Accountable Strategies blog

A blog about accountability issues in the public, private, and nonprofit sectors

Remaking the United Way

Posted by David Kassel on January 22, 2008

Major scandals can cause the implosion and disappearance of a company or organization—Enron and Worldcom are examples—or else, once scandal-plagued entities can emerge reformed and remade.  Fannie Mae and Freddie Mac are examples of the latter. 

In the nonprofit sector, the United Way might be seen as an example of an organization that has been trying to emerge remade and reformed from numerous scandals. 

The question Rick Cohen asks in an article in the Nonprofit Quarterly is whether the United Way today is “on the cusp of rebirth, or is it in the death throes?”  The United Way of course is a collection of individual agencies around the country, which operate semi-autonomously under an umbrella organization, the United Way of America.  Scandals seem to have hit a great many of these individual agencies, starting in the 1990s.

Cohen cites many of the cases:  William Aramony’s theft of $600,000 “to support a high-flying lifestyle and various paramours.”  Oral Suer’s and Norman Taylor’s mismanagement of the United Way in metropolitan Washington, D.C.;  and Jacquelyn Allen-McGregor’s embezzlement of nearly $2 million from the Capital Area United Way in East Lansing, Michigan, while she was the vice president of the organization.  And Cohen notes that the United Way has faced serious criticism of its accounting practices, including revelations in 2002 and 2003 that United Ways in several cities had inflated their fundraising totals by double counting the numbers.  As Cohen notes:

The image of a United Way system hobbled by widespread accountability and ethical problems has been difficult for nonoffending United Ways to shake.

That perception coupled with various economic and demographic changes have significantly dampened the United Way’s fundraising ability since the 1990s.  As a result, United Ways around the country have been trying to modernize themselves, and have turned to the latest business and governmental management models to do so.

A major thrust has been the “Community Impact Agenda,” implemented by United Way of America President Brian Gallaher, which reflects a strategy of focusing larger and longer grants toward a small range of “priority issues,” Cohen says.   Borrowing the terms of those management models, the new United Way approach places a focus on “results” and “performance.”

One of those results has been that the former staples of United Way funding—the “core” agencies, such as the Salvation Army, Volunteers of America, the Boys & Girls Clubs of America, and the YMCA and WYCA—are losing United Way funding, “in part because their broad missions might not align with emerging local priorities in the action agenda.” 

Cohen maintains that United Way agencies around the country now talk of addressing “root causes” of social problems, which are often identified through community surveys.  He maintains, though, that by addressing root causes, it appears that some agencies “are simply refocusing attention on intervention points that make sense.”  In Battle Creek, Michigan, for instance,  the United Way discovered that teenage pregnancy was positively correlated with the problem of illiteracy.  This prompted a shift in funds into programs that focused on literacy skills.

Meanwhile, United Ways themselves are finding that their traditional sources of revenues are changing as well.  Cohen points out that despite the generosity of workplace givers, participation rates of federal employees through payroll deduction have declined significantly, from 47.9 percent of solicited federal employees in 1993 to 31 percent in the most recent campaign results.  To replace these declining workplace revenues, the United Way system has had to find alternatives by tapping institutional donors to replace workplace donors. 

Cohen doesn’t venture a prediction as to whether the United Way’s new management approaches will work in the long run.  The United Way may prove an interesting test case as to whether a major nonprofit institution can indeed reinvent itself. 


 

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