The Lightning Rod M/M Blog

Why Not Full Disclosure About the United Way List To Public Sector Employees?

These days it's not uncommon for United Way campaign solicitation materials distributed to donors to not include any list of "United Way Member Charities."  Many United Ways no longer have "member" charities.  In any case, the "new United Way" paradigm is to encourage gifts to the United Way community fund and discourage gifts to individual charities.  Including a list of charities with the solicitation materials would only remind donors they have a choice.

But when it comes to at-work fund drives for public sector employees at the federal, state, and municipal level, the participating federated groups, including the United Way, are required to list their respective member charities in the campaign materials.  In the cases where the United Way has no members it nevertheless "certifies" charities that it has persuaded to apply for inclusion in the fund drives under United Way's name. 

Everyone turns a blind eye to the fact that these charities are not "members" in any commonly understand definition of the term.   When donors see the United Way list they presume those charities are somehow supported by or affiliated with the United Way.  They also presume that if they make a gift to United Way that money will be shared among the "members."  After all, that's the traditional federation model.

But nothing could be further from the truth.  United Way will not share any funds designated to it with these charities.  The only support United Way will give these charities is to pass along any gifts that have been designated by donors to these individual charities, and it will charge a 10, 15, or 20 percent service fee off the top for the privilege.

Isn't it time for this practice to be disclosed?  If a federation is not going to share gifts with the charities it lists under its name, shouldn't donors have right to know that?

Heart (less) West Michigan United Way

Heart of West Michigan United Way runs the funds distribution program for the Raymond James Investments company's United Way campaigns conducted around the country.  The company is a big United Way supporter, especially of the United Way of Tampa Bay, where the company has its headquarters.  Employees are strongly encouraged to support the United Way, but "write-in" gifts to individual charities are permitted so long as the gifts are to "organizations  whose primary mission focuses upon health and human service issues."

Guess who determines whether the intended recipient charity is a "health and human service" organization?  And guess who keeps the money if the charity is determined not to be a health and human service organization?

Last fall a Raymond James employee in Tampa Bay made a designated write-in gift to a charity the donor had supported for years.  In due course the Heart of West Michigan United Way contacted the charity and asked it to provide evidence that it met the health and human service criteria.  The charity did so.  A few weeks later the United Way wrote back, saying:  "After careful review, it has been decided that the PRIMARY mission of (charity) is not health and human services."

And what does this charity do that makes its PRIMARY mission NOT health and human service.  Wait for it...

It provides material support to orphanages and helps couples adopt orphans.

To add insult to injury, the United Way's letter pointed out that the charity's application had been reviewed by the Vice President of Resource Development -- in other words, by the executive responsible for bringing in money to the United Way.  Conflict of interest anyone?

There was no mention of an appeals process in the letter, but the charity appealed anyway and eventually prevailed.  The charity eventually got the gift, about six months after the donor had given it, with 10 percent taken off the top as United Way's "service" fee.

We asked the United Way in writing  whether the donor would have been notified had the charity not eventually prevailed and, if so, would the donor have had the option to have the gift refunded?  No response.  A month later we asked again.  What we got back was a fax of our request letter on which was a handwritten note that said:  "I've been busy."  We've heard nothing since.

Seven Questions Every Donor Should Ask United Way

Seven Questions Every Donor Should Ask United Way

1. How much money did you take in last year?  How much of that did you pay out in grants or distributions?  (The difference between those two numbers is the most accurate reflection of the United Way’s effectiveness.  You can’t rely on United Way’s self-reported number of its administrative and fund raising overhead percentage because they label much of their internal paper-shuffling as “program costs.”

2. If I earmark my gift to a specific United Way member charity, will United Way treat that gift as “first dollars” against the charity’s United Way allocation?  (This is a common practice. The United Way subtracts the amount of the donor’s gift from the amount of the grant it has pre-determined it will make to the charity.  Thus, the donor’s gift results in no net benefit to the charity.  Had that donor given to the charity directly, there would have been a net benefit.  This practice dis-empowers donors and insults their intelligence.)

