United Way Hopes to Attract New Donors as It Alters the Fund-Raising Landscape

By Elizabeth Schwinn

As United Way of America makes changes in how it raises and distributes money — largely by concentrating on just a few causes — it says its goal is to do a better job of solving social problems. But many local United Way leaders say the changes are every bit as motivated by the need to lift contributions that have stagnated or dropped in recent years.

United Ways nationwide raised $4-billion in 2007, but they have struggled in recent years to raise enough to keep pace with inflation.

One big problem for the network of 1,287 has been the decline in contributions raised through on-the-job campaigns, particularly those run by big companies, which were once a mainstay of United Way.

In hopes of turning things around, United Way announced in May that it would focus on solving three specific problems — fighting poverty, improving Americans’ health, and keeping kids in school — and reward charities that demonstrate progress in achieving those aims.

Those efforts are intended to appeal to individuals of moderate means, who have long been United Ways’ main contributors through on-the-job campaigns. But they are also designed to help United Ways better appeal to other donors, especially corporations, foundations, and wealthy people.

“If we don’t get smarter about the impacts that our investments achieve, and we don’t continue to raise the money we need, we won’t be able to survive,” says Milton Little, president of the United Way of Metropolitan Atlanta. “The goals allow us to claim relevance as a national movement, and they can help us get out of incremental fund raising and achieve some significant increase in the kind of resources we’re able to raise.”

Bringing In More Money

United Ways across the country have been experimenting with a version of the new approach for several years — typically by focusing on specific community needs, such as fighting crime or reducing homelessness.

So far, the approach has helped United Ways raise money, research conducted by United Way of America shows.

In the five years since the organization announced it would focus on solving specific problems, the sums donated to 172 United Ways that adopted the so-called community-impact approach were 20 percent higher on average than giving to other United Ways.

And among those using the community-impact approach, unrestricted donations are 26 percent higher than at other United Ways.

That is a big deal because in recent years more and more donors have been earmarking contributions for specific charities, which meant United Ways did little more than channel donations from contributors to nonprofit organizations.

Closing a Gap

To show how its new focus on measurable goals can improve fund raising, United Way of America points to the United Way of Dane County, in Madison, Wis., which more than a decade ago ran a widely publicized effort to reduce the reading gap between white students and others.

Every year, as reading scores improved, donations did too. In nine years, Dane County eliminated the reading gap — and more than doubled contributions to its fund-raising campaign, from $7.81-million to $16.2-million.

United Way of America hopes its new approach will appeal to donors who have never given to a United Way drive.

“For younger donors, it’s about volunteering, getting engaged, and giving voice,” says Brian Gallagher, president of United Way of America. Young adults, he says, are more likely to respond to United Way’s ambition to inspire social change.

But some United Way insiders are skeptical about whether the new approach will increase contributions.

Donors in some parts of the country may not like the changes, warns John E. Ebbets, executive director of the United Way of Hampshire County, in Northhampton, Mass.

Mr. Ebbets’s predecessor left after a public outcry about his plan to take 30 percent of United Way’s money away from longstanding recipients. As a result, Mr. Ebbets has restored the money to charities that would have lost out under the new approach.

Tangible goals may be popular with donors in parts of the country like the Southwest, where the region is growing and a transient population is unfamiliar with local charities, Mr. Ebbets says. But in New England, he says, “you’ve been talking to the same people for 50 years.”

Household Names

United Way’s changes are also causing conflict for its longtime beneficiaries, particularly the large, well-known charities that traditionally have been big recipients of its support.

Those groups have been frustrated that United Way is asking donors to give more unrestricted money, rather than earmarking money for specific charities. Charities like the Salvation Army and Red Cross tend to benefit from earmarking more than small groups, since their names are easily recognizable.

The steep declines in support from United Way as a result of the community-impact approach have been the last straw for many prominent charities.

As recently as 2000, the Salvation Army of Southern California received $2-million a year from United Way. Last year, the organization, which has a $100-million annual budget, received $600,000, and was told it would be eligible for even less in future, as the United Way focused on other organizations that work on long-term efforts to pull people out of poverty.

“It’s not enough money,” says Jack Mayer, associate director of development.

“We’re the largest comprehensive social-service provider in the county,” he says. United Way’s new method of doling out grants to many organizations and requiring them to collaborate “isn’t responsive to a larger nonprofit,” he says.

Now, the Salvation Army — along with local affiliates of the Boy Scouts and Volunteers of America, groups that also stopped participating in United Way’s drives — has affiliated with America’s Charities, another umbrella group that runs campaigns at big companies, government agencies, and other large employers. That change has been promoted as United Way has pulled some or all support from those organizations.

Other organizations that have never been part of United Way have also joined forces with America’s Charities-Southland Partners. The effort is headed by Douglas Barr, chief executive of Goodwill Southern California.

In June the group ran a four-page ad in the Los Angeles Business Journal with a banner reading “America’s Charities includes these charities in employee-giving campaigns in the workplace.” Mr. Barr declined to reveal how much the effort has raised, saying that the campaign is in its early stages.

There’s plenty of room for America’s Charities and United Way to vie for donations from workers, says Elaine Buik, president of the United Way of Greater Los Angeles. “They can coexist,” she says. However, Ms. Buik believes United Way’s effort to engage donors will prove more compelling. “For too long, we’ve said to donors, sign the pledge form,” she says. “Now, we’re trying to create a movement amongst our donors about fighting poverty.”

Don Sodo, president of America’s Charities, says he doubts United Way’s new approach will win more money from donors, especially those who give through campaigns run by their employers.

“It’s counter to what employers and employees want,” he says. “Research shows that about 70 percent of people would rather designate their gift to a charity they know than give it to an organization that will simply regrant it.”

Mr. Gallagher disagrees. It no longer makes sense to try to reach donors at work, he says. “There are fewer people in large workplaces and so many more in small workplaces, we just can’t get to them.” In 2006, the most recent year for which figures are available, gifts to United Way’s on-the-job drives represented 58 percent of the $4-billion raised by United Way that year, down from 63 percent in 2002. Mr. Gallagher says he would like that percentage to shrink even further.

What’s more, Mr. Gallagher says he doubts that donors want more opportunities to earmark their gifts. “Individuals more and more are issue-oriented,” he says. “The environment is coming back to those that add value and really create results. For us or anyone else to organize as a federation of nonprofit agencies, I just don’t think is compelling.”