United Way Donations Barely Rise

As sluggish economy takes toll groups plan new approaches

In a sign that the slow economy is making it harder for nonprofit groups to raise money, United Way of America has announced that its campaigns in 2000-2001 grew by just 0.4 percent, after adjusting for inflation. The nation’s 1,853 United Ways raised $3.9-billion, $140-million more than in 1999-2000. United Way said it was pleased that for the fifth consecutive year campaigns had grown faster than inflation, which was about 3.4 percent during the drives, and that donations of $1,000 or more totaled $1-billion, an increase of 10 percent.

Nevertheless, the fund-raising figures suggest that United Ways — and the charities that depend on them for financing — face tough times ahead. The sluggish economy has already caused many layoffs at companies that run United Way campaigns. In addition, corporations are increasingly cutting back in their giving, making it tougher for United Ways and other organizations that rely heavily on businesses for support.

But United Ways’ problems go deeper. Competition from other on-the-job campaigns has caused problems for many United Ways. In the past 10 years, the percentage of employees who support United Way drives run by their employers has fallen by one-quarter, from 47 percent to 34 percent, according to the draft of an internal report prepared by a committee of United Way volunteers and staff members. Such campaigns, said the report, are the “bread and butter” for United Ways, which raised nearly 66 percent of donations in 2000-2001 that way. The report added: “While the current decline is distressing, the situation will certainly get worse.” By 2010, when baby boomers start reaching age 65 and many will retire, it said “50 percent of the nation’s wealth will be in the hands of people who may never again be reached by a workplace giving campaign.”

Looking Ahead to the Next Campaign

Before they can start tackling the problems caused by those trends, many United Way leaders are looking ahead to the 2001-2002 fund-raising season, and trying to figure out what the mixed results of the last drive mean. Among the key findings from data released by United Way:

• At the nation’s 83 largest United Ways — those that raise $9-million or more — 14 saw no growth in contributions or a decline from 1999-2000. Another 26 of the largest United Ways posted gains that did not exceed the 3.4-percent inflation rate. Hardest hit was the United Way of Morris County, in New Jersey, where contributions fell by 11.6 percent, to $9.6-million, after Exxon consolidated offices elsewhere, taking with it the $1.2-million the company and its employees had provided the previous year. That United Way says the decline will force it to dip into its reserves to avoid making major cutbacks in the sums local charities receive. San Francisco had the second worst showing, with gifts dropping nearly 8 percent.

• Seven of the largest United Ways had double-digit percentage increases, led by Austin, Tex., which raised nearly 21 percent more than the previous drive. It was followed by Seattle (13.2 percent) and Charlotte, N.C. (12 percent).

• The largest growth by region was in the south-central part of the country, where giving rose 5.4 percent, followed by the Southeast, at 4.4 percent. Gifts grew slowest in the Midwest and West, at 3.2 percent. Donations rose 3.6 percent in the Northeast.

• The growth in the amount raised per capita based on the number of people employed in an area served by a United Way did not quite keep pace with inflation. In 2000-2001 campaigns, the figure was $33.26; in the previous drives, it was $32.23.

The results reported by United Way are among several indicators that a slowing economy has left individuals and businesses feeling less willing or able to give. After five years of double-digit growth, corporate contributions are expected to stall this year, according to a survey by The Chronicle (July 26). Fifty-five of 91 corporations that provided data plan to donate about the same or less than they did in 2000. And overall charitable giving slowed in 2000 to its lowest rate of growth in five years, rising just 3.2 percent after adjusting for inflation, according to statistics released in May by Giving USA.

In cities large and small, United Way leaders are worried about the effects of the economy — especially the corporate layoffs and other troubles facing the businesses in their regions.

In Altoona, Pa., the United Way missed its $1.5-million goal, raising just $1.1-million or 11.4 percent less than a year ago. This United Way, which serves a region of 130,000 people, says the closing of several other businesses is making fund raising increasingly difficult.

“I feel like we’re sinking,” says Kay Griffin, executive director of the United Way of Blair County.

To make more money available to charities, Ms. Griffin says she won’t replace an employee who recently left, saving $25,000. She also is trying to persuade small companies to conduct payroll campaigns in the coming years and will brainstorm with local civic leaders about other ways to save or raise money.

Even in Austin, which for the fourth consecutive year turned in the biggest percentage gain among the largest United Ways, raising $20.9-million, the outlook for the coming year is cautious.

A big reason for last year’s gain was gifts from individuals, much of that in appreciated stock, which offers significant tax benefits to donors. Stock gifts totaled $3-million in the latest campaign, up from $50,000 in 1996.