3. Is this list of member charities I see in your brochure or on your web site really a list of members in the sense that if I make a gift to the United Way they will all share in that money?  (Don’t assume that the charities United Way presents are really “member” charities that are going to share in your generosity.  Sometimes the lists are just window dressing, such as United Way of the San Francisco Bay Area’s “community certified charities.”  None of these charities are necessarily going to get any United Way dollars, and few will.  Other times the lists are composed of so-called “community partners.”  These are charities that the United Way has made grants to in the past, but there is no guarantee they will get any money (i.e. your money) in the future.

4. If I earmark my at-work gift to a specific charity of my choice, how much of that money will United Way deduct before sending the remainder on to the charity?  Will this cost vary if I choose a charity not on United Way’s list as opposed to if I choose a charity that is on United Way’s list?  (This information should be disclosed up front on United Way campaign materials, but often it’s in the small print.)

5. If I earmark my at-work to a specific charity, will United Way honor my designation unconditionally or will United Way only honor the designation if it is to a charity United Way approves?  (The policy among United Ways to only “allow” designated gifts to “health and human care” charities is increasingly widespread.  There is no universal definition for this term – it can mean whatever the local United Way wants it to mean.  Charities are asked to “prove” their “health and human care” bona fides with documentation.  As a result, the recipient charity sometimes has to spend more to receive your gift than the amount you gave. 

6. If this United Way has a “health and human care” limitation on designated gifts, and you determine that the charity I chose didn’t meet that criteria, what will happen to my gift?  Will you return it to me or will you re-direct it to the United Way general fund?  Is that re-direct automatic, or will you re-direct only with my express permission?  (If United Way were a business or a government program instead of a sacred cow, people would be going to jail for this practice of re-directing designated gifts to the general fund.  Even in a best case scenario, where donors are notified of United Way’s decision, United Way has an unconscionable conflict of interest by putting itself in a position to benefit if it determines that the charity the donor intended to benefit doesn’t meet United Way’s criteria.)

7. How much of the United Way operating budget is spent on lobbying governments to provide more money to social welfare and entitlement programs – in other words, to raise my taxes.  (You probably won’t get a straight answer to this question, but you should understand that “networking” with government is now a key component of the “new United Way” program.  Basically, the United Way is trying to reinvent itself as “the community’s ombudsman” for public health, job creation, education, etc., joining a long, long list of other self-appointed “ombudsmen” at the public trough.)

Another Day, Another United Way Cookie Jar

Earlier this week the Atlanta Journal-Constitution (www.ajc.com) reported that Mark O'Connell, the former CEO of United Way of Metropolitan Atlanta, received nearly $1.6 million in cash as a pension supplement.  There followed the usual and customary howls of outrage.

I say, give Mr. O'Connell a break.  If his corporate masters on the United Way board thought he was worth it, who are we to second-guess them?

Just one problem:  Nobody told the board.  They did not vote on this increase.  According to AJC's story, although leaders of the compensation committee claimed they informed the board, board members AJC contacted said they didn't know O'Connell was on track to receive this supplement.

Sound familiar?

I wonder how many other UW execs out there have similar retirement packages their boards don't know about.

Defenders of the payout said they did it so as to not lose a valuable chief executive.  Huh?  According to its most recently available IRS 990 return, for the year ending June 30, 2005, United Way of Metropolitan Atlanta operated at en effective overhead rate of 27.6 percent.  That is to say, they paid out to charities only 72.4 percent of what they took in.  That's poor management, even by United Way standards.

Contest: Design The Logo For The Untied (Not A Typo) Way

Our newest pro bono client is an advocacy organization whose mission is to encourage and empower on-the-job givers to donate directly to the charities of their choice.  Hence  the name:  United Workers for the Untied Way (UWUW).  It was formed to counter the move now afoot within the United Way system to scale back or eliminate donor choice and return to the bad old days when a workplace gift went to United Way only -- no designating it to an individual charity, thank you very much.

UWUW needs a logo.  So I'm asking readers of this blog to submit suggestions.  The ideal logo would be suggestive of the United Way logo but revamping it to make a statement (and not infringe on United Way's copyright).  You recall the United Way logo -- an anorexic Pillsbury Dough Boy standing under a rainbow.  How can we twist that?  Have fun!      

