August 8, 2002 | Read Time: 5 minutes
Continued controversy at the United Way of the National Capital Area is causing some United Ways outside Washington to take steps to assure their donors that all is well — especially as many organizations prepare for fall fund-raising campaigns.
Many United Ways are also reviewing their own managing and accounting practices in light of the troubles at the Washington charity, to make sure that they avoid similar problems.
A federal grand jury is now investigating Washington’s United Way, and has subpoenaed financial documents from the organization, which reported total campaign revenue of $88.5-million in 2000-1, more than all but three other United Ways.
The inquiry comes after newspaper reports raised questions about the spending of top officials at the charity. In addition, the organization has acknowledged that it had taken credit for more than $2-million in contributions that it did not handle; retained more money from donations than necessary to cover uncollected pledges; and, in some cases, twice subjected contributions to deductions for overhead costs.
Executives of the 30 largest corporate supporters of the Washington United Way planned to meet next week to discuss the charges, and the businessman who was expected to serve as the United Way’s board president this year has decided not to do so.
Some United Ways across the country are now assuring donors who have heard of the controversy that the problems have not spread past Washington. The Chicago Tribune, The Sun in Baltimore, and some other newspapers outside the District of Columbia have published reports of the unfolding events.
Brian A. Gallagher, chief executive officer of the United Way of America, the umbrella organization for local United Ways, said that his office has kept all United Ways posted on developments at the Washington-area charity.
“To a United Way — to a nonprofit — trust is everything,” he said. “They need to do everything that has to be done to address the issues, create aggressive long-term resolutions to them, do it transparently, do it quickly — and that’s the way you build trust back.”
He added, “They were slow out of the gate, but now I think they are making some of the right moves — diving deeply into not just operations but ethics and governance.”
Dealing With Donor Worries
In Chicago, the local United Way “has not had an overwhelming number of phone calls about this, but that doesn’t mean we’re not worried about it and that it isn’t having an impact,” said Brian T. Hassett, president of the United Way in Chicago.
“When people call you,” Mr. Hassett continued, “you at least have a chance to address their concerns. What worries me is the people who don’t call. I’d rather hear if people are upset than not hear and be worried about it.”
The United Way in Chicago has prepared written “talking points” for officials to use to reassure donors. The document says that the investigation of the United Way in Washington by federal authorities “is a very serious matter.” But it also makes clear that the Chicago charity follows national United Way of America policies designed to enable the local groups to operate in an effective and proper manner.
Mr. Hassett said he hopes that the Washington controversy does not linger. “The main thing we are looking for is that some resolution be arrived at soon,” he said, “because the longer it goes and the more articles there are — the more our contributors’ trust is at risk.”
The United Way of South Hampton Roads, which serves Norfolk, Va., and surrounding cities, was prompted by the situation in Washington to prepare a document to explain to donors and others how it does business.
“Even if this issue is just raised within what I would call the immediate United Way family — our board, our agencies, our volunteers — they should have this information to resolve any questions,” said Vicky G. Gray, chair of the board of the United Way of South Hampton Roads.
Drew Langloh, a senior vice president of the United Way of Central Maryland, said he thinks that “most of our donors in Baltimore realize that the Washington controversy is not about their United Way.”
But Mr. Langloh, too, hopes for a quick resolution. “Every United Way is an independent nonprofit, so we don’t have control over what another United Way does or doesn’t do,” he said. “The value of that is that every community gets to respond to community needs the way they see fit. The disadvantage is that what hurts one hurts us all.”
However, some other United Ways say they have not heard any concerns from donors. “Our newspapers and TV stations haven’t picked up on it, and we haven’t had a single call,” said Joseph G. Calabrese, president of the United Way of Greater Rochester, N.Y. “However, any time there is a charge made about any United Way, we take a look at our operations to see what our situation is, to make sure everything is fine.”
Corporations Watch Closely
Corporate supporters of the United Way of the National Capital Area also hope for an end to the problems in Washington.
“We are very interested in the proper stewardship of our employees’ contributions,” said Prem Nair, a spokeswoman for the Exxon Mobil Corporation. “We fully expect the United Way leadership to take whatever actions are necessary to ensure the integrity of their operations.”
In the meantime, executives of the United Way in Washington say they are cooperating fully with the grand jury’s request.
The subpoena, delivered by FBI agents to Norman O. Taylor, the Washington United Way’s chief executive, required the charity to turn over financial records, board membership lists, and other documents dating back to 1997.
