December 16, 1999 | Read Time: 2 minutes
United Way of America has spent $12-million on a new charitable-pledge software system that is so riddled with errors it had to be scrapped.
The charity hired Cap Gemini America, a subsidiary of a $4.4-billion information-technology company based in France, to design the software in 1997. But a review of the program, which was designed to streamline the processing of donations from millions of people who participate in local United Ways drives, uncovered 400 separate problems that kept it from operating properly.
United Way has now abandoned the project and is trying to reach an agreement with the company that would help the national umbrella organization recover at least some of the money it has spent, said United Way of America officials. But if that process fails, they said, the matter could end up in court.
Mary-Ellen Harn, a spokeswoman for Cap Gemini America, said she was not willing to discuss her company’s work with United Way of America.”Our policy is that we respect client privacy, and therefore we will not comment publicly,” she said.
To fend off criticism of the failed deal, United Way of America officials pointed out that the $12-million it spent on the software did not come from fees that local groups pay to United Way each year.
To get money for the project, United Way of America raised $1.8-million from companies and took out a $10.5-million line of credit that was secured with its office building in Alexandria, Va.
United Way officials said they would be able to cover any loss from the software mishap with the proceeds of an unrestricted grant from the Bill & Melinda Gates Foundation. The grant was made to release the charity’s building from the line-of-credit arrangement.
Despite those assurances, some local leaders questioned how United Way of America could have poured so much money into the software without being aware of problems earlier in the process. “Where was the oversight?” asked one United Way leader who requested anonymity.
Betty Beene, president of United Way of America, said that the charity did take steps to insure adequate oversight. It appointed an 18-member committee of United Way and corporate leaders, including several technical experts, to guide the project. The committee, she said, did identify problems and rejected three versions of the program that were sent back to Cap Gemini for corrections that ultimately did not materialize.
“We were working in good faith with Cap Gemini to get a good product,” said Ms. Beene. “We relied on their technical expertise and depended on their assurances that the product would meet our needs.”