United Way To Other Charitable Federations: "We Are The Deciders"

Here's yet another example United Way's arrogant, short-sighted, treat-givers-like-sheep "Take Back The United Way" movement -- the systematic effort to eliminate giver choice in employee workplace charitable fund drives and replace it with the United Way being the sole decision-maker for determining which charities get the money.

This one's from Illinois, a hot spot of the movement.  Illinois has a law that requires municipal employee fund drives, like cities, counties, or school districts to allow all the charitable federated groups the state recognizes to participate.  For example, if a county government lets United Way participate in its employee fund drive it has to let Independent Charities of America participate, too, as well as the other federated groups the state recognizes.  As a result, most of these campaigns are jointly managed by the federations, with one of them being selected to take the "coordination" role. 

In Lake County that coordinator is the local United Way.  Here's an email from the coordinator to the other participating federations, followed by one federation's response:

Hi,

I am the United Way coordinator for the Lake County Federated Campaign for this year.   

To help save the cost of printing a large volume of booklets this year we are trying something different this year which we feel will help all federations.  This year we are going to print on the back of the pledge card a listing all the federations with their number and logo. If an individual wants to designate to a specific agency within the federation they will have the option to pledge on line with a searchable database with all agencies or they can go to their team leaders who will have a printed booklet with the federations and agencies in it. 

Our thoughts on this were that the employee does not need to go any further than their pledge card to donate to a federation.  As a federation we of course would like to have the monies come to the federation directly so we can put the dollars to the most needed places. 

I hope this is in agreement with all of you.  Hopefully all federations will see more income directly to them. 

We still need your list of agencies for the online pledge and to print a minimal number of booklets for the team captains and departments.  I would like these as soon as possible so we can start getting what we need printed and setup on the web.

Any questions please feel free to contact me.  We are planning the campaign to run from October 2nd through October 19th.

A Response:

Community Shares of Illinois is STRONGLY opposed to the changes you are proposing.  The campaign materials should be about giving donors the opportunity to choose the charities they wish to support not so that "federations will see more income directly to them."  That may be what United Way wants, but we are committed to giving donors more control over where their dollars are directed.

In terms of costs,  I believe that the charities can provide a donor guide that includes all of  the state certified charities at little or no cost to the campaign.  The materials you are proposing are both biased to United Way and unfair to the donors in that it makes it difficult for donors to find out which charities they have the right to choose from. 

Thanks for the opportunity to comment on your suggestions.

I have no idea whether this coordinator is a true believer in the all-money-to-the-federations philosophy or if she was merely following orders.  Probably both.  But it's one thing to give donors an opportunity to direct their gifts to an institution to re-distribute among charities as the institution sees fit.  It's quite another to propose a system that is deliberately designed to make it harder for a donor to exercise his or her own choice of which charities to support. 

This United Way proposal is analogous to your being given an election ballot that only lists the political parties, not their respective candidates.  You have to go online if you want to select which candidates get your votes, or go to a campaign official to get a special form.  Sound like a good idea to you?

Earth To United Way:  You are not smarter than the people, and your choices are not somehow inherently better than their choices.  Get over yourself.   

Should You "Pre-Certify" With The United Way?

I've heard that some local United Ways are requiring annual "pre-certification" paperwork from charities that wish to "remain eligible" to receive donor choice ("write-in") gifts from contributors in UW corporate campaigns.  I'd like to hear from you if your organization has received any such applications.  If you receive any pre-certifications, I recommend you complete and return them.  I'll explain why below.

The idea behind pre-certification is that United Way will only accept write-in gifts to charities that it has "pre-certified" before its fall campaign begins.  To get said certification a charity must apply annually using a form provided by the local United Way with includes various affirmations (e.g. anti-terrorism compliance), contact information, a copy of the applicant's IRS 501(c)(3) determination letter, and perhaps an ACH authorization form and a voided check.

Obviously, this process reduces the administrative burden on United Way of processing donor option gifts.  It reduces the number of charities UW has to send remittances to, and it streamlines the process of making the remittances it does send.  Of course, it also takes the donor's choice out of "donor choice."  "You may give to the charity you like, just as long as it's one of these." 

