Allocate to Your United Way First

I have noticed that many United Way boards have a preoccupation, or even an obsession, with maintaining partner agency funding. Even when workplace campaigns raise less money, the board is all about making sure that partner agencies continue to receive funding at current levels. The dark side of this obsession is that when workplace campaigns do not raise enough money to support partner agencies in the manner they are accustomed, United Ways look to cutting costs and/or raiding their reserve.

CUTTING COSTS IS UNSUSTAINABLE

Board members frequently think of their United Way like a business and when workplace campaigns decrease the expectation is that United Way will cut costs. But rather than cutting costs across the board, board members feel that partner agency funding is somehow “exempt” and that cutting costs needs to come from United Way operations. Since staff costs are the largest expense for most United Ways, cutting costs often means cutting staff costs. Most commonly, this means that staff are underpaid compared to similar positions in the market, and they often do not receive appropriate raises. This results in passionate and talented staff leaving for other jobs.

Every week, United Way CEOs and Executive Directors tell me how they have lost another valued team member who left to take a better paying position elsewhere. I also know first-hand how significant this problem is from the number of “[NAME] is no longer employed at United Way” auto response messages we receive every time we email our blog posts. Retaining talented staff is not a new problem for United Ways. United Way Worldwide acknowledged this was a significant challenge over 15 years ago.

RAIDING YOUR RESERVE IS UNSUSTAINABLE

United Way boards will argue that taking money from the reserve to fund partner agencies is precisely why United Ways have a reserve. This type of thinking is dangerous because if the reserve is for “unanticipated” events (Think: “In case of emergency break glass”), a decrease in workplace campaign funding is hardly an unanticipated event.

For 18 of the past 20 years, the amount of money raised from workplace campaigns system-wide has decreased year-over-year. This is not news, this is reality. There are fewer workplace campaigns, raising less money. If your United Way uses your reserve to “make-up” partner agency funding, it is only a matter of time before you don’t have a reserve anymore. Eventually, after years of raiding the reserve, United Ways say to partner agencies “We are not going to be around if we keep doing this.”

ALLOCATE TO YOUR UNITED WAY FIRST

There are two strategies for dealing with declining revenues. The first is to have the board commit to the long-term success of United Way by not cutting costs or raiding their reserve. Take the amount of money that is raised and cover all of the costs of operating your United Way FIRST. Then you can allocate the remaining money to partner agencies. Accept the reality that it took the current level of staffing and operational costs to raise the money that was raised. Cutting costs will not raise more money in the future and reduced revenues are not cause to raid your reserve.

GROW YOUR REVENUE

The second strategy is to grow your revenue. There are no pots of gold at the end of a rainbow for growing revenue at United Ways. United Ways are trying all sorts of methods for growing revenue such as starting more workplace campaigns and implementing digital giving platforms. But these methods are not going to generate more revenue for United Ways. Why? Because these methods are how people give to United Way, not why people give to United Way.

The best way to grow revenue is by focusing everything you do on addressing a single issue like poverty, homelessness, or the graduation rate. You can do this by making it clear to donors what issue you are addressing, telling stories of how people are affected by the issue, and sharing stories of people who are no longer impacted by the issue. This approach to charitable giving empowers donors to change lives in their community as they will be able to see that their contributions result in fewer people living in poverty, more people who have a home, or more students graduating. An issue focus allows you to raise more money from grants, institutional sponsorships and support, planned giving, and affinity groups in ways that are not possible when United Way acts as a middleman or pass-through organization.

We call this approach the issue-focused model for United Ways. The vast majority of your donors will support United Way to do this work and United Ways that have adopted this approach grow their revenue.

TIME FOR A RESET

Do you want to stop cutting costs and raiding your reserve, while funding yourself first and growing your revenue? We help United Ways do this everyday. Start with our New Directions Board and Staff Retreat, which is an opportunity for your board and staff to think about the purpose of your United Way and what your donors need and are willing to support. We’ll help your United Way decide whether or not you should be a fundraiser for partner agencies or focus on making measurable and meaningful change addressing a specific issue in your community.