#127 Jan/Feb 2003

The United Way’s New Business Plan for Community Development

These cannot be fun times at the United Way of America (UW). An astonishing scandal at the National Capital chapter, covering Washington, DC, and the northern Virginia suburbs, continues to […]

These cannot be fun times at the United Way of America (UW). An astonishing scandal at the National Capital chapter, covering Washington, DC, and the northern Virginia suburbs, continues to reverberate through the organization. One UW chapter after another is revealing a tendency to double-count some fundraising, resulting in problems calculating true administrative costs.

Many member agencies report plummeting workplace donations, which were already stagnant for many years, largely failing to recover from the Aramony scandals of the early 1990s. Brian Gallagher, the new executive director recruited from the Columbus, OH, chapter, is strategically repositioning the UW. There is much for the community development sector to address.

A Decline in Dollars and Image

UW fundraising is increasingly dependent on leadership gifts (above $1000) and major donor gifts (above $10,000), which now account for more than 28 percent of national totals, compared to 9 percent ten years ago. The combination of major donor, leadership and direct corporate gifts represent over half of UW fundraising.

Donations from traditional donors, almost all workplace-generated at below $1000 per person, have sunk over the last decade from more than 61 percent in 1991 to less than 45 percent. These donations declined 10 percent in the last year, dropping from $1.95 to $1.77 billion. Major donor and leadership gifts, on the other hand, increased from $2.245 to $2.88 billion.

In the pre-scandal era, the UW was developing a variety of housing and community development programs in response to needs assessments that ranked housing and homelessness as critical issues. UW allocations for affordable housing jumped from about $15 million in 1989 to almost $25 million in 1992. UW chapters played significant roles as conveners and partners in affordable housing task forces and funding collaboratives. Housing-oriented UW chapters became aware of CDCs and their needs.

During that time, the UW’s Housing Impact Program fostered housing partnerships for “facilitating the integration of housing and community development into the United Way’s fund-raising and allocation activities.” Chicago’s chapter made grants to move a limited number of CDCs from the LISC-administered operating support collaborative, the Fund for Community Development, to eligibility for UW membership and core allocations. The Houston chapter created a partnership with LISC that provided $50,000 annual operating grants to three CDCs.

UW funding also became increasingly donor-designated over the last 10 years to maintain fundraising totals and ward off competition from other funds. More than a quarter of all national fundraising, and some chapter fundraising, was donor-designated, reducing the proportions devoted to general funds to 50 percent or less. The UW became a financial intermediary that donors could work through or bypass altogether.

The image of the organization plunged, even among donors: in a survey, 48 percent identified religious organizations as building coalitions, 27 percent other nonprofits, but only 4 percent defined the UW in those terms. Twenty-one percent identified local nonprofits as a mechanism for creating community visions and plans, but only 3 percent described the UW that way.

Setting the Human Care Agenda

Consequently, the UW is returning to a strategy that predominated before the Aramony scandals: the UW as a community problem-solver. The new business plan, according to one internal document, is “to be the way a community sets its human care agenda and then works together to carry it out.” Key to the vision is tapping a programmatic movement that began within the UW system in the late 1990s that focused on community impact and community building. Gallagher is articulate and vociferous that the objective is no longer to simply raise more and more money, but to be accountable for “concrete, meaningful impact and results” and to “make decisions based on the long-term, best interest of the community first.”

Herding 1,400 chapters through a shift in national strategy is daunting, but it is already discernible in local initiatives that follow at least seven models.

Comprehensive community building. As part of its entry into the comprehensive community initiatives arena, the UW’s Community Investment Partners program targets several neighborhoods with an infusion of resources designed to do more than housing. For example, the Cincinnati chapter is investing substantial resources in combination with the Greater Cincinnati Foundation, Fifth Third Bank, Proctor and Gamble and other charitable donors in a small number of neighborhoods.

Affordable housing funding. The Minneapolis chapter has made a major commitment to funding solutions to the region’s burgeoning affordable housing problem. Last year the chapter announced a five-year, $11 million commitment to affordable housing, partnering with CommonBond Communities, Project for Pride in Living and other established providers, and national intermediaries such as LISC and the Corporation for Supportive Housing, for a target production level of 525 units. The Minneapolis initiative is similar to the Santa Fe chapter’s Housing Roundtable a decade earlier, which was credited with developing 800 affordable units over five years.

CDC program components. In Rhode Island, the UW is working with CDCs in specialized program development, focusing on providing support for the development and renovation of child care facilities. In other regions, the United Ways are working with CDCs and neighborhood developers on other kinds of community facilities, including family centers and recreational programs. As community development begins to pay more attention to non-housing issues in neighborhood development, the United Way’s traditional work in human services finds itself in a position to provide attractive resource assistance.

Operating support collaboratives. A fourth model appears to be a return to the Houston and Chicago models, using UW funding as core operating support for CDCs. The Cincinnati chapter has been a full participant in the Greater Cincinnati Housing Alliance, which has functioned as the region’s nominal funders’ collaborative for pumping core operating support into CDCs.

Public funding coordinator. In Tucson, the UW formed a partnership with the municipal government to plan for and allocate large portions of the city’s Social Services Block Grant and the Community Development Block Grant (CDBG) funding. Using UW resources to leverage CDBG and other funds redefines the UW as a coalition builder and problem solver.

CDC affordable housing development. Some chapters have simply put money into CDCs for operating and development costs. Boston’s UW made substantial allocations in 2002 to Codman Square NDC, Fenway CDC, Inquilinos Boricuas en Accion and others.

Housing development spin-offs. Increasingly, UW chapters are running their own programs. In Memphis, the UW of the Mid-South established United Housing Inc. to run housing education programs and develop housing on its own and in partnership with CDCs.

It is probably too soon to measure how much UW money is contributing to affordable housing and community development initiatives. Some suspect that these community building initiatives might be part of the unending UW public relations spin that was evident in its explanations of accounting problems to the press and the U.S. Senate Finance Committee.

Nonetheless, CDC access to the UW’s $4 billion in funding is important during these times of federal cutbacks, massive state and local budget deficits and the decline of philanthropic grantmaking in community development and affordable housing.

The upside for CDCs is access to UW largess; the downside is the traditional UW predisposition against advocacy and organizing. Will UW support of affordable housing and community development come with a tradeoff of CDC political activism and social justice? No one will know unless the community development sector participates in the UW’s community impact accountability process, monitoring and measuring what the UW actually contributes to the preservation and development of affordable housing for the nation’s poor.


  • Has Homeownership Been Oversold?

    January 1, 2003

    Discussion about homeownership almost always seems to begin with some reference to owning one’s own home being a part of “The American Dream.” Homeownership has come to stand for wealth, […]

  • Building Assets with Permanently Affordable Housing

    January 1, 2003

    Since 1984, the Burlington Community Land Trust (BCLT) in Burlington, VT, has developed and sold nearly 250 single-family houses and condominiums to first-time homebuyers. All of these owner-occupied homes have […]

  • Section 8 Is Broken

    January 1, 2003

    The Patterson Park neighborhood, on the East Side of Baltimore, stands perched precariously between renewal and collapse. A mixed-income population, almost evenly divided between white and black, lives here in […]