D.C. Area Nonprofits Fear Loss of Funding As United Way Retools

By Philip Rucker
Washington Post Staff Writer
Friday, May 16, 2008

United Way's announcement yesterday that it will refocus its giving around education, income and health stirred anxieties among leaders of Washington area arts organizations and other nonprofit agencies that fear their groups' funding could be cut.

Most of the money raised by the United Way of the National Capital Area in workplace campaigns and private donations is earmarked by the donors for specific nonprofit groups. United Way officials said they will continue accepting the restricted money, even if the chosen groups fall outside the areas of education, income and health.

But the local affiliate said it will follow the national organization's lead by directing its unrestricted money toward programs that help meet ambitious 10-year goals, including cutting the national high school dropout rate in half.

Jennifer Cover Payne, president of the Cultural Alliance of Greater Washington, a consortium of nonprofit arts groups, said she thinks the new initiative could cause problems for arts groups that have relied on the United Way.

"The first thing that usually is dismissed are the arts when there are any new funding initiatives or when there is a challenge with funding initiatives," she said. "People are not educated to understand . . . the reach of the arts in the community."

The United Way of the National Capital Area allocates much of its discretionary money in the three targeted areas, in such programs as affordable housing, child wellness and academic mentoring. But the affiliate also awards grants to arts organizations and other nonprofit groups that might fall outside the core areas identified by the national organization.

Charles W. Anderson, president and chief executive of the local United Way, said that the agency will slowly and carefully move toward fully supporting the priority areas.

"You can't pull the rug out from under agencies that are doing good work in other areas," Anderson said. But, he said, "as time progresses, more and more dollars will go in those [priority] areas as we are able to share with people measurable outcomes to show people that their investments in United Way are working."

For large arts groups in the Washington area, the loss of United Way funding might have little impact on their overall budgets. Arena Stage has received unrestricted grants from United Way that could be jeopardized under the new initiative, but Jennifer Baker Howard, the theater's development director, said the organization's overall budget is so large that United Way's contributions are insignificant.

"It's a shame that they've decided to take this stance, and we hope they'll reconsider," Howard said. "Obviously, people need to be clothed, fed, housed, but we also feel that the arts are a significant contribution to society."

Chuck Bean, executive director of the Nonprofit Roundtable of Greater Washington, said he expects some anxiety in the region's nonprofit sector.

"When any major funder develops a keener focus, then of course there may be some organizations that end up not within that focus," Bean said. "But I think it's up to the United Way's board of directors to discern both cost and benefits and do the right thing for our region."

The national United Way sets the agenda for its 1,300 affiliates, but they can set their own giving priorities. The national organization defined the three priority issues loosely to allow affiliates to be flexible in deciding how to award grants.

For instance, the Capital Area Food Bank, which receives United Way money, can be grouped in either the health or income categories.

"I would hope they will come at the whole thing from a broad perspective," said Lynn Brantley, president and chief executive of the food bank.

Brantley said food pantries and housing programs are "the important undergirding that people depend upon to exist, to know that these are things that do improve things in a community."

Most of the United Way's discretionary grants are already spent on national priority issues, said Allen Lomax, co-chairman of the local United Way committee that oversees such grants.

"There's going to be a little shift in thinking, but most of the grants we deal with help with moving families and children toward self-sufficiency and deal with affordable housing issues already," Lomax said.

In the past fiscal year, United Way of the National Capital Area raised $23.7 million that was designated by donors to go directly to select nonprofits and nearly $3 million in unrestricted funds to distribute as grants.

"The reality is, there is history with United Way where people donate to their specific agency, and that's viewed more as a transactional role for United Way," Anderson said.

But United Way leaders say they hope to increase unrestricted donations to help pay for the national priority issues.

"This isn't easy," Anderson said. "But this is the right thing, because this organization is about serving people and making sure donors are able to contribute to issue areas that are making a mainstream impact."

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