
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To: gitmo
Ask them- seriously, they have to tell you what procedure they use to distribute the money they collect.

And don't think I am sticking up for the UW- I once worked for a company that would have you kneecapped if you didn't help make management's promise of "100% particpation" good (AND they had "suggested gift levels" for your salary grade...)

23 posted on 09/01/2003 8:01:00 AM PDT by RANGERAIRBORNE ("Oderint dum metuant" -CALIGULA)
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To: mtbopfuyn
Strip away all of the polite language and Clintonese, and it's clear the Milwaukee UW and others like it are defrauding donors by giving them the impression that their contributions are being directed to specific charities, while cooking the books to make sure such donations really aren't.
24 posted on 09/01/2003 11:13:10 AM PDT by libstripper
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