October 31, 2002 | Read Time: 4 minutes
In the wake of controversy at the United Way that serves metropolitan Washington, United Way
of America has endorsed new accountability, disclosure, and financial practices for local United Ways.
The standards are designed to make sure that donors get a clear picture of how their money is used, that the funds are used wisely, and that United Ways accurately report overhead and program costs as they face increasingly complex fund-raising campaigns and the imperative to be straight with the public about their internal finances.
In addition, United Way of America, the umbrella organization for local United Ways, will establish a monitoring and operations-assessment committee to make sure that all practices and standards are followed at agencies across the country. The committee will help United Ways manage their operations to comply with the new standards. Members of the committee will include representatives with no ties to United Ways who are experts in ethics and financial management.
The development of new practices was in the works before the crisis broke out at the United Way of the National Capital Area. Officials of the United Way of America said that, had the updated standards and procedures been in effect in Washington, some of the alleged management and financial problems now under investigation by multiple federal agencies might have been identified earlier or headed off.
“We are raising the bar on United Way’s accountability — doubling our efforts to remain beyond reproach — and making it easier for donors and the public to understand our financial practices,” said Brian A. Gallagher, chief executive of United Way of America.
Mr. Gallagher added: “We need to be fully accountable for our practices and openly report them. The new standards will ensure that the more than 1,400 United Ways across the country meet that goal.”
Membership Rules
All local organizations will have to abide by the new practices in order to hold membership in the United Way. The standards will be submitted for formal approval at the annual meeting of all United Ways in April. In the meantime, the practices must be used in the United Ways’ 2002 annual campaigns.
The announcement of new standards from the United Way of America follows a months-long public-relations nightmare at the United Way of the National Capital Area over alleged managerial and financial misconduct.
For example, the Washington United Way has been under review by a federal grand jury and questions have arisen over the spending of former top officials. The organization has acknowledged taking credit for more than $2-million in contributions that it did not handle and keeping more money from donations than necessary to cover uncollected pledges.
In recent weeks, the Washington organization’s chief executive stepped down and United Way of America has been helping with the local organization’s fund-raising campaign.
Among the practices announced by United Way of America:
- United Ways will break down the expenses that they incur in generating contributions with greater specificity. The approach is aimed at making sure that overhead costs are accurately reported, especially as more and more businesses turn to outside companies to distribute funds rather than use United Ways for that purpose.
- More than one United Way will not be allowed to deduct expenses from a single donor’s gift. Only the United Way that pays administrative, fund-raising, or other costs associated with a gift will be allowed to do so.
- United Ways that share responsibilities for fund raising or processing of gifts will reach shared-cost agreements that clearly define the portion of the single charge that each could take from gifts.
- United Ways will conduct and submit to the United Way of America every three years a “self-assessment” of their management, governance, decision making, and community work. “Through the issuance of a ‘report card’ to the community, United Ways can demonstrate their continuous improvement and ongoing accountability to their donors and stakeholders,” said the report that outlined the organization’s plans.
The new practices were proposed by Mr. Gallagher and then developed and endorsed by the United Way of America’s National Professional Council. The council is an advisory body that is made up of leaders from 54 United Ways that collectively raise approximately $1.7-billion annually.
In a memorandum to local officials that provided the report describing the new practices, Mr. Gallagher said that the “United Way movement is in a period of transformation. The business and social climate in which we work is ever changing and others expect change from us.”
More information about the new guidelines is available on The Chronicle’s Web site.
