For decades the United Way has been the undisputed leader of corporate charitable giving.
But now the venerable non-profit is finding its position challenged especially in L.A. over discontent with its new emphasis on alleviating the causes of poverty.
That emphasis cut the United Way funding for some social service organizations and has opened up an opportunity for America’s Charities, a small competitor that runs corporate charity campaigns.
The Chantilly, Va.-based organization is moving its Western U.S. headquarters from Sacramento to L.A. and is claiming support from local employers, such as Southern California Edison, as well as aid recipients such as the Boy Scouts of America. It also has launched an aggressive marketing campaign.
Steve Barns, chief executive of the L.A. council of the Boy Scouts of America, said his organization took a direct hit because of the United Way’s new focus and is now partnering with America’s Charities.
“We applied for funding, and they turned us down in July of last year,” said Barnes, who expects that America’s Charities should make up for at least the funding they used to receive from the United Way.
Last year, for the first time in its history, the United Way of Greater Los Angeles gave half of its money not earmarked to specific causes to social services and other organizations that it had never before funded.
The recipients, such as Wilmington Community Clinic and the Corporation for Supportive Housing, focused on either providing financial help, health care or educational resources to county residents and families living in poverty or homeless.
Overall, 139 organizations received $15.6 million in funds not earmarked. However, that emphasis meant that longtime United Way recipients such as the Boy Scouts, the Salvation Army and others were shut out of the non-earmarked funds.
Maria Wiest, senior vice president of operations for the United Way of Greater Los Angeles, said her group was well aware of America’s Charities’ efforts to capitalize on United Way’s change in funding strategy.
However, she said that the United Way stands behind its new program, because it believes that by targeting donations to anti-poverty programs it can make the most difference.
“The systemic change and the grass roots work they all have to be working in unison,” Wiest said. “And the end result is our homelessness initiative that is getting 2,300 Los Angeles residents off the streets.”
Seizing opening
Don Sodo, chief executive of America’s Charities, which has run corporate charity campaigns since its 1980 founding, said that as the United Way shift took place his organization saw an opportunity to enlarge its giving.
While donors to the United Way can still earmark their dollars for the Salvation Army, Sodo said it’s unlikely that will happen given the emphasis on other programs.
“When the United Way stopped funding many charities like the Boy Scouts and the Salvation Army, these charities had a common ground where they said, ‘We are no longer a part of the United Way,’ and we said ‘Welcome,'” said Sodo.
Indeed, America’s Charities is a fraction of the size of the United Way. In 2007, America’s Charities distributed some $30 million nationwide, less than what the United Way of Greater Los Angeles distributed by itself. Nationally, the United Way distributed $4.1 billion to thousands of charities.
Over the past several years, the United Way has been changing its funding strategy, requiring local chapters to identify key social and economic problems that should be targeted. That strategy led to Los Angeles’ “Pathways Out of Poverty” program. Other areas have different funding targets.
However, America’s Charities recipients, including Goodwill and the Braille Institute of America, said the United Way is not tapping into a key trend in charitable giving which allows donors to have more, not less, say in where their dollars are going.
“From our perspective, as admirable as the United Way’s goal may be, they are flying in the face of an increasing trend toward designated giving that is sweeping across the country,” said Doug Barr, chief executive of Goodwill Southern California, which has never been a member of the United Way.
Barr’s organization joined America’s Charities Southland Partners, the organization’s local chapter, three years ago. He said research shows that as employees are given fewer charities to choose from in workplace-giving campaigns, the employee participation rate declines.
Marketing campaign
America’s Charities paid for a glossy insert in the Business Journal targeting corporate giving, which boasts how the organization can offer payroll deductions and other services to facilitate employee giving.
And while it lists more than 20 organizations it claims do not receive United Way funding, it also notes that America’s Charities is willing to run joint employee-giving campaigns with its larger competitor.
Sodo said the marketing materials are part of a campaign to increase its Los Angeles funding. Currently, only a few dozen charities in the county receive funding through America’s Charities. They include the Braille Institute of America and Breathe California. Sodo said he expects to find a director for the Western Region within the next few months.
Wiest disputed the notion that the United Way does not provide flexible funding opportunities for employees, noting that its earmark program gives them broad choices for funding.
She also said she is not surprised by the aggressive stance America’s Charities is taking, but was surprised the group took a jab by name at the United Way.
“I question the rationale behind their approach,” Wiest said. “But we are all trying to raise more money and help our communities, and I don’t begrudge them for trying to break out and make their mark.”
