Held to a New Standard

National office urges local United Ways to make changes

United Way of America has issued new standards for its 1,350 independent local affiliates that reflect the changing nature of the organization. The standards urge the affiliates to identify community problems, raise money to solve them, and demonstrate measurable progress toward their goals — something many United Ways have started to do as they drop their decades-long approach to supporting the same health and social-services organizations year after year.

With its revised “Standards of Excellence,” United Way of America hopes to push local affiliates toward a broader view of United Way’s role in addressing social ills and toward more-uniform fund-raising, grant-making, and operational philosophies.

The standards, which United Ways are encouraged but not required to follow, were last updated in 1988.

Besides emphasizing how United Ways ought to tackle social problems, the new document includes accountability, disclosure, and financial standards, some of which are already codified in United Way of America’s membership rules. Both documents, for example, ask local United Ways to adopt a code of ethics and to conduct an annual, independent financial audit.

Brian A. Gallagher, president of United Way of America, the federation’s umbrella group in Alexandria, Va., submitted the revised standards to Congress last week following his testimony at a Senate Finance Committee hearing examining accountability and governance issues at nonprofit organizations.

Mr. Gallagher said he wanted to add the standards to the public record so that other nonprofit groups could benefit from United Way’s “extensive work” on issues of accountability and transparency.

New Business Model

What may be most interesting about the standards to other charities — both the tens of thousands that receive United Way money annually and those that compete with it to raise money — may be their emphasis on the United Way’s new mission and business model. The standards make clear that the United Way intends to shed its traditional role as a so-called pass-through fund-raising agency. Not unlike community foundations and other private grant makers, the United Way wants to define itself according to its ability to address long-term social problems, such as poverty or crime.

“The primary measure of the United Way’s success is no longer the fund-raising thermometer,” said Mr. Gallagher. “We’ve moved in a whole different direction, and the new standards are a way to share best practices, help people catch up.”

United Ways have adopted that new model in large part to help differentiate themselves in a crowded field of charities asking for donations, and to rebuild donor loyalty. A growing number of donors, especially wealthy contributors who are supplying an increasingly large percentage of United Way revenues, are demanding tangible proof that United Ways and the charities they support are making a difference.

Giving to United Ways has remained relatively flat over the past decade, after adjusting for inflation, and has accounted for a smaller and smaller share of overall philanthropy. United Ways raised $3.59-billion in their 2003-4 annual campaigns, a decline of about $120-million from the previous year.

But Mr. Gallagher insists that the changes, and now the new standards, are not simply about money.

“This is clearly going to raise more dollars,” he says. “The point of it, though, is not about fund raising as the ultimate goal, but about making a difference at the community level.”

Not long after Mr. Gallagher took over at the United Way in 2002, the system revised its mission statement, adopting the view that the system’s emphasis should be on helping to identify and solve specific, long-term social problems. The following year, the United Way put mandatory membership rules into place, requiring that local affiliates, among other obligations, provide the national headquarters with annual financial-data reports.

Now with the release of the updated standards, United Way of America hopes to re-emphasize the importance of following the membership rules and to provide a blueprint for local United Ways on how to carry out the new mission.

The standards are laid out in six small booklets and include statements both general and specific on topics such as building relationships with donors and marketing the United Way so that potential donors see it as a brand name, just like a consumer product.

A section called Shared Community Vision, for example, states broadly that United Ways ought to promote “community dialogue and deliberation,” but the section also includes a note with a helpful detail: The Greater Twin Cities United Way held “focus groups” in places where people naturally congregate, like churches and schools.

The introduction to the standards includes a glossary to ensure that everyone in the system “talks the same language,” says Mr. Gallagher.

Among the terms: “impact strategy,” defined as “an approach to addressing the root causes of an issue,” and “community impact,” which means “improving lives by mobilizing communities to create sustained changes in community conditions.”

‘Pick and Choose’

United Way officials around the country say that the new standards have been well received. What’s appealing about the new document, they say, is that it is the result of a wide-ranging effort by more than 200 United Way employees, volunteers, and consultants, and that it includes recommendations, not rules. Past efforts by the United Way of America to unify the United Way system have met resistance from local groups worried about maintaining their autonomy.

“We now all have a guidebook, one that is elective, so we can pick and choose what we think would work best for each of us,” says Mac Bennett, chief executive officer of the United Way of the Midlands, in Columbia, S.C. His organization has just shifted strategy, from giving money mostly to the same 45 charities each year to a new process in which charities apply for grants to support projects dealing with job training, education, health care, and other issues.

“The standards give us a hint of how other United Ways adopted this new model so successfully,” Mr. Bennett says.

But in a federation as diverse as the United Way, standards that are not mandatory may not make their intended mark everywhere.

Paula Pack, executive director of the United Way of Hempstead County, in Hope, Ark., says she is pleased to have guidelines she can consult, and she will do her best to comply with the national organization’s suggestions. But, she says, in a small town like hers, the so-called community-impact model doesn’t fit.

Her United Way, she says, will continue to distribute the $100,000 it raises each year to the same dozen or so charities that provide a broad range of basic social services in the region. And, she says, the organization will not get rid of its fund-raising thermometer anytime soon.

“It sits at the corner of Third and Main,” Ms. Pack says of the six-foot-high placard featuring a thermometer with red strips that track the money United Way raises. “It’s a very recognizable reminder that we are here, helping our community.”