A Peek into United Way's Hidden Restructuring Program

Large and small mergers are steadily cutting the number of United Way organizations in the US, but community fears of losing out in funding allocations are the chief obstacle to administrative streamlining.

The Arkansas Democrat-Gazette (Robert J. Smith) provided some useful background and perspective on the merger of the United Way of Benton County (EIN 71-0541169 Form 990) with the United Way of Washington County (EIN 71-0305700 Form 990), now calling itself the United Way of Northwest Arkansas.  The reporter found that there have been 81 United Way agency mergers since 2004, ranging from the very small up to the combination of four groups from Missouri and Kansas into a new United Way of Greater Kansas City.  Currently there are 1,297 United Way organizations.

Mergers are not the only reason number are declining.  In some cases campaigns throw in the towel, as in the case of the United Way of Jackson County (Arkansas) (EIN 71-0638661 Form 990), an organization that raised just $11,508 in its last reported year.

Which hints at the huge variation in organizational scale among United Way campaigns.  The article points out that before 1994 there were actually eight different United Way campaigns in Benton county alone, one for every town in the county that could manage a campaign.  The process that resulted in a single Benton county campaign (plus those of some smaller neighboring counties including one in Missouri) took until 2001.

And there is still a holdout, the United Way of Gentry (EIN 58-1808761 Form 990).  This small community near the Oklahoma line uses the United Way campaign to raise about $80,000 a year, which supports a number of non-human-service programs like the high school band, the fire department, American Legion, and public library.

In an earlier era, competition among communities would motivate fund raising, but with greater mobility and member agencies that serve several communities, the rationale for so many independent campaigns has diminished. 

Still, the one factor that slows down the merger process in community concerns that their funds would be siphoned off to other communities in a merged operation.  United Ways address this concern by retaining local advisory boards to decide how to distribute funds raised in those communities.  This approach—centralized administration with local say in fund distribution—seems to be working, except when local community interests are too far afield from the basic United Way human service mission (as in Gentry).

Noteworthy about this merger is that the two counties of Benton and Washington are roughly equal in size.  According to the census, Benton county passed Washington to become the second most populous county in Arkansas around 2003.  But the United Way campaign of Benton is significantly larger: $2.8 million vs. $1.8 million for Washington (excluding non-cash contributions).  The difference is no doubt due to the local economies: 

• Benton county is, of course, the home of the world headquarters of Wal-Mart,
• Fayetteville, the largest town in Washington county, is home of the University of Arkansas. 

Since corporate-sponsored workplace giving remains a core of United Way support, the Benton county lead is not surprising.  In this case, corporate support is even more significant than for most United Ways, because the Benton group also enjoys $15 million a year in in-kind giving (although the Form 990 fails to note what organizations receive the benefit).  I haven't looked at all of them, but I doubt that many United Ways can claim in-kind giving five times larger than their cash collection.   

How big is the United Way merger story nationwide?  A Google search on United Way mergers turns up more recent cases:

• Illinois: United Way of Evanston with United Way of the North Shore, January 1, 2006.
• Wisconsin: Sheboygan and Plymouth merged in 2005.
• New York: UWs in Schenectady and Northeastern New York (Albany) merge to form the United Way of the Greater Capital Region in May, 2007.

What I find odd is that it takes a newspaper in Northwestern Arkansas to take note of this trend, while industry media like the Chronicle of Philanthropy miss it.  I've noted in the past how the Chronicle misreads the United Way.  It's not a monolith.  It's more like a community of 1,300 separate charities that share a name and some elements of a common culture.  As an institution and as a cultural phenomenon it deserves more study and respect than it is given in academic circles and in the nonprofit press.