If you have received a pre-certification application from a United Way, it's because at some point a workplace donor made a write-in gift to your organization that was processed by that United Way.  That's how come the United Way has your name and address.  Is it worth the trouble to complete and return the appplication?  The answer is yes.  Somehow, some way, that United Way is going to publish that list of "certified" charities.  Some donors will be offended that the charity they'd prefer to give to is not included on the list, but others will just shrug their shoulders and find someone on the list to give to.  You want to be on that list.  Remember one of our Golden Rules of Workplace Campaigning:  You have to be present to win.

Again, if you receive any pre-certification requests, please share them with me.  Thanks.

Donor Advised Funds For Workplace Giving?

According to an article in the May 3, 2007, Chronicle of Philanthropy, donor advised funds are now paying out to charities about the same amount annually as the entire United Way system (my observation, not the Chronicle's).  What I found especially interesting was that the Renaissance Charitable Foundation set up donor advised at three companies, which gave their workers the option of contributing.  This is new, and I hope to see more of it.  Replacing United Way donor option ("write-in gifts") with donor advised funds could be good news for both the United Way (which doesn't really want to process write-in gifts) and corporations that want to offer their employees freedom of choice in charitable giving at work but don't want the administrative burder of running that program in-house. 

Independent Charities of America (ICA) offers donor advised funds, too, and it has been ICA's experience that  the interest earned on the assets contribution mostly pay for the administrative costs of the eventual distribution to charities.  (ICA requires a minimum distribution of five percent of the donor's account annually).

That's the good news.  The bad news is that when ICA has offered this option to corporations, the response has been "that's too complicated for our employees to understand."  Maybe so.  It's a new idea for workplace giving.  But once that AH-HAA! moment happens, and employees get it, I think they will love this idea.

What do you think?

Who Owns The CFC Logo?

As I write this on March 6, 2007, the Combined Federal Campaign's training workshop for campaign managers and volunteer leaders is underway in a hotel in Seattle.  In the hotel lobby, outside the ballroom, attendees can visit with a number of commercial vendors exhibiting their wares -- all the awards and pins and doodads and whatnots so necessary to waging a successsful campaing, and all bearing the CFC campaign logo.  But there's a problem.  One of those vendors, Sales Service America, a subsidiary of United Way of America, claims that it owns the CFC logo and that if other vendors want to show it in their catalogs or on their websites they must first pay a license fee to United Way or face the wrath of United Way's high-powered lawyers.  The US Office of Personnel Management is aware of this situation.  Doesn't it strike you as odd that the government would accede to United Way's claim that it owns the logo and seal of a government program?  Who's in favor of a new CFC logo, one in the public domain?

Is United Way Donor Option Disappearing? Part II

So United Way wants to be more like a big grants-making foundation and less like "a mere pass-through organization." Too bad. They are pretty good at being a pass-though organization, and common sense tells you that the giving public as a group is in a better position to determine what giving priorities should be than the charity bureaucrats at United Way.

Nevertheless, if that's their agenda, that's their business. But when they want to advance their agenda by dis-empowering YOUR donor, that's your business. So what do you do when your donor calls and says "United Way won't let me give to you."

1. Get it in writing, either from the donor or the United Way.

2. Ask the donor to file a complaint with the company's human resources office. Charitable giving through payroll deduction is an employee benefit, and if the employee is not able to exercise that benefit because the United Way has decided to pre-empt the employee's choice of recipients, that's discrimination. Not legally, perhaps, but in reality. My buddy who wants to give to the United Way can use the payroll deduction benefit. But if I want to give someplace else I can't use the benefit.

3. Accept that the employee wants to vent his anger and frustration but in the end, most of the time, will do nothing. Fear of consequences for rocking the boat will usually trump standing up.

4. Give the employee an alternative way to give to you in bite-sized chunks using a method other than payroll deduction. Send him to your web site to make a recurring credit card gift. That's as economical and convenient for the giver as payroll deduction, and it's even better for you because you get the money without United Way's service fee taken out.

5. Write the company's chairman of the board or CEO and express your dismay with United Way policy. Don't use the complaining employee's name without his express permission, of course, but do express your own displeasure, politely but forcefully. The United Way is the company's agent if it's running the company's employee fund drive, so if the United Way is discriminating against you then the company is discriminating against you.

Write to share your own ideas for "best practices" in handling this situation.