‘Fortune’: United Ways Face Challenges

United Ways help millions of people who desperately need assistance, observes Fortune magazine (November 27).”But at a time when donors question the need for an organization that processes money to other charities, the organization has been convulsed by internal squabbling over how it will govern itself,” says the magazine. “Unless it can find a way to agree both on a destination and a manager who can take it there quickly, the United Way faces a future of slow decline.”

United Ways’ problems are many. As a proportion of U.S. personal and corporate income, contributions to United Ways declined 29 percent in the past dozen years, even though overall charitable giving as a percentage of income rose 12 percent, Fortune says.

Turning around the fund-raising problems at United Way was the main task for Betty Beene, when she was appointed head of United Way of America in 1997. But the changes she proposed caused such turmoil that she was ultimately forced to resign this summer, says the magazine in a detailed account of the events surrounding her departure.

Ms. Beene’s main problem, the magazine says, was that few local United Ways wanted to undertake the changes proposed by United Way of America headquarters.

Ms. Beene further antagonized many United Ways when she pushed for a national computerized system that would make it easy for companies in numerous locations to allow their employees to give to United Way campaigns. She told the magazine that she recognized from the outset that the national system threatened the autonomy of many local United Ways, but hoped the system’s efficiency would win over critics. However, the opposite happened when the system was tested last year and failed.

Ms. Beene resigned, under pressure from some local United Ways that refused to pay dues until she stepped down. “It seems a Pyrrhic victory at best,” the magazine says. “The rebels have toppled a leader who was pushing for necessary transformation. Now the United Way has to find a way to patch the tear in its fabric.”

The only solution, the magazine speculates, is for United Way of America to appoint a chief executive who has strong authority over local United Ways. But Fortune says it is unlikely the organization can pursue that course without alienating United Ways in many of the nation’s big cities.

The United Way article is accompanied by a profile of Peter Hero, president of Community Foundation Silicon Valley, who was asked to preside over a bailout of the Silicon Valley United Way after it nearly went bankrupt last year.

Mr. Hero, the magazine says, is “Silicon Valley’s go-to guy in the realm of charitable giving — even when it doesn’t directly benefit his own foundation.” Nevertheless, the magazine says, his own foundation has grown significantly. It had $9-million in assets when Mr. Hero arrived at the fund, and holds $625-million today, Fortune says.

Mr. Hero recognizes the importance of encouraging giving in a region made wealthy by technology companies. “We need to create a culture where philanthropy becomes a way of life in Silicon Valley,” he told the magazine. “If we don’t do that, people will say, I can’t believe these guys blew it.”

The articles are available at http://www.fortune.com.