Former Official Alleges That D.C. United Way Distorted Campaign Results

By Harvy Lipman

The United Way in Washington, D.C., faces charges that it distorted its fund-raising results, putting another roadblock in the way of the organization’s effort to rebuild its reputation after a scandal that in 2004 saw its former chief executive plead guilty to stealing nearly $500,000 from the organization.

The latest dispute involves allegations by Kim Tran, who was chief financial officer of the United Way of the National Capital Area until she resigned in March, that she was forced to exaggerate the amount of money raised during the organization’s 2004-5 fund-raising campaign. She said that the charity’s current chief executive, Charles Anderson, asked her to distort the numbers, but Mr. Anderson denies doing that.

The disagreement, Ms. Tran said, centered on $1-million in donations from two large corporations that operate in the District of Columbia and other parts of the country. Because the money could have been contributed by employees anywhere in the United States, and could have been intended for other United Ways, Ms. Tran said she believed that the United Way in Washington should not claim any of that money in its total until the corporations provided clearer documentation. The United Way announced in a news release in June of last year that it had raised a total of $39-million, including the controversial $1-million. That represented a 10-percent increase from the previous campaign.

“The backup data was inadequate, and I pointed that out to Chuck Anderson, and he said go ahead and count it,” Ms. Tran said. “He said he wanted the number to come in as high as possible.”

An audit that was conducted after the numbers were released to the public concluded that the money should not have been included in the campaign total.

Mr. Anderson denied telling Ms. Tran to exaggerate the fund-raising total. “I did say to her I wanted us to audit out as high as possible, with emphasis on the word ‘audit,’” he said. “That means verification of the contributions, documentation of the contributions. I wanted us to give the best possible number to the public.”

He said that after he was made aware of the disagreement, he brought the matter to the United Way’s ethics officer, who agreed the money should not be counted as part of the campaign. At that point, Mr. Anderson added, the organization adjusted the amount it was telling the public it had raised.

He also said that when he announced the higher total in June, he made it clear that the amount was a projection based on pledges the United Way had received.

A news release put out by the organization at that time does not mention that the campaign total is a projection, but Mr. Anderson said he emphasized that point during a publicity event at which he announced what the campaign had raised.

Avoiding Controversy

Especially given the organization’s history, however, local United Way officials acknowledge that they need to be extraordinarily careful to avoid potential controversies. Toward that end, Mr. Anderson said the charity will no longer announce projected totals for its fund-raising campaigns, instead limiting its public statements to the amount of dollars that have actually been received by the United Way.

“We’re learning from our experiences,” he said. “We’d like not to bump our knee, but sometimes we do. The reality of the nonprofit — and the for-profit — world today is that we’re under a lot more scrutiny.”

Improving its public image has been a critical problem for the United Way of the National Capital Area for the past several years.

The local charity was rocked by scandal beginning in 2002, when audits and an internal investigation raised questions about executives spending United Way funds for their personal use, and other financial wrongdoing.

Two years later, Oral Suer, who served as chief executive of the organization for 27 years, pleaded guilty to receiving excessive pension payments and transporting stolen property. In his plea, Mr. Suer acknowledged that he had received the excessive pension payments, pocketed unreimbursed cash advances, and filed for fraudulent business expenses for reimbursement.

He served two years in prison and was released earlier this year.

The United Way recruited an entirely new board after the scandal broke.

It hired Robert Egger, president of the D.C. Central Kitchen — a Washington charity that offers meals and job training to the homeless — to serve as interim CEO. Mr. Egger, a longtime critic of high pay for charity executives, agreed to take the job but would accept only $85,000 in salary (less than a third of what Mr. Suer had been paid). He said such an approach was necessary if the United Way expected to win back the public’s confidence.

In June 2003 the board hired Mr. Anderson to take over as chief executive. The United Way was careful to avoid paying Mr. Anderson more than $200,000 because it was conscious of the concerns Mr. Egger had raised. But in recent years, Mr. Anderson has gotten several raises, and those increases are also touching off controversy.

Since he took the job, his salary has increased gradually and is now nearly 20 percent higher than when he was hired. He makes $231,750, on top of $25,000 worth of contributions to a deferred-compensation plan.

The Washington Post reported last week that employee morale has been slipping because of those increases in compensation.

Ric Edelman, chairman of the local United Way’s board, said that, even with the increases, Mr. Anderson is being paid less than other nonprofit executives in similar jobs, according to an analysis done for the board by an outside consultant.

“He was brought in at an artificially low salary because of the situation at the time,” said Mr. Edelman, who heads a financial-services company in Fairfax, Va.

The board agreed to pay Mr. Anderson the deferred compensation for the first three years he was in the job, Mr. Edelman added, to offset the fact that the United Way did not have a pension plan at the time.

The deferred compensation was part of the package Mr. Anderson was offered to persuade him to accept the position, Mr. Edelman said, and no other United Way staff members were offered similar benefits.

Mr. Edelman said the organization has now added a defined-contribution pension plan for all employees, and from this point forward Mr. Anderson’s retirement package will be the same as that offered other United Way workers.

Mr. Edelman said the new controversy about Ms. Tran’s allegations and Mr. Anderson’s pay “terribly misrepresents what is happening at the organization.”

Mr. Anderson added that while donations have not come close to returning to the level they were before the scandal involving Mr. Suer — the organization raised more than $90-million in 2001 — “we’ve done a good job of fixing so many problems. The organization was in a financial free fall. That’s not the case anymore.”