But in a region where technology is one of the biggest industries, David Balch, president of the local United Way, says he knows that the industry’s economic woes will make fund raising a challenge. As a result, he is trying to expand the number of companies where the United Way solicits. So far, he has persuaded 20 companies that have 200 to 1,000 employees each to run a campaign this fall for the first time.

Slow-Growth Regions

In regions of the country that were bypassed by the economic boom of the past decade, some United Ways have considered it a major feat just to achieve increases that keep up with inflation.

In New Orleans, where the economy has been stagnant as companies have moved, merged, and closed, the United Way managed to increase donations from $14-million in 1990-91 to $19.4-million in 2000-2001, in large part by doing what a growing number of United Ways are doing: focusing their resources primarily on one or two of the biggest social problems in their communities.

In New Orleans, the United Way has been pouring money into crime-busting programs and efforts to fight teenage pregnancy and child abuse. Gary Ostroske, president of the United Way of the Greater New Orleans Area, says the United Way’s efforts to help the local police forces improve their work is a big reason that crime in the city has dropped.

This year’s fund-raising growth of 1 percent was not enough to surpass the growth in inflation, but he says even that small increase was considered a victory, given how much the area’s work force has been hemorrhaging. “We’ve survived by proving to donors that we have a community impact,” Mr. Ostroske says.

His job isn’t over. The New Orleans Saints professional football team is debating whether to move to another city. If it does, the United Way couldn’t count on again getting the $200,000 it received last year from the team’s players and owners. If the team moves, other companies are likely to do the same, he says. “We don’t have a billboard that says ‘Will the last one leaving please turn out the lights,’ but there could be one,” Mr. Ostroske says.

Soliciting Minorities

In Los Angeles, where the United Way has been committing a big share of its resources to a single cause — helping the city’s poorest residents become self-sufficient — giving increased by 4.6 percent in 2000-2001, even at a time when many companies have been leaving the metropolitan area.

Perhaps as important as focusing on a single goal, say United Way officials, was the campaign’s effort to diversify its pool of donors. In its latest drive, the United Way made special efforts to solicit big gifts from women and minorities, as well as entrepreneurs at small and midsize businesses.

Making many of the requests for the donations was Dominic Ng, an Asian American who is president of East West Bancorp, which opened its first branch in 1973 in Los Angeles’s Chinatown and today is the third-largest bank with headquarters in Southern California.

Among Mr. Ng’s successes in attracting new donors: He helped bring in a $100,000 gift from a Latina lawyer and $1-million from Andrew and Peggy Cherng, who founded the Panda Express fast-food-restaurant chain.

Mr. Ng says Los Angeles’s success should prove instructive to other United Ways.

“We have to go after different kinds of businesses and donors,” Mr. Ng says. “If we don’t change, we’ll become nonessential.”

Big Gifts

In recent years, United Ways in Los Angeles and elsewhere have found that focusing on gifts of $1,000 or more can help make up for the decline in the number of workers giving through traditional payroll campaigns.

Donations of $1,000 or more have grown by 251 percent since 1991, outpacing both corporate gifts, which rose by 18 percent, and money raised through on-the-job campaigns, which grew 23 percent.

But much as United Ways have been working to attract donations from the nation’s wealthiest people, they must do far more, according to the draft report by the group appointed by United Way of America to recommend ways to strengthen the organization.

“Most United Ways do not have the skills or systems needed to adequately provide the sophisticated financial products and advice that the affluent want and that many competitors already supply,” the report said.

Such gaps in expertise are far from the only problems affecting United Ways. United Way of America is currently operating without a permanent chief executive. After Betty Stanley Beene left United Way in January, a year earlier than she had planned to resign, an interim executive was named, but not a successor.

The draft report said United Ways were unable to make a strategic response to changing conditions in the philanthropy market because of “major differences of opinion and approaches, exacerbated by an inadequate governance structure.” It said that unwillingness of United Ways to coordinate drives run in multiple cities by the same company was leading to lack of trust among businesses that have traditionally run charity drives for employees.

To respond to both internal and external threats, the report suggested that United Way move to fill in what the report called “a leadership vacuum when it comes to addressing human needs.”

It added: “Luckily United Way’s two most immediate challenges — coordinating a response to increasingly complex community needs and revitalizing fund raising — are interconnected. If the United Way clarifies its mission and becomes an acknowledged leader in the business of caring and real impact, the fund-raising challenge will become less daunting. We already know when a United Way has clear, measurable impact, and can demonstrate it, donors get more excited about participating in campaigns and fund raising becomes much easier.”