The Washington Post

United Way of the National Capital Area gambles on new giving models

When William A. Hanbury took the helm of United Way of the National Capital Area in 2009, he knew he wasn’t signing up for an easy job. The organization was still struggling to erase the stain of damaging financial scandals, and the recession was making donors hesitant to open their wallets.

But the obstacles just kept coming. In his first week, 21 major nonprofit partners dropped their affiliation with the group. Then he discovered the organization had been negligent in paying some bills. And he soon decided that the staff needed overhauling and its infrastructure needed rethinking.

“It was really in a tailspin,” Hanbury said.

In an effort to energize what he believed was a moribund organization, Hanbury started some bold initiatives. He rebuilt the staff with fresh talent, retooled its strategy and tightened rules for charity groups looking to qualify for membership.

But most critically, he also set in motion a shift away from the workplace-oriented giving campaigns that have long been the lifeblood of the organization.

William A. Hanbury, president and chief executive of United Way of the National Capital Area, has announced he will step down in September. (Jeffrey MacMillan/JEFFREY MACMILLAN FOR CAPITAL BUSINESS)

At a time when online philanthropy platforms are fast-multiplying and donors’ giving habits are gradually changing, Hanbury and some others say the local chapter of the United Way can no longer afford to keep a traditional workplace-giving approach at the core of its brand.

“If you are completely dependent on workplace giving, you are going to stagnate and stay in decline,” Hanbury said. “You must execute on other kinds of philanthropy.”

Not all employers and nonprofits are convinced that workplace giving is on its way to extinction. Some suggest that the United Way chapter simply fails to provide the best framework for managing it.

These competing ideas illustrate the uncertainty surrounding the future of workplace-oriented giving models, which for decades have been mainstays at employers in this region and across the country.

United Way is gambling that the system needs to morph into something new. And since Hanbury recently announced that he will step down as the national capital chief executive of United Way in September, that difficult charge will fall to someone else.

United Way remains a dominant player in the Washington area philanthropy system, as it has been since its launch in 1975. It funneled $26.1 million last year to regional charities, many of which are deeply dependent on its funding.

But that is a steep fall from 1991, when it collected $75 million in donations.

Some of that drop-off is likely attributable to donors dodging the brand in the wake of past scandals at its parent organization and locally. But Hanbury and other members of the philanthropy community say that broader cultural shifts have also driven the decline.

“The challenge is in donors wanting to be more directly connected with a particular organization,” said Lucy Bernholz, a visiting scholar at Stanford University who studies philanthropy trends.

The millennial generation, Bernholz said, has a different mind-set about giving: They want a customized, personalized giving experience that allows them to be highly specific about what groups get their dollars.

Online giving platforms including Kiva, Kickstarter, DonorsChoose and Indiegogo offer the public direct access to the causes they want to support. And Web sites such as Guidestar and Charity Navigator have made it easy for them to assess the credibility of those groups.

For United Way, “It’s harder to make it clear what they are adding to the process,” Bernholz said.

Some employers, too, are changing their attitudes about giving.

McLean-based Booz Allen Hamilton, for example, maintains an in-house philanthropy program rather than contracting with a campaign manager such as United Way.

“It’s not that we have any issue with United Way, it’s that we’re a large company that can manage and coordinate our own employee giving campaign,” Joseph Suarez, director of community relations.

Microsoft, IBM, Target and Siemens also have extensive in-house giving platforms.

Observing those changes among both employees and employers, United Way chapters around the country slowly began embracing a new model. Hanbury’s group was one of its early adopters.

Instead of transacting money from a donor to a charity, United Way’s new approach is to broker partnerships between the two to create social programs, while collecting a fee from the donor.

“We have to convince corporate donors that this model has value, but they have to sustain the operations side of this. There’s no transaction costs. They have to believe in United Way,” said Hanbury, 63, in an office filled with plaques from his 30-year nonprofit executive career and memorabilia from his days as a player for the Buffalo Bills.

The social programs are based on United Way’s core issues: Financial stability, education, health and basic needs.

Under this new strategy, workplace giving will be just one of its business lines — and a declining percentage of revenue, Hanbury figures. That percentage is currently 85.

As United Way NCA changes course, some employers remain committed to workplace-oriented giving, and still find it to be a viable practice. They just don’t want United Way’s local affiliate to manage their campaigns.

The Montgomery County government is one employer who had contracted with United Way on its giving campaign before financial scandals beset the organization.

“The United Way brand, obviously, was broken, and that’s why Montgomery County stepped away,” said Bruce Adams, director of the county’s office of community partnerships.

After that, the county decided in 2003 to launch an in-house employee giving effort, rotating responsibility for overseeing it among various managers.

Over time, this practice became burdensome.

“These poor department heads who have all this mammoth work to do were having to sort of learn this process and spend a quarter of their time on it,” Adams said.

Adams didn’t want to drop the employee giving program altogether. He still believed that the roughly $200,000 Montgomery County employees raise each year could make a difference.

So, in 2009, he again sought to bring back a professional partner to manage the giving campaign. Because the county is a government entity, it had to go through a mini-procurement process to do it. Both United Way and another group, America’s Charities, made pitches.

In some ways, their offerings were similar: Each offered to manage the campaign pro bono for the first year. And their administrative costs are not wildly different (In 2010, the most recent year for which data is available, America’s Charities’s costs were 20 percent, while United Way NCA’s were 24.4 percent.)

Ultimately, Chantilly-based America’s Charities won out.

United Way “just didn’t seem as state of the art,” Adams said, compared with America’s Charities online giving platform.

He also liked that America’s Charities sent its top leaders out to meet him, a move he felt demonstrated a firm commitment to the partnership.

Unlike United Way, America’s Charities believes strongly that workplace giving campaigns a re a durable model.

“In my view, workplace giving and online giving are not mutually exclusive,” said Steve Delfin, chief executive of America’s Charities and a former staffer at both United Way NCA and United Way’s national organization.

Delfin said he has found that workplace giving can be enhanced by new media and Web-based platforms. As charities get more sophisticated about providing multimedia or social elements to their promotional materials or offerings, he said his team can pass those on to the employers.

And Delfin said that workplace giving offers charities a unique and highly desirable benefit: While online giving tends to be largely episodic, he said, automatic payroll deductions are recurrent.

Robert Egger, the founder and president of the D.C. Central Kitchen and a former interim director of the United Way NCA, said this financial consistency can be enormously valuable to a charity.

In fact, he said the reliability of a United Way check was critical for his organization in its early years.

“The ability to grow and plan and budget, that’s what gave the Kitchen the ability to grow,” Egger said.

Additionally, the employer-matching component of workplace giving models still has appeal for those who want to feel as though their dollar is stretching further.

“They absolutely do offer this multiplying effect,” Bernholz said.

And even though it may not be cutting edge, some givers still find it convenient. The Prince William County government continues to participate in such campaigns because there’s still a sense that the setup simplifies giving for its workers.

“Our employees like the benefit of being able to do that out of their pay directly,” said Jason Grant, communications director.

Like Montgomery County, Prince William once contracted with United Way, but has in recent years switched to America’s Charities.

“United Way’s challenge with employers is that they’re not presenting to companies a contemporary look at workplace giving that their employees want to have,” Delfin said.

Vanessa Small covers philanthropy and nonprofits for Capital Business. She also spotlights newly appointed executives in the New at the Top column, which chronicles their journeys to the top. Small was raised in Orange County, Ca. and graduated from Howard University.
Sarah Halzack is The Washington Post's national retail reporter. She has previously covered the local job market and the business of talent and hiring. She has also served as a Web producer for business and economic news.



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