At the Top of the Philanthropy 400 Ranks, a Battle for No. 1 Heats Up

For nearly a decade, United Way Worldwide has held the No. 1 spot on the Philanthropy 400, The Chronicle’s annual ranking of the charities that raise the most money from private sources.

But now, it’s hearing footsteps. And they’re getting louder.

Fidelity Charitable’s contributions grew 89.1 percent from 2011 to 2012, making it No. 2 on the Philanthropy 400 for the second year in a row.

Based on current trends, Fidelity won’t take the No. 1 spot next year, but it’s rapidly shrinking the gap with United Way. And the relative fortunes of Fidelity and United Way since 2007 may reflect stark differences in how wealthy donors and donors of more modest means have absorbed and recovered from the recession’s blows.

Middle Class v. Affluent Donors

Fidelity was founded 22 years ago to help donors create funds they can use to give away money any time they want. Donations grew 93.7 percent since 2007, according to a Chronicle analysis of the data. A big reason for the growth is the number of affluent Americans who are putting stock-market gains to work in their charitable giving.

And it’s still growing. Fidelity collected more than $3.6-billion in its 2013 fiscal year ending in June, an increase of 11.2 percent over 2012.

Meanwhile, the 126-year-old United Way has struggled even as it has sought to reach beyond middle-class donors and its longstanding reliance on corporate donors and workplace-giving campaigns.

It raised $3.9-billion last year, an increase of 0.6 percent from 2011. Donations have dropped every year during the recession and are still 16 percent under the total raised before the recession started, after adjusting for inflation.

The stark difference in the fundraising results of United Way, which helps the needy by distributing to social-service groups what it raises each year from mostly middle-class people, and Fidelity, a type of charitable bank for the affluent, bothers some people.

“The growing trend of using donor-advised funds is symptomatic of a broader trend where needs and desires of donors are put ahead of the needs of communities and causes,” says Aaron Dorfman, executive director of the National Committee for Responsive Philanthropy, a watchdog group that monitors grant-making organizations. “This troubles me.”

Years after the recession, Mr. Dorfman adds, “economic inequality is higher than it’s ever been, and low- and even middle-class families have not recovered. People and communities with the least wealth and opportunity need philanthropic investments. I have concerns that some donor-advised funds could be used to warehouse donations.”

Finding Common Interests

At United Way, fundraisers are “working hard to move the numbers,” says Sherrie Brach, executive vice president for investor relations at United Way Worldwide.

But, she adds, “at the end of the day, giving does tend to trend to how the economy is going.”

The organization raises much of its money the way it always has: by collecting donations from employees of the nation’s businesses. That approach is still critical to its fundraising, she says. But United Way is also trying to raise money by getting donors with something in common, such as women or young professionals, to join forces.

Giving to United Way by such affinity groups has nearly doubled since 2006. That year, the charity raised $89-million from women’s councils alone; last year, the women’s groups gave $160.8-million.

The affinity groups, which together have increased donations by 10 percent or more every year since 2008, have focused on some of the specific causes United Way supports, Ms. Brach says. For instance, its national women’s leadership council, an umbrella group for the local women’s council, works on efforts to help young children learn to read and write.

Several local United Ways are also organizing donors to pool their gifts and advocate for causes they care about, she says. “They have volunteer engagement and they do advocacy in their state and on Capitol Hill,” Ms. Brach says.

Such efforts keep donors loyal, she says. “Retention rates for donors in affinity groups are much higher than overall retention for traditional workplace donors.”

In addition, local United Ways are getting more active on Twitter, Facebook, and other social networks as they try to attract young donors. But United Way Worldwide hopes to create a more comprehensive strategy that also involves mobile technology, and is putting more resources into that effort.

“It is definitely an area that’s becoming more significant, and over the next two years or so we will develop a social-media plan,” says Ms. Brach.

Confronting Changes

The social-services mission of United Way, she says, “is more relevant than ever. “ But, she adds, “we have is to figure out how we can connect and engage and bring people closer to our work. How do we enhance channels we already have?”

United Ways’ workplace giving drives have been increasingly challenged since the recession, says Edith Falk, a Chicago fundraising consultant. “It was difficult for companies to mount aggressive fundraising campaigns while they were laying people off,” she says.

And working conditions have changed sharply since United Ways’ heyday decades ago, with people changing jobs more frequently, companies offering less job security to their workers, and CEOs who are less willing to tell their employees to give to United Way, Ms. Falk says.

Probably another reason United Way fundraising returns are not growing as fast as contributions to Fidelity: The corporate-sponsored fund has a much bigger marketing budget with which to promote itself, says Ms. Falk. “United Way pales in comparison.”

More Donor Wealth

Meanwhile, Fidelity Charitable has benefited, both this year and last, from wealthy donors seeking to get the maximum tax benefit from their giving.

Last year “we saw two camps around the fiscal cliff,” says Amy Danforth, Fidelity’s senior vice president for marketing. “One camp wanted to lock in 2012 tax rates and the second camp was deciding to stay at their current giving level, with the belief that the tax deduction would be worth more in 2013. The latter camp was correct.” And members of both camps gave.

Charities have also benefited from Fidelity’s boom: In the first six months of this year, the amount donors distributed grew 33 percent over 2012. The jump was fueled by a 50-percent jump in grants of $1-million or more.

In June, Fidelity released its first-ever survey of its donors’ giving, intended to help charities learn to tap that support.

It is also using technology to help donors support their preferred causes.

In April, Fidelity collaborated with other donor-advised funds to introduce an online widget, DAF Direct, that charities can add to their Web sites. Donors can use the widget to make a gift from their donor-advised accounts.

The Pan-Mass Challenge, an annual bike-a-thon to raise money for the Dana-Farber Cancer Institute, was one of 10 charities that helped test the widget last year. DAF Direct generated 600 gifts totaling $329,000 for Dana-Farber.

Last November, Fidelity also unveiled an iPhone application that allows its donors to use their cellphones to make grants to charities from their accounts. The app, says Ms. Danforth, has been embraced by donors. Last winter, she says, “one of our first grants on this app was for $500,000. We called the donor to make sure they didn’t type in an extra zero.”

Emma Carew Grovum, Sarah Frostenson, Marisa López-Rivera, and Sam Speicher contributed to this article.