United Ways Face Fund-Raising Competition From Some Former Beneficiaries

In recent years, most local United Ways have stopped supporting a roster of health and social-service charities that in the past rarely changed and instead focused their money on groups that solve specific issues, like improving education and health and promoting financial independence. While the new approach was designed to give local United Ways a means of appealing to new donors, it has been hard to see whether the approach is working, since many groups adopted it just as the economy began to sour.

With donations declining 5 percent a year in each of the past two years, and changes in the mix of nonprofits getting support, some big-name charities, including the Salvation Army and YMCA’s, have lost what was once a stable source of income.

As a result, some are voicing their opposition—either by severing ties or by waging new fund-raising efforts. In Philadelphia, seven charities that lost significant sums when United Way refocused its giving on grass-roots groups banded together last year to form Give Philly.

But so far, the group has not raised much. It collected $35,000 through online contributions since November, a measly sum compared to the hundreds of thousands of dollars these charities, such as the YMCA and the Salvation Army, received annually from the United Way.

‘Competing for the Same Dollars’

John Flynn, president of the local YMCA, which used to receive $550,000 or more each year from the United Way, says that groups like his rely far more on their own solicitations than on the coordinated effort. As a matter of fact, the stepped-up fund raising his group did after losing United Way support brought in $2.3-million, $1-million more than it raised when it was getting United Way aid.

Jill Michal, president of the United Way of Southeastern Pennsylvania, isn’t bothered by the fund-raising efforts undertaken by former beneficiaries of her group.

“We support everyone’s right to raise money as they see fit,” she says. “In so many ways, we’re all competing for the same dollars.”

Just as in Philadelphia, Boston’s nonprofit world has been shaken up by the local United Way’s decision to focus most of its money on specific causes such as reducing violence and improving services to young children.

In August the Salvation Army in Boston separated itself from the local United Way. The Army says that steep reductions in United Way support in recent years have made it nearly impossible to continue services to the poor and needy. About 20 years ago, the Salvation Army received $1-million annually from United Way; this year, it got only $171,000, less than 3 percent of its operating budget.

As a result, the Boston Salvation Army is starting to run its own on-the-job campaign and is asking employees at participating businesses to contribute a portion of their pay, something it was not allowed to do on its own as a United Way-affiliated charity. “This disaffiliation allows the Salvation Army to go to anybody that we feel would be inclined to support the Salvation Army,” says Major William Bode, commander of the charity’s Massachusetts division.

He says that he shared his concerns about the cutbacks with the United Way over the past four years, but the reductions continued. “That concerns us, especially in today’s economy,” he says. “When people need help, we need to do our best to raise money.”

‘More Duplication’

Michael Durkin, president of the Boston-area United Way of Massachusetts Bay and Merrimack Valley, says that his organization actually increased the total amount provided to Salvation Army to $415,000, or an 18-percent gain, when dollars United Way donors earmarked for the charity are counted. He agreed that the Salvation Army needed more money but was frustrated that it cut ties to his United Way.

“I’ve worked 30 years for United Way in a couple of different places,” Mr. Durkin says. “It was a low point in my career that the Salvation Army would choose to end a 70-year relationship here in Boston with a 15-minute phone conversation. It’s terribly disappointing.”

Mr. Durkin says he fears that with a huge proliferation of nonprofit organizations in the Boston area, the Salvation Army’s plan to find its own sources of support will create “more confusion and more duplication.” Still, the United Way plans to continue providing money to the Salvation Army despite the rift.

“The work is too important and our partnership is too important,” Mr. Durkin says.

Last year, the Boston United Way raised $45-million, almost a 4-percent drop from 2008. Mr. Durkin says losses in financial-services jobs affected the 2009 campaign.

The organization is trying to diversify its fund-raising efforts by applying for more foundation and government grants. Last year it received a total of $3.6-million in grants, an increase of $400,000 over 2008 and $2-million more than it raised in 2007.

“The economy has dealt all of us a pretty tough blow,” Mr. Durkin says. “For us, it’s a double hurt. People who have been traditional supporters are out of work, and organizations that depend on United Way are seeing more people. That’s probably the most troubling aspect to all of this.”