Reconsidering United Way contributions

[pb4uski]

We recently received our United Way solicitation for 2013 as our local UW is about to do their annual campaign. We have given substantial amounts to UW each year for as long as I can remember. UW is by far our largest contribution and is anywhere from 16-22% of our total contributions for each of the past 6 years.

Last year I remember reading their annual report and was surprised at the staggering amount of administrative costs. If I take their allocations and grants (what gets to the charities they fund) divided by their campaign collections (which includes my contribution) only about 63 cents of each dollar goes to charities - the rest is absorbed by their administrative costs. Their salaries and benefits are 38% of their total income (and 80% of their income is the campaign).

Anyhow, I'm thinking these admin expenses are outrageous and am considering ditching UW and just making contributions directly to some of the organizations they support.

Thoughts? Anyone else gone through this?

 

[martyb]

I pretty much came to the same conclusion awhile back. I've been targeting my charitable contributions for about 5 years now. And...I used to be the guy who ran all around the organization giving the big speech, soliciting contributions for the CFC (Combined Federal Campaign) at work.

 

[MichaelB]

It might be helpful to this discussion if it were related to FIRE.

 

[Chelhxi]

I hate my company's United Way campaign. Last year they even had speakers in, with sob stories. If it wasn't totally rude I'd have laughed or challenged them. There's no way to verify that their stories were true and they weren't actors. Nothing against charitable giving, but I'll pick my own charities, thank you very much. I don't think the work place should be involved, especially when you don't know where your donation is going, like with the UW. I prefer the item drives, where we give stuff specifically to the Humane Society or the High River, Alberta, flood victims.

 

[H2ODude]

Evaluations, getting the budget passed, and having to run the UW campaign for the department every year: the three things I miss not at all. Always encouraged folks to contribute if they had no other interests to support through church or other orgs, it always amazed me how a very, very small percentage of the group constituted about 90% of total dollars. I finally disposed of the annual "group meeting" where we had donuts or biscuits and they came in to promote the cause. It was those who NEVER CONTRIBUTED who questioned why we did away with it! I just get more cynical the older I get. Oh well.

 

[tuixiu]

According to this Top 25 Compensation Packages from the Charity Rating Guide the CEO of the United Way has a salary of a million bucks a year.

Now I realize he's an executive of a massive organization and is doing a job that requires some talent to do well, but there is something weird about a $500 donation to charity covering an hour or two of their leader's time.

 

[H2ODude]

I had the pleasure of being the designated leader of the UW campaign for the entire municipal organization one year. It was the year Arimony was ousted as UW leader with all the scandal. That was fun. It has always been what, unseemly, that non profit charitable organizations pay these people so much and then can tolerate misbehavior that should shame anyone.

 

[Koolau]

I guess I see the tie-in to FIRE as "contributions = significant expense" for some of us (20% for DW and me during some years - no brag, just one of our priorities). SO, with that in mind, I too stopped supporting UW several years back. Honestly, it was partly to "stick it to the Megacorp" as they were so bloody proud of their support of UW. I was about fed up with Megacorp, so dropped out completely. I DID still support several of the local agencies directly (and did some volunteer work as well). Again, so what's the point? I think we should all spend our money as we see fit, and all spending is a part of the FIRE equation. If UW no longer meets your expectations (either due to individual agencies "politics" or direction) OR if you believe the HQ is spending too lavishly (as they were accused of many years back) by all means do what feels right. If there are still local agencies you want to support, keep in mind that UW does not meet all the budget of any agency (IIRC - please correct if I am wrong). I do like supporting agencies and charities that I actually KNOW about, have worked at, have seen up-close, etc. etc. I don't like sending off money to some "agency in the sky" to dole out the funds. Sounds too much like the gummint, but I digress (sorry about that). As always, YMMV.

 

[pb4uski]

It might be helpful to this discussion if it were related to FIRE.

Sorry, I may have miscategorized it - was focused on Money and not on FIRE. Recatagorize it if you think it make sense to do so. I actually never look at the categories, so my bad.

