United Way in the Nation’s Capital Tries to Win Back Donors’ Confidence

As its chief executive stepped down and four federal inquiries continued into its operations and finances, the United Way of the National Capital Area took strong steps this month aimed at rebuilding the shaken confidence of individual and corporate donors in the Washington area.

The Washington United Way, one of the nation’s largest, has announced plans to cut its staff size by a third, reduce its fund-raising budget, and review all its expenses with an independent auditor. The steps had been recommended by a special ethics and policy committee, made up of community leaders, that the Washington United Way formed in the wake of news-media inquiries into the charity’s practices.

The Washington United Way announced its actions as Norman O. Taylor, its embattled chief executive, said he was retiring from the charity. “The time has come for me to hand over the reins,” Mr. Taylor said. “This proud community organization deserves the opportunity to start anew, and it’s my aim to give it that chance.”

Mr. Taylor’s departure had been urged by the chief executive of United Way of America, Brian A. Gallagher, and others after reports of alleged improprieties were published in newspapers and several federal investigations got under way. Mr. Taylor has denied any wrongdoing.

Government Inquiries

The Washington United Way has been under review by a federal grand jury for several weeks. Questions have arisen over the spending of top officials. In addition, 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.

What’s more, the U.S. Department of Labor is investigating the United Way’s retirement benefits. While the department has not disclosed the reason for its inquiry, The Washington Post has reported that the charity’s former chief executive, Oral Suer, gained an estimated $200,000 by taking his pension nearly two years before he retired, a move that the pension’s rules did not authorize at the time.

In addition, Sen. Charles E. Grassley, of Iowa, senior Republican on the Senate Finance Committee, which oversees tax-exempt organizations, has raised questions about the United Way’s management and fund raising.

Also looking into the Washington United Way’s operations is the inspector general of the federal Office of Personnel Management, which monitors the Combined Federal Campaign, the charity drive for federal workers.

Committee’s Suggestions

In charting the charity’s new course, the Board of Directors of the Washington United Way unanimously accepted 19 recommendations of a special ethics and policy committee of community leaders. The board said it sought “to put the organization back on track.” The detailed suggestions are available on the charity’s Web site, http://www.unitedwaynca.org.

Specifically, the board plans to:

• Reduce the number of full-time workers from 90 to about 60 and close six of its eight regional offices in Maryland and Virginia.
• Give 90 percent of the donations pledged to United Way in on-the-job campaigns to charities, and take 10 percent to cover administrative costs for all drives except the Combined Federal Campaign. The United Way made the change because it has been criticized for spending too much money on fund-raising efforts and taking too much money from donations for administrative expenses. The United Way estimated that with the change it will spend $4.6-million on fund-raising, compared with the $7.6-million it had expected to spend this year.
• Adopt a code of conduct, establish a permanent ethics committee, and appoint an “ethics officer” who will report to the committee.

The United Way of the National Capital Area also began to take steps to reduce the size of its board to improve its efficiency and ability to oversee the charity.

Mr. Gallagher, who took over this year as the top executive of the United Way of America, had said the former administration lost the trust and confidence of its donors. He applauded the Washington charity’s board for accepting the advice of the special ethics and policy committee.

“Local volunteer leaders have made some difficult — but the right — decisions, and I’m really encouraged by that,” Mr. Gallagher said in an interview. “I’m also a pragmatist. And the volunteer leadership knows the same thing: They’ve got to make real steps toward implementation [of the committee recommendations]. They’ve made some courageous decisions; they have many more ahead of them.”

A. Neal Barkus, acting president of the Washington United Way’s board, said he hoped the recommendations would help the charity reassure both individual and corporate donors before the group begins its annual fund-raising campaign October 1. But, said Mr. Barkus, the group expects “some impact” on the amount of money it will be able to raise.

“We know that trust in the United Way of the National Capital Area has eroded,” said Mr. Barkus. “There’s a lot of work to be done. We’re an organization that’s going to change from top to bottom.”

Poll Findings

Some evidence may exist that the United Way scandal already threatens to take a toll on the organization’s fund raising.

A new survey — commissioned by America’s Charities, a Chantilly, Va., fund-raising federation that raises money through on-the-job drives — shows that nearly 80 percent of Washington-area residents would be less likely to give to a United Way campaign if charges of money mismanagement at the Washington charity reported in the news prove to be true. The survey was based on interviews with 500 Washington-area residents.

In announcing his retirement, Mr. Taylor said in a statement that he had dealt with questions about the United Way’s performance by recruiting the members of the independent special committee and making sure the organization carefully reviewed its governance structure.

“While some may take issue with the pace of reform, through these actions I believe I have proven my abiding commitment to constructive change and my dedication to our mission,” said Mr. Taylor.