United Way tells many to expect less

Outside designations in record pledge year cut into member funds

June 03, 1999|By Kate Shatzkin | Kate Shatzkin,SUN STAFF

Despite a recent record-setting campaign, the United Way of Central Maryland is telling the agencies it serves that many are likely to receive less money this year -- in some cases, as much as 13 percent less.

The culprit, United Way officials say, is donor "designations" to agencies that aren't members of United Way -- but whose names can be written onto pledge forms by donors.

Though the numbers are still being calculated, President Larry E. Walton said allocations to the organization's 140 member agencies and affiliates would likely be reduced by at least $1 million -- even though the 1998 campaign raised $39.4 million, an increase of 4.2 percent over 1997.

Donors earmarked 20.6 percent of those dollars for agencies that are not members of United Way, compared with 16.9 percent the year before.

"Designations" have become a sticky problem for United Ways across the country. They pose a Catch-22: By providing donors with choices, the designation option can attract new and larger gifts. But it also can cut into the United Way's core mission -- consolidating money to address basic human needs.

The United Way of Santa Clara County, Calif., ran out of money for a brief period last month in the heart of wealthy Silicon Valley, in part because an increase in gifts to outside agencies had led the executive director to compensate for member agencies by dipping into the organization's reserve fund. In Richmond, Va., United Way officials have told agencies to expect allocations of about 12 percent less because of designations.

The Central Maryland organization -- which serves Baltimore City and Anne Arundel, Baltimore, Carroll, Howard and Harford counties -- was the first on the East Coast to offer the option, Walton said.

Generally, the designations tend to go to health care organizations or other nonprofits with which donors have some kind of personal connection, Walton said. The donations are also spread out among hundreds of programs, lessening the impact for any one. "There are no huge winners," he said.

Some of the choices stray far from the agency's mission.

Nearly $250,000 of the 1998 designated money is going to local private schools such as Garrison Forest School in Owings Mills, St. Paul's School and St. Paul's School for Girls in Brooklandville, and the Gilman School in Roland Park. Those schools received $57,500, $22,000, $17,500, and $15,800, respectively.

Walton acknowledged that few other United Ways accept such designations. He said that agreements allowing donations to private schools began at the organization in the late 1980s -- and that while he has discouraged the practice since becoming president three years ago, it has not completely stopped.

"When you come in, how bad a guy do you want to be viewed as?" Walton said. "There are a few donors that like to use our system for that. We certainly discourage it at every opportunity.

"That's not what we're in business to do. The private schools and the arts are not what we're here for."

Walton said that the outside designations have been rising in Central Maryland for the past several years, but the United Way board has compensated by using the extra interest earned on its $23 million endowment in the booming stock market.

"We put in extra money to make the agencies whole, but that's not a practice you can do long term," Walton said. "We can't do it this year -- not with the gap that we have."

Meanwhile, some United Way affiliates are scrambling to deal with the expected drop in funding.

Associated Black Charities, which funds grass-roots organizations through a contract with United Way, has already been told to expect a 13 percent reduction from last year's United Way funding, said the executive director, Donna Jones Stanley.

"This is a precipitous drop, and totally unexpected," Stanley said. "What I expected was that it would be, if nothing else, flat. To get this decrease was a shock."

At Combined Health Agencies Inc., which raises money for 24 member health agencies by contract with United Way, President Linda Cotton Perry has been told to expect a drop of about 9 percent.

The Baltimore Area Council of the Boy Scouts of America anticipates a 13 percent cut.

"It's going to mean a decrease in the dollars we have available to provide program services," said Erik L. Nystrom, scout executive of the council. "We don't have a lot of any kind of excesses we can cut out."

Walton said he has been meeting with agency directors and members of the board's finance committee to search for ways to soften the blow to programs that depend on United Way.

To help make up for the reduced pool -- and to pay for a new computer system that will allow the agency to better manage and analyze its data -- the agency has laid off seven people and left open two other jobs that were vacant.

In its 1999 campaign, the organization is trying to inform donors that too many designations actually can undercut smaller agencies whose names and work are not widely known.

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