Let?s all join in applauding United Way of Central Maryland for overhauling the way it distributes money on behalf of all those who donate to it.
The organization decided to focus its charity on four areas where it says United Way can help the most people in need. Those areas are helping the poor and homeless; preparing young children for school; protecting people from family violence; and helping 6- to 18-year-olds achieve their “potential.”
Good start.
But the defined areas are vague. What exactly is “potential,” for example? Specifics, please.
It?s good news, however, that the changes in how money is allocated will mean that United Way, and those of us who give charitably through the United Way, can look back five years from now and say, for example, that its efforts to reduce domestic violence worked or didn?t work and assess its programs.
As part of the process, any group that wants money from United Way will have to outline how its work fits with United Way?s goals. July 10 is the drop date for the new procedures.
This may worry previous grant recipients who were used to a steady check.
Peter Berns, executive director of the Maryland Association of Nonprofit Organizations, which provides training and consulting services for nonprofits, said the changes are “creating a lot of controversy and anxiety” within groups that have received funding.
“It?s a bold move to redefine their approach to philanthropy,” Berns said. By making the changes, they plan to become more “dynamic and accountable to donors.”
Exactly.
Given the financial management scandals in nonprofits throughout the country, why has it taken so long? Nationally, United Way started pushing these reforms about four to five years ago, saidSheila Consaul, director of media relations for the national organization.
A desirable next step would be for United Way of Central Maryland?s board of directors to turn the microscope up a couple of extra notches to look at its own operations, including the salaries of its executives. Its tax forms from 2003, the most recent available through nonprofit resource GuideStar, show that six executives received base pay of more than $100,000 per year.
Too much? Not enough?
The salaries constitute just a part of the cost of administering the United Way, and that cost averages 17.5 percent of revenue received. That outpaces the national average of administrative costs for United Way affiliates ? 12.7 percent ? by 38 percent. Nationally, the amount nonprofits spend for overhead varies widely by the type of charity. Arts organizations spend the most on administrative costs on average ? nearly 30 percent ? according to a study by the Urban Institute and the Center on Philanthropy at Indiana University.
United Way of Central Maryland, rightly examining the efficiency of its affiliates, needs to start at home and demonstrate the value it provides to donors who could simply donate directly to the charities of their choice.
United Way has been demonstrating its worth nationally and in Baltimore for a long time, showing how common marketing and the efficiencies of single donations work well for donors and recipients. For example, United Way streamlines donations from local businesses, which would otherwise receive calls for donations from hundreds of groups.
But since the United Way board has chosen to apply stricter guidelines to its recipient organizations, now is the best time for it to show why it is spending more to administer the community?s donations than other United Way affiliates.
