D.C. United Way Faces New Scrutiny

Charity is under review by federal officials; United Way of America leader seeks changes

The United Way of America, the national umbrella organization of local United Ways, is under

Congressional scrutiny because of alleged financial misconduct at one of its largest local member charities — the United Way in Washington, D.C.

The problems at the United Way of the National Capital Area have led to a crisis of accountability that the national organization is attempting to defuse so that donors across the country don’t lose confidence in the United Way system.

The Washington United Way faces pressure on several fronts:

• Iowa Sen. Charles E. Grassley, ranking Republican on the Senate Finance Committee, sent the Washington organization and the national United Way a series of detailed questions about their operations. Mr. Grassley wanted the local United Way to explain how it manages donations, and the United Way of America to describe how it ensures the integrity of its local groups. “I am concerned about allegations regarding mismanagement, misuse of funds, and inflated fund-raising totals at the United Way of the National Capital Area,” he said in a letter to both charities. (A copy of Mr. Grassley’s letter is available on the senator’s Web site, http://grassley.senate.gov.)
• The chief executive of the United Way of America, Brian A. Gallagher, concerned about the problems at the Washington United Way and the “overall damage being done to the reputation of the [United Way] movement,” called for the departure of Norman O. Taylor, chief executive of the Washington United Way.
• A federal grand jury continued to investigate the United Way of the National Capital Area. Newspaper reports have raised numerous questions about the spending of top officials at the charity. What’s more, the organization has acknowledged that it had taken credit for more than $2-million in contributions that it did not handle and kept more money from donations than necessary to cover uncollected pledges.
• The Department of Labor began investigating the United Way’s retirement benefits. While the Labor Department has not disclosed the reason for its inquiry, The Washington Post disclosed earlier that the charity’s former chief executive, Oral Suer, gained an estimated $200,000 by taking his pension nearly two years before he retired, a move that the pension’s rules did not authorize at the time.
• Washington-area companies and charities are expressing deep concerns about the direction of the local United Way. The Exxon Mobil Corporation, in Fairfax, Va., announced that it will not have an exclusive relationship with the United Way of the National Capital Area during the company’s local on-the-job fund-raising campaign this year.

Loss of Trust

In an e-mail sent to local and national United Way leaders, Mr. Gallagher said a change in management at the local United Way was essential. The Washington charity “has lost the trust and confidence of its donors,” he wrote. “The time for change is now, and that cannot happen without a management change.”

The United Way of America has been so concerned about recent developments that it scheduled a special meeting of its membership committee last week to begin to monitor whether the Washington United Way continues to meet the criteria the national umbrella group requires of its members.

Mr. Gallagher, who cannot cancel a United Way membership himself, said he has “great hope” that the committee will never have to recommend that the beleaguered Washington organization lose its membership and the right to use the United Way name.

Offer of Assistance

Mr. Gallagher said that the United Way of America offered to assist the Washington United Way by providing staff members to help during the local organization’s forthcoming fund-raising campaign — which had already been postponed one month because of the controversy — and handle the administration of donations.

In an interview with The Chronicle, Mr. Gallagher said that the offer of assistance was not contingent on a management change at the United Way of the National Capital Area.

In fact, he said his office has been talking with Washington United Way leaders — including its interim board chair and its chief financial officer — about how the United Way of America could provide immediate aid.

“I don’t have any illusions of dictating policy to this local volunteer board,” said Mr. Gallagher, “but it’s important that its members know what my position is and that I’m charged with providing whatever help and support to that board that is needed in terms of getting done what they need to get done.”

In the end, Mr. Gallagher said that his great concern was that “when you get the erosion of trust and confidence at the levels that it has gotten to [at the Washington United Way], you are really now running the risk of people that need services not getting them,” if contributions drop off.

Pledge of Cooperation

Mr. Taylor, the chief executive of the Washington United Way, pointed to the establishment of an ethics committee at the charity, and he vowed to cooperate with Senator Grassley.

“He’s concerned about charitable organizations,” Mr. Taylor said in an interview. “He should be congratulated, and we will work posthaste to get him the information he is requesting.”

Mr. Taylor said that many of the controversial issues that have arisen in recent months at the Washington United Way stem from events that preceded his becoming chief executive of the charity early last year.

He said he is not surprised by some of the criticism that he and his organization have received, because it follows their efforts to make important changes, including revamping the board to include more minority and labor leaders.

“If you are doing your job, not everybody’s going to love you,” said Mr. Taylor. “I would hope that whatever happens — if Norm Taylor is here, and if he isn’t here — that this United Way will be a better United Way than when I started. That’s my dream.”

Mr. Gallagher, who became chief executive of the United Way of America in January, said that as he attempts to maintain the integrity of the United Way system, he is “not haunted” by the ghost of the umbrella organization’s former leader William Aramony. Mr. Aramony was convicted in 1995 of stealing more than $1.2-million from the organization and served time in prison.

But, Mr. Gallagher said, “a lesson you learn over and over again is that trust and reputation is what matters in your personal life.” He added: “It also matters in corporate America. And it matters in the United Way.”