 

[ERhoosier]

I stopped contributing to UW many years ago due to their large $$$ overhead. I only contribute to efficient (low overhead) charities so the $ does the most good possible. IMHO It's negligent for charities to waste $$ on high overhead, almost criminal to pay those massive executive compensation packages

 

[mystang52]

IIRC, United Way is only an umbrella charity. They collect their contributions, and then distribute to other charities. So, give $1 to United Way, and only 63 cents is for charity. THEN, the individual charity has to cover its own admin costs. If those costs are 20%, that's 12 cents out of the 63 cents.
If I'm correct, and using the above sample numbers, give $1, and some 51 cents ends up going to actual charitable benefit. I'd rather just donate directly to my favorite charities.

 

[pb4uski]

IIRC, United Way is only an umbrella charity. They collect their contributions, and then distribute to other charities. So, give $1 to United Way, and only 63 cents is for charity. THEN, the individual charity has to cover its own admin costs. If those costs are 20%, that's 12 cents out of the 63 cents.
If I'm correct, and using the above sample numbers, give $1, and some 51 cents ends up going to actual charitable benefit. I'd rather just donate directly to my favorite charities.

Makes sense to me. I don't need to see 37% of my contribution "wasted". I can decide which local charities merit help. I'll start with UW's list and refine it from there. A little more w*rk, but I have time - I'm retired now.

 

[Bestwifeever]

We always had a UW paycheck deduction, not too much. We didn't really think about it, just did it. Some of the charities' budgets mostly came from the UW which I believe vets them, which is good. There wasn't a big rally or pressure to take part, and it was good for us just starting out to make us think about helping others as it was easy for those inclined.

Now we give mostly to one institution and skip the middlemen. And we don't have a paycheck anymore to deduct from

 

[ERD50]

IIRC, United Way is only an umbrella charity. They collect their contributions, and then distribute to other charities. So, give $1 to United Way, and only 63 cents is for charity. THEN, the individual charity has to cover its own admin costs. If those costs are 20%, that's 12 cents out of the 63 cents.
If I'm correct, and using the above sample numbers, give $1, and some 51 cents ends up going to actual charitable benefit. I'd rather just donate directly to my favorite charities.

This is how I figured it also. I don't know if that is correct, but it seems it would be, otherwise they'd need to figure in all the weightings of the individual overhead numbers. Having ~ 1/2 go to overhead never felt right to me. We are down to just two charities, plus the occasional memorial request or fundraiser that might be awkward to say 'no' to.

It's kind of like those 'funds-of-funds' with their expense ratio piled on top of the ERs of the funds they hold.

-ERD50

 

[Keim]

I worked for years in the nonprofit sector. The rule of thumb is that no more than about 15% of income should go to administration. Keep in mind that each UWay will vary, as each is its own corporation. The OPs UWay is VERY high. I wonder if it is very small, with high fixed administrative costs?

 

[foxfirev5]

Bad charity. But, do your homework and you'll find plenty of deserving causes.

 

[JakeBrake]

This is another great thing about being retired. No Megacorp sponsored United Way! I will choose my own charities, thank you.

Another great thing is no Megacorp sponsored PAC's (Political Action Committees). I guess that's a topic for another thread.

 

[braumeister]

Keep in mind that each UWay will vary, as each is its own corporation. The OPs UWay is VERY high. I wonder if it is very small, with high fixed administrative costs?

It's probably not that out of line.
I just looked up the figures for my local United Way. Salaries and administrative expenses were 33% of total income, and 44% of campaign donations (for 2011, the most recent year available).

I certainly agree with JakeBrake. It was a huge relief to me when I left the military and the pressure to give to the Combined Federal Campaign (the gummint employees' equivalent of United Way).

My charitable contributions have been higher since I retired than when I was w*rking, often much higher. I love being able to identify causes I want to support and then support them directly.

