Where Most Needed: New United Way Rules Devastate a Small Service Agency

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A shift of priorities to teens and consumer credit counseling leaves people with disabilities behind. It's too bad they can't keep up in a competitive world.

The Burlington (North Carolina) Times-News reports on a major cut back at a small agency due to shifting priorities of the local United Way organization. The Arc of Alamance County (EIN 56-1009893 Form 990), serving people with mental retardation and developmental disabilities, will have to restructure because it can no longer fund a full time executive director (paid $35,391, with $9,835 in benefits) or office rent. The executive director needed a full time job, so he left and the position is now open.

The agency's main funding source, United Way of Alamance County (EIN 56-0599239 Form 990), like many United Way organizations, has changed its focus and methods over the last few years. Naturally, there have been winners and losers in the process, and the Arc happens to be one of the losers.

To see what happened, I compared the grants by United Way of Alamance (from the Form 990) for 2003 and 2006 and make them available in this PDF file (66.9K). Between the two years, the grants stayed at about the same dollar level, a little over $700,000. But there were significant funding shifts:

The big winners were new United Way initiatives like Success by Six, an Education Task Force, and something called Community Impact. These three picked up $67,658 among them.
There were two other programs not on the 2003 list, Consumer Credit Counseling and Teen-to-Teen Theater, that received over $40,000 in 2006.
On the other hand, there were thirteen agencies out of twenty-one in 2003 that saw cuts ranging from 9% to 40%. The losers included Alamance Cares (HIV/AIDS support) , Crossroads (sexual assault response), Salvation Army, Boy Scouts, Girl Scouts, the Y, Meals on Wheels, and Residential Treatment Services (substance abuse treatment).

So the Arc had a lot of company, and its 27% drop in support from 2003 was in the middle of the pack. However, the big difference was the agency's heavy dependence upon United Way support. United Way accounted for about a third of its overall support, while for most of the others UW only accounted for a few percentage points of their total support. Only Alamance Cares, the HIV/AIDS agency, was more dependent on the UW, but they didn't have paid full time staff.

The news story reports that the Arc sponsored a lasagna sale, concessions at a city park, and received money from a professional wrestling event. Apparently these were not enough to offset the United Way cuts. The standard consultant's advice for small charities is to diversify their sources of income, but this case illustrates the difficulty with that prescription: it's expecting a great deal from a $35,000 a year executive director to run the program and develop creative fundraising ideas and earned income streams.

What could be done here:

The United Way could take into account the impact its funding has on organizations. More consideration could be given to the capacity of organizations to develop other revenue streams. After all, the original purpose of the United Way was to consolidate fundraising for human service agencies so they wouldn't have to do it themselves.
The United Way could review the balance of needs in the community. Several new initiatives, like Success by Six, the Education Task Force, and Teen-to-Teen Theater seem to have a youth focus, always a popular cause. More weight could be given to less popular causes, like HIV/AIDS and disabled adults.
The United Way could rethink the decision to support Consumer Credit Counseling and Teen-to-Teen Theater, both of which seem far afield from the United Way's role as a social safety net. While consumers with debt problems and teens have valid needs, they are far from the neediest cases in the community. These are the groups that should be encouraged to come up with new fundraising initiatives and earned income streams, rather than putting that burden on the Arc.

This is just one small county in North Carolina, but it seems to me that this kind of shift could be more widespread as the new United Way strategy works its way through the system of 1,300 or so independent agencies that make up the United Way system in the US. Maybe this little piece could show more journalists and bloggers what to look for in the Form 990s of United Way organizations.

Comments

As a former local United Way employee, I'll say you're partially right and off on a major point. You're right about the United Way's shift to community impact funding and the what it means.

You're wrong on the United Way being the non-governmental social safety net. That is what they are shifting away from - primarily because it's not a very good pitch in these days. In short, community impact will mean more targeted funding and less entitlement funding to organizations like Boy Scouts, Girl Scouts and the Ys.

As for Arc, it doesn't appear to provide services other than advocacy and public awareness/education. If an organization helping the disabled can't sustain itself w/o UWay funding, perhaps it's not viable and/or needs a good shaking up. (And I'd argue that asking help for DD and otherwise disabled adults is popular and effective. I always mentioned it in my pitches.) Perhaps the organization's inability to raise funds for itself was a factor and a legit. factor to consider. If an organization will go under because it loses $8k, it's not very healthy. The United Way propping it up forever isn't realistic.

I won't disagree with the notion of funding less popular causes, but it's much easier to seek funding for and to fund childhood initiatives.

The bigger issue for this United Way is the 26% admin and fundraising cut. That's pretty high.

Posted by: United Way apologist | May 07, 2007 at 02:58 PM

Tierney says that larger scale organizations would have access to other resources, which I suspect means that they pay for consulting services from Bain at the going rate. Bridgespan's Form 990 reports that the company operates with consultants borrowed from Bain & Company, which continues to pay their salaries while on loan.

Posted by: air jordans | March 18, 2011 at 11:09 PM