Silicon Valley’s United Way Hopes It Has Recovered From Crisis

Two years ago, the United Way of Santa Clara County, in California’s Silicon Valley, was floundering in debt, and its donors were awash in doubt about the organization’s future. It had emptied its reserve fund, spent $11-million more than it had raised from 1994 to 1999, and sought a $1-million line of credit to help make up the shortfall.

Now, with a new board of trustees, new president, and new name — United Way Silicon Valley — the charity says it has righted itself. With the help of $16-million in donations from Hewlett-Packard, Intel, Microsoft co-founder Bill Gates (who gave $5-million), and other high-technology titans such as the former InfoSeek chief executive, Steve Kirsch ($1-million), United Way Silicon Valley has not only made major steps toward solvency, but has begun to regain its credibility with donors and the charities it supports, says its top executive.

“We feel like we’ve turned the corner,” says Greg Larson, who became president in July 2000, replacing the interim president, Les White, who stepped in a year earlier when the United Way’s troubles came to light.

United Way Silicon Valley raised $22-million in donations in the 2000-2001 campaign, the same amount as in the previous year’s fund drive. (Nationally, United Way fund drives reported increases of 3.8 percent in 2000-2001.) Mr. Larson sees that as a hopeful sign. He points out that income from pledges deducted from workers’ paychecks remained steady despite a tripling in the unemployment rate in the technology-dominated region in the past seven months.

“That has surprised us,” says Mr. Larson, a former city manager of Milpitas, Calif.

Still, gifts of stocks have declined by 90 percent in the past year, and with high-tech companies such as Hewlett-Packard announcing substantial layoffs recently, Mr. Larson says he expects on-the-job donations to decline this year.

Even so, Mr. Larson, along with charity officials and corporate-giving officers in the region, says United Way Silicon Valley is on much stronger footing than it was in 1999.

Mr. Larson credits a number of factors, including stronger governance of the organization. The old United Way board of directors resigned amid criticism that they hadn’t kept a careful eye on the organization’s finances. The new board has “transitioned to become a governance board more than a fund-raising board,” Mr. Larson says.

In addition, the United Way is running more efficiently, observers say. It has cut its operating costs to 13 percent of its total budget, from 26 percent two years ago, says Kathleen Franger, employee-giving-programs manager for Hewlett-Packard.

What’s more, United Way Silicon Valley has worked to be more transparent to the public than it was under earlier management regimes, Mr. Larson says. For example, he says, the board set up a committee to oversee the United Way’s finances and ordered an independent financial review.

“They’re doing a good job of promoting donor trust and working very hard at building back relationships with the corporate sector,” says Scott Render, chief executive of the American Red Cross of Santa Clara Valley, which will receive $315,000 from United Way Silicon Valley this year.

Adds Mr. Larson, “We are nearly a public trust. We decided to act like one.”