 

[jimnjana]

I have never given to UW. That said, last year during tax season they bore the cost of the Volunteer Tax Prep on Patrick Air Force Base. If it wasn't for UW stepping up, we would not have completed over 1000 tax returns for service members and retirees. I know the cost for internet access, computers, printers and ink was in excess of 5k. So I may give to them this year only as a way of expressing gratitude.

 

[Keim]

It is higher than it should be, Braumeister. Organizations I've worked for strove to be 10-15% administrative.

Look here: Top 10 Best Practices of Savvy Donors : Charity Navigator

Obtain Copies Of Its Financial Records
Savvy donors know that the financial health of a charity is a strong indicator of the charity's programmatic performance. They know that in most cause areas, the most efficient charities spend 75% or more of their budget on their programs and services and less than 25% on fundraising and administrative fees. However, they also understand that mid-to-large sized charities do require a strong infrastructure therefore a claim of zero fundraising and/or administrative fees is unlikely at best. They understand that a charity's ability to sustain its programs over time is just as important as its short-term day-to-day spending practices. Therefore, savvy donors also seek out charities that are able to grow their revenue at least at the rate of inflation, that continue to invest in their programs and that have some money saved for a rainy day. All of this analysis is provided on Charity Navigator's website for free, but when considering groups not found here, savvy donors ask the charity for copies of its three most recent Forms 990. Not only can the donor examine the charity's finances, but the charity's willingness to send the documents is a good way to assess its commitment to transparency.

It's probably not that out of line.
I just looked up the figures for my local United Way. Salaries and administrative expenses were 33% of total income, and 44% of campaign donations (for 2011, the most recent year available).

I certainly agree with JakeBrake. It was a huge relief to me when I left the military and the pressure to give to the Combined Federal Campaign (the gummint employees' equivalent of United Way).

My charitable contributions have been higher since I retired than when I was w*rking, often much higher. I love being able to identify causes I want to support and then support them directly.

 

[braumeister]

It is higher than it should be, Braumeister. Organizations I've worked for strove to be 10-15% administrative.

I understand, and that's why I don't have a good feeling about them.
I'd be happy to be proven wrong, though. My understanding is that there are a lot of small nonprofits that rely heavily on their "share" of the United Way annual campaign, and might go under without it. So I can't really be too negative, despite my personal feelings. There are plenty of organizations that I would probably like to support that I've never even heard of.

 

[gerntz]

Don't know where people are getting their (high) %age numbers for UW overhead.

"The overall United Way system’s administration/overhead rate in the U.S. of 13.8% remains extremely competitive with the top 100 nonprofits in the U.S., and is well below industry standards and recommendations (such as the Better Business Bureau Wise Giving Alliance at 35% and the Office of Personnel Management/OPM at 25%). Moreover, United Way helps hundreds of other non-profits maintain low overhead rates."

Contact US | United Way

 

[gerntz]

it always amazed me how a very, very small percentage of the group constituted about 90% of total dollars.

Why? Some orgs do way bigger jobs than others. Red Cross is a huge operation & big percentage of where the donations go. Recall Hurricane Sandy? Katrina? Andrew? What else causes more need than those events?

 

[MooreBonds]

Why? Some orgs do way bigger jobs than others. Red Cross is a huge operation & big percentage of where the donations go. Recall Hurricane Sandy? Katrina? Andrew? What else causes more need than those events?

I believe what H2ODude was referring to was that a small % of his COWORKERS accounted for 90% of the donations at his company's UW drive....not that 90% of the donations went to just a few charities/projects.

 

[Chuckanut]

The timing of this discussion is interesting. Just today I heard a report on NPR on a charity called Give Directly. Basically, the money one donates goes directly to a poor person (in Kenya for now) who then uses it as he or she sees fit. The idea is that the poor person has a better idea of what he/she needs to get out of poverty than some charitable outfit. Google people apparently gave over 2 million dollars after a presentation. They claim almost 93% of the money goes to the poor. Overhead is about 7.4%.

GiveDirectly