United Way Hit by Weak Economy, Old Scandal, and Competition

MORE than 1,200 United Way volunteers and staff members converged on San Francisco last week for a conference dubbed "Changing Today, Challenging Tomorrow." For the largest philanthropic organization in the United States, the past year has been one of big changes and even greater challenges.

Last year William Aramony, then president and chief executive officer of United Way of America (UWA), was forced to resign amid allegations of lavish spending and questionable business practices. In response, many of the local United Ways that are paying members of UWA (1,400 out of a total of 2,100) withheld dues and tried to distance themselves from their parent organization.

The scandal, along with a slow economy, made 1992 a year of sharp decline in pledges. Local affiliates typically solicit contributions each year in thousands of workplaces nationwide, and pass the money to selected charitable organizations.

United Way of America is trying to pick up the pieces and start over. It recently announced a restructuring of programs and staff intended to "begin a new era of strength," says Elaine Chao, UWA's new president and chief executive officer.

Ms. Chao, a former Peace Corps director and deputy secretary of transportation in the Bush administration, says her mandate as president is to better serve local United Ways. She has spent most of her first four months on the job visiting affiliates from Bath, Maine, to Portland, Ore., to find out what they are looking for and what they feel is missing.

To make United Ways more effective in their communities, UWA has to become more sensitive to supporting their needs, Chao says. "This is a redress that is badly needed and long in coming. The question was how to consolidate and rationalize certain functions so there would be quick decisionmaking and responsiveness to the field."

The new organizational structure emphasizes training, field relations, and quality of service, Chao says. A member-services division was created to provide consultation and technical assistance to local United Way fundraising efforts.

Most of the money local United Ways raise is sent to agencies that provide services for children, the elderly, the homeless, or to offer education, treatment, and research in health care. Many of the United Ways are falling millions of dollars short of previous campaign-pledge levels.

Under the plan, one-third of UWA's staff was let go and one-third of its budget cut. New staff had to be "willing to buy on to change," she says.

Some local United Ways, even those which initially withheld dues and stressed their independence from UWA, are willing to give the new plan a chance.

"A significant amount of thought and planning went into the decision" to restructure UWA, says Marian Heard, president and chief executive officer of United Way of Massachusetts Bay. "This is kind of trial and error, but I certainly am confident enough to support the trial."

The test, Ms. Heard says, will be whether or not, when a local United Way turns to UWA for help, it gets the answer it needs. The United Way of Massachusetts Bay still does not release its dues to the parent organization until its board reviews UWA reports each quarter to make sure new policy recommendations have been put into place.

Part of the problem in the past, Chao says, was that UWA took local United Way pledge money for granted. "Now we're trying to get advanced projections as to when the money will be coming in," Chao says. "We've never done that before."

The United Way of Massachusetts Bay needs help from UWA just as much as UWA needs its dues, Heard says. "There's great strength in pulling together. The trade association can do things at the national level that local United Ways cannot do."

Even before the current problems developed, UWA was coming under criticism for being "narrow-minded," since it does not give money to certain alternative charitable groups.

Charitable organizations for women, blacks, the environment, and other causes have had to create competing charitable funds because they have been excluded from the United Way, charges Beth Daley, assistant director of the National Committee for Responsive Philanthropy in Washington. United Way says the charge is unfair.