February 6, 2003 | Read Time: 4 minutes
Chief executives of the nation’s United Ways have overwhelmingly approved new accountability, disclosure, and financial standards that will apply to their organizations and result in a stepped-up role for their national umbrella organization.
The practices 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 the 1,400 local United Ways accurately and consistently report overhead and program costs. Organizations that refuse to follow the new practices will have to give up the United Way name.
The changes — passed 667 to 64, with 14 abstentions, at a special meeting of United Way leaders in Phoenix — are “a mandate by United Ways across the nation for increased accountability,” said Brian A. Gallagher, chief executive of United Way of America.
The development of new membership standards was in the works before controversy over alleged managerial and financial misconduct broke out last year at the United Way that serves metropolitan Washington. But officials of United Way of America have said that, had the updated standards and procedures been in effect earlier, some of the problems that arose at the United Way of the National Capital Area might have been identified sooner or headed off (The Chronicle, October 31, 2002).
Iowa Sen. Charles E. Grassley, ranking Republican on the Senate Finance Committee, last year sent the national United Way and the Washington organization a series of detailed questions about their operations. He asked United Way of America to describe how it ensures the integrity of local groups.
Mr. Gallagher said United Way “can’t prevent every negative situation that might come up with so many different operations around the country.” But with the new standards, he said, “I’m absolutely convinced we can prevent bad things from happening.”
The practices will require United Ways to conduct and submit to the United Way of America a periodic “self-assessment” of their management, governance, decision making, and community work for review by a monitoring and operations-assessment committee that the national United Way will create. Committee members will include United Way officials as well as representatives with no ties to the organization who are experts in such fields as ethics, financial management, and governance.
“There are certain questions that we should regularly ask ourselves, and this puts in place a discipline to make sure we do,” said Mr. Gallagher.
Review by Experts
In addition, all United Ways now will be required to report full revenue and expense data to United Way of America for third-party review. The 170 largest United Ways — representing 75 percent of the $3.9-billion raised in the 2001-2 fund-raising campaign — will also submit to United Way of America their annual reports, federal informational tax returns, financial audits, and codes of ethics for outside review.
“Having United Way volunteers and professionals — and, as importantly, outside experts — review the documents is one of the most significant changes being made,” said Mr. Gallagher.
What’s more, he said, requiring the reporting of data will help United Ways be more “transparent” to the public and the press. “In the past, when we were asked for data in terms of comparisons of United Ways in the system, we in many cases were not able to do that because we didn’t have the data,” he said. “Now, we’ll be able to do real apples-to-apples comparisons and analyses of the entire United Way network and system.”
The standards are designed in part to make sure that United Ways report revenue accurately and that no more than one United Way deducts expenses from a single donor’s gift.
Local organizations will have to abide by the new practices to use the United Way name and logo.
“We expect to have a very large group of United Ways that are already, or very quickly will be, in compliance with all the new criteria,” Mr. Gallagher said. Others “will need some reasonable period of time to work toward meeting every single criteria.”
A very small number of United Ways, he said, “won’t have the intention to be in compliance, and they will lose the privilege to call themselves United Ways.”
The vote of local chief executives showed that most want the United Way of America to play a strong role as an enforcer of standards — a “more direct leadership role” — in addition to the marketing and other services it provides, Mr. Gallagher said. “United Way of America can’t be the ‘cop’ if United Ways collectively aren’t prepared to raise the bar on themselves. The vote says we are raising the bar, even though the vast majority of United Ways already operate legally, ethically, and incredibly effectively.”
For United Way of America’s announcement of the changes, go to http://www.unitedway.org.
