Thursday, October 1, 2009

Why I Will Not Support the United Way

It's that time of year. The air is cool and crisp, the wind picks up, sometimes creating a bit of a chill, the leaves are changing, and the annual United Way campaign kicks in at work. The United Way is an organizational clearing-house that collects donations on behalf of designated charities and then distributes those funds appropriately.

There are at least three fundamental problems with the United Way, and it is for these reasons that I have not, and will not support the organization. The first problem is that the United Way skims money off the top of every donation. The second problem is that, although you can direct your donations to specific charities, the United Way actually utilizes an accounting trick to funnel money in the proportions that they see fit, and finally, and most egregiously, the United Way provides donated funds to organizations that discriminate. I'll address each of these problems in greater detail.

When giving to a charity, it would seem logical that the donated funds be directed to maximizing the mission of that charity. Administrative costs obviously cannot be avoided, but these should be minimized to the greatest possible extent so that the money can be put to work actually making a difference. There is a lot of information out there about how efficient charities are at putting donated money to work (e.g., www.charitynavigator.org). Yet, United Way isn't a charity in of itself, it's just a distributor of funds. So, money given to the United doesn't actually do anything until it is sent to the designated organizations. The actual charities then use the money from the United Way to operate their organization, including providing for their own administrative costs. So then, United Way is a middle man, skimming money off the top. The money that stays in the United Way's pocket does nothing for a given charity. Every charitable organization that I can think of accepts donations directly. So, why not give money directly to the charity? Why give it to the United Way so that they can just pass it along while skimming money off the top? It just doesn't make sense.

If you are willing to swallow the commission charged by the United Way, there is still the problem of their donation accounting tricks. When giving to the United Way, you can specify that your dollars go to a specific charity on their designated list. Here's the rub though. As best as I can tell, the local United Way Board of Directors decides in advance what fraction of the total annual take will be allocated to various charitable organizations. As long as the total amount of dollars specifically directed to an organization by donors is under the amount allocated by the Board, your donated dollars are considered to be part of the Board's allocation percentage. For example, suppose the United Way has, after taking their cut, $100 to distribute. The Board decides that $20 (20%) will be given to organization A, $40 (40%) to B, and $40 (40%) to C. Of the $100 dollars, individual donors requested that $15 go to A, 10$ to B, and $1 to C. Since these request fall under the amounts allocated by the Board, the Board allocations are unaltered. In other words, the amount of donor-directed dollars has zero impact on the allocation. Your "vote" has been thrown away. The ethical way to divide donations is for the Board to allocate a percentage of undirected dollars and to send the directed dollars as a separate disbursement. In the case I gave, that would result in a total undirected amount of $100-$15-$10-$1=$74. The amount of undirected dollars going to A, B, and C would be $14.8, $29.6 and $29.6, respectively. When directed dollars are added in, that would result in $29.8 to A, $39.6 to B, and $30.6 to C. That's quite a bit different than what the Board allocated, but it is reflective of the donors' wishes.

The biggest problem of all, however, is that the local United Way chapters decide to which charities they will distribute funds, and they are free to choose charities that discriminate. Even if one accepts the two other fundamental flaws, this one is unforgivable. Why anyone would give or support an organization that permits this is beyond me.

The Boy Scouts of America (BSA) is an organization that openly (and legally!) discriminates . Members may not be GLBT and they must profess in the belief of a god. The SCOTUS has ruled that because the Boy Scouts are a private organization, they are free to determine who is eligible for membership. While I find discrimination deplorable, I also strongly support the rights of private groups to do so. It turns out that a substantial fraction of funding for the Boy Scouts is provided through donations distributed through the United Way.

My local chapter (Foothills United Way in Boulder), it turns out, will not support the local Boy Scouts, because of their policies. However, the chapter of our corporate headquarters (San Antonio) does support the Boy Scouts. Some will argue that because the local chapter will not distribute to the BSA that donations to the local United Way chapter or morally allowable. I beg to differ.

Although, thankfully, the local United Way will not support discriminatory organizations, the fact remains that the national organization under which they are chartered allows this to continue. Supporting the United Way locally or nationally provides legitimacy for an action that is indefensible. The solution is for the national United Way to make it clear in no uncertain terms that they will not support organizations the discriminate. Period. That the local chapter will not support discriminatory organizations is nice, but it is no more meaningful than knowing that some local chapter of the KKK does not support segregation of blacks.

Above are the three fundamental problems with the United Way. In addition, there are various other issues, including strong-arm tactics--bordering on coercion--that are still rampant. Maybe I'll write some more about that while prospective United Way campaign contributers are enjoying a pizza party courtesy of the company.