United Way Drives Dropped 3.2% in Most Recent Campaign Season

As United Ways start their fall fund-raising campaigns, United Way of America has announced that donations to the

nation’s 1,350 United Ways declined by 3.2 percent in 2003-4 — slightly more than the 2-percent drop that the organization predicted in May.

Over all, United Ways raised $3.59-billion in their 2003-4 annual campaigns, a decline of about $120-million from what United Ways brought in during the 2002-3 period.

More than half of the 78 largest United Ways — those that raise at least $9-million in their annual campaigns — reported declines, with nine United Ways experiencing double-digit percentage losses.

The decline — which follows the worst fund-raising drop in three decades, as donations plummeted 7.5 percent, or $240-million, during 2002-3 campaigns — has led to continued cutbacks at many charities across the country and left some charity officials worried that if the economy doesn’t pick up soon, they could face money problems again next year.

Job losses at large companies continue to stifle campaign efforts in many cities, said Brian A. Gallagher, president of United Way of America, in Alexandria, Va.

In Austin, Tex., United Way campaign support declined 11 percent, to $16-million, in part because officials there said the city had lost about 25,000 high-technology jobs in the past two years. As a result, some nonprofit organizations have had to cut staff members and programs — and step up their fund raising.

“We’re in crisis mode,” said Gena VanOsselaer, executive director of the Austin Children’s Shelter, which received $137,800 from the 2003-4 Austin United Way campaign — 27 percent less than from the previous campaign. Because of the drop in support, she said, the shelter has cut back on housing services and counseling it provides to abused and neglected children.

Ten of the shelter’s 75 employees quit their jobs in the past year in part because of a pay freeze the organization put in place, Ms. VanOsselaer said. The group also has had trouble hiring people, she said, because it can’t pay enough money to attract qualified candidates.

Job Losses

Job losses haven’t just affected technology businesses. The loss of thousands of manufacturing jobs in Michigan last year contributed to a 4.6-percent decline in support for United Way campaigns in the Detroit metropolitan area, which brought in $64-million.

Catholic Social Services of Oakland County, in Pontiac, received 27 percent less from United Way this year, according to Marge Huggard, president of the group, whose nine facilities provide counseling and foster care for children and life-enrichment programs for older people.

“It’s been devastating,” said Ms. Huggard, whose group receives about one-fifth of its $7-million budget from United Way.

Since July, Ms. Huggard said, her group has turned away about 125 people a month who have requested counseling services.

As United Way campaign support has fallen in recent years, many local United Ways have started to put an increasing emphasis on diversifying their sources of revenue. Those efforts are beginning to pay off, as United Ways across the country raised $4.05-billion in total revenue during 2003-4 — 2.8 percent more than in 2002-3, Mr. Gallagher said.

Money that local United Ways bring in outside of their campaigns comes from corporate sponsorships, planned gifts, donations to endowment funds, and other sources. While some of that money gets to charities, local United Ways hold on to a large share of it — sometimes using it for their own operational expenses, and often investing part of it for future needs.

During the 2003-4 period, revenue that came from sources other than campaigns reached $476-million, or 13 percent of the total money that local United Ways raised; in 2002-3, that amount was $282-million, or about 7 percent of United Way’s total revenue.

Three big areas of growth for local United Ways in the past year: Corporate sponsorships, special events, and large gifts made outside of annual campaigns have jumped 46.5 percent, to $61-million. Gifts to endowments rose by 68.8 percent, to $27.1-million. And bequests and other types of planned gifts have grown by 60 percent, to $19.8-million.

In some large cities with sluggish campaign results, local United Ways have gotten a big lift from money they have brought in outside of their on-the-job solicitations.

In Dallas, gifts to the 2003-4 campaign increased just 1.8 percent from the 2002-3 campaign. But the organization’s total revenue shot up 17 percent, to $53-million, in part because a foundation the United Way of Metropolitan Dallas set up five years ago to collect gifts from wealthy donors and companies received $7.8-million during the 2003-4 period.

Other United Ways have sought money to offset weak campaign performances. The United Way of Greater Cincinnati, whose 2003-4 campaign was flat, increased its total revenue by 13 percent, to $67-million, by working with governments and grant makers to bring in $5-million during the past few years for a program that provides opportunities to disadvantaged children, said Robert C. Reifsnyder, the group’s president.

Growing Competition

As many United Ways seek to raise money in new ways, some charities view those efforts as competing against theirs.

“It’s obviously competition for us to see them diversifying their means of generating revenue,” said Susan McDowell, executive director of LifeWorks, which offers counseling, shelter, and other services to people in the Austin area. “But a lot of donors want to have long-term relationships with a variety of organizations. We do ourselves a disservice in the charity world if we look at each other as competition.”

“Besides,” she added, “we could end up being a huge beneficiary of their additional fund-raising efforts.”