In Silicon Valley, United Way Sees Role as Program Evaluator

By STEPHEN G. GREENE

An experiment now under way in Silicon Valley may foreshadow the future of on-the-job campaigns conducted by United Way.

The United Way of the Bay Area, which several years ago abandoned the traditional

model of financing specific organizations year after year in favor of making awards based on charities’ achievements, hopes to carry that idea a step further by becoming an authoritative source of information about which organizations are most effectively tackling a community’s social problems.

By helping donors sort through the conflicting claims of myriad non-profit groups, United Way officials believe, they will ensure that their organization continues to play a critical role in donors’ decisions — even as donors increasingly make gifts over the Internet, and despite competition from companies that are seeking to help major corporations move their workplace giving online.

“There’s a ton of information on the Internet, with very little evaluation attached to it,” says Anne Wilson, chief executive of the United Way of the Bay Area, which operates in seven counties around San Francisco. “We’d like to position the United Way as a source of credible evaluative information that helps a donor meet their charitable goal.”

Measuring Results

The United Way is working with McKinsey & Company, a consulting firm, to reassess its position in the changing philanthropic landscape. It is also collaborating with Harvard and Stanford Universities’ business schools to develop objective standards for evaluating a non-profit group’s performance in terms of quantifiable results: grade-point averages, for example, or infant-mortality rates, or juvenile-crime statistics.

“If 300 agencies in a community are doing job training and development, but only two of them have been able to place people in jobs paying $14 or more an hour and thus get them off welfare, knowing which ones they are is important information,” says Tom Ruppanner, Ms. Wilson’s predecessor as the longtime head of the Bay Area’s United Way.

Mr. Ruppanner recently left United Way to head a new for-profit venture, Social Enterprise Inc., which he plans to unveil in October. Although he offers few details about the new business, he says his company is “working hard on developing metrics to help solve a terrific problem: In the charitable world, there is no easy way to know on a quantitative or qualitative basis what works.”

Solving that problem, Mr. Ruppanner believes, would be of great benefit not only to United Ways but to society at large. Non-profit groups vary widely in their efficiency and performance, he observes, and helping donors to support the most effective and successful projects will lead to a more efficient use of limited charitable dollars.

While the United Way of the Bay Area focuses its attention on identifying organizations that outperform their colleagues, it may increasingly leave many of the fiscal and administrative details of its campaigns — donor pledges, gift processing, and payroll deduction, for example — to outside contractors.

Rather than hire a high-technology company to perform those tasks, however, the United Way has chosen to work with PipeVine, a non-profit gift-processing organization that itself spun off from the United Way earlier this year. PipeVine also handles gift processing for Helping.org, the America Online Foundation’s giving site, among other clients.

“Our No. 1 partner is PipeVine,” Ms. Wilson declares. “We think it has a unique capability — and its position as a not-for-profit organization is a huge plus.”

Frank Melcher, PipeVine’s chief executive officer, predicts that the provision of core fiscal and administrative services for workplace giving will become a commodity business with relatively low profitability — leading inevitably to a shakeout among the high-technology companies that are seeking a piece of that business.

Forming Donor Consortia

But some service providers will go a step further by helping donors take a much more active role than most have been able to do, he says. The Internet will facilitate the formation of donor consortia that focus on particular issues — gun control, say, or early-childhood education — or geographic areas, such as a particular neighborhood, historic district, or watershed, he says. Donors with a common interest in tackling a specific community need can pool their resources and issue requests for proposals from among relevant charities to achieve concrete goals.

Such donor activism threatens to turn the traditional philanthropic model on its head.

“Philanthropy today is 95 percent agency-driven,” Mr. Melcher says. “Agencies are the assertive part of the interaction; they’re out shaking donors to support their particular cause.” Each organization generally takes the lead in identifying problems, crafting responses, and soliciting support to help it carry out its programs, he explains.

But the wealth of information now available through the Internet, as well as the emergence of virtual communities of like-minded people in cyberspace linked through newsgroups, chat rooms, and discussion groups, hold the potential for enabling donors to take a much more assertive role in influencing charities’ agendas, Mr. Melcher says. The result will be more responsive and effective organizations, he predicts.

Ms. Wilson observes that successful programs are seldom achieved by a single organization: Many involve the combined efforts of government agencies, businesses, and non-profit groups. Her United Way is exploring ways of translating that fact into an online-giving model, so that donors could support with a single gift a broad collaboration of groups that are working on a particular social problem.

“The value United Way adds is that, because we are committed to measurable outcomes and have a knowledge base of what really works and what are the indicators of success, we could create portfolios that represent the best of breed among programs in a given geographic area or around a given issue,” Ms. Wilson says. “That would provide a different level of accountability to donors, as well as measures of performance that are not unlike those of a fund manager in a mutual fund, where investors seek a manager that can provide some level of assurance” on the soundness of their investments.

A Gift Portfolio

She envisions, for example, a portfolio of programs designed to improve education, the success of which might be measured by the grade-point averages of children in a low-income neighborhood. A donor could make a gift to that effort, which might involve participation by dozens of organizations — and could also track its progress online, as measured by quantifiable benchmarks of success.

In any given campaign, United Way would offer several such portfolios that deal with problems of great interest to local residents.

“Our principal challenge is to add unique value in the Internet or intranet environment in the giving decision and process,” Ms. Wilson says. In early testing, she says, the new model of performance evaluation has received an enthusiastic response from donors and charities alike.

The future of giving, she says, will involve developing “issue-based portfolios” that focus on measurable outcomes in a community, giving donors better tools for assessing the impact of their gifts, and enabling non-profit groups themselves to compare their performance with that of their peers.

Adds Ms. Wilson: “There’s no organization better suited to do this than a local United Way.”