A long way to go for United Way

United Way of Central Carolinas in Charlotte, N.C., needs to find its way fast.

Ousting Gloria Pace King as president and launching a probe into its board’s approval of her lavish pay and benefits are important first steps.

But United Way is headed for a perfect storm, and its board cannot afford to wait too long to change the way it does business.

On Sept. 5, United Way kicks off its annual fundraising drive, which last year raised a record-high total of nearly $45.3 million.

This year, the slumping economy and rising costs are driving up demand for services at United Way’s partner agencies and putting added pressure on givers.

Even before United Way’s board announced Aug. 26 it would fire King if she does not quit by Sept. 30, at least two employers had scrapped their United Way workplace campaigns in the wake of disclosures about her compensation.

That number now has grown to at least 12 employers that accounted for $160,000 in giving in last year’s drive.

Dumping King may buy United Way a quick cosmetic fix for its annual drive, but its board needs a major makeover, both in its mindset and in its policies for setting employee compensation.

The board also needs to find a better way to tell United Way’s story.

Since a financial scandal in the early 1990s at United Way of America seriously eroded trust in local United Way affiliates throughout the United States, United Way has worked hard to revamp its business model and restore its reputation as a respected and important community player that promotes charitable giving and invests donors’ dollars in critical health and human services.

United Way of Central Carolinas has been one of the biggest success stories. Under King, it has dramatically increased the dollars its raises.

Key to United Way’s effectiveness has been the compelling story it has to tell: The Charlotte region’s booming affluence masks entrenched social problems and urgent human needs for those living in poverty or on its margins, and United Way serves as an indispensable broker in tapping that affluence to address those problems.

Equally critical to United Way’s success have been corporations that sponsor United Way workplace campaigns, make corporate gifts to United Way, and employ many of the individuals who make larger gifts, which now account for over half the dollars it raises.

Corporate executives have played a big role on United Way’s board, which ultimately is accountable for the organization, its operations, its impact and the trust on which its effectiveness depends.

Ultimately, charity is about trust: People give their money, time and know-how to charities not only because they address causes the givers care about but also because they have earned the givers’ trust by serving as smart and effective stewards of the resources they receive.

But United Way’s board has not been smart enough: It is not enough just to care, and it is not acceptable to look the other way on pay in exchange for fundraising success.

Trading excess in pay for success in fundraising can trigger a public-relations storm that can sink even the most established and productive money-raising efforts.

A board, like a parent, must set boundaries and enforce discipline.

But United Way’s board abdicated its responsibility.

And the board’s decision to pay its $20,000 a month for up to four months to Mac Everett, a retired Wachovia executive who has been named interim president, is not likely to persuade donors it has learned its lesson.

Nonprofits play a vital role in addressing community needs, and they need executives and staffs who are smart and compensated fairly, indeed generously, but not excessively.

So board members must understand that, to fulfill its mission, a charity must be able to tell a story that makes people want to support and be part of the organization, not to shun it when it needs them most.

And today, with a recession looming, agencies serving Charlotte’s most vulnerable populations need United Way, and United Way needs the support of the community.

Government can do better for charity

With some nonprofit leaders pushing hard for closer ties with government, the time is ripe for those working in the charitable marketplace to think hard about how to partner with government more productively.

But in seeking a greater partnership, nonprofits also need to recognize the limits of government and the obstacle it can post to social progress.

Despite access to vast resources and regulatory power that can have a big impact on charity, government has failed to use its assets to develop innovative and even-handed partnerships with nonprofits to address critical social problems.

Government has proved a weak cop in policing foundations and nonprofits, a bully in menacing charitable groups that oppose its policies, a failure at creating innovative incentives to giving and volunteerism, and ham-fisted in channeling public funds to religious charities while ignoring discrimination in who they hire and serve.

For their part, nonprofits and foundations often act as if their social mission frees them of the obligation to account for themselves in return for the tax-exempt status they enjoy.

There has got to be a better way to tackle urgent social problems.

Nonprofits and foundations address the symptoms and causes of those problems, often serving as civil society’s research-and-development arm.

But nonprofits lack the resources and power more readily available to government.

As the Washington Post reported recently, some nonprofits leaders are calling for a special White House office or government agency to focus on nonprofits, community initiatives and volunteerism, while others are pushing for greater collaboration among charities, corporations and government.

Jockeying for influence in a post-Bush administration, nonprofit leaders rightly are looking for ways to play a greater role in shaping public policies and leveraging government resources.

But nonprofits need to be smart, and to be careful what they wish for.

The charitable marketplace in the U.S. plays an indispensable role by taking on difficult and messy jobs no one else wants or cares about.

Because of their independence, nonprofits can be creative and entrepreneurial, can take risks and can team up with partners that make sense and that recognize true collaboration requires giving as well as taking.

By treating government as a potential partner that requires cultivation and engagement, nonprofits can find ways to put its resources to productive use and develop innovative and productive collaborations.

But in making use of taxpayer-support resources, nonprofits also must recognize their obligation to be more open and accountable about the work they do and the results they generate.

While it is not the answer to society’s toughest problems, which are more effectively addressed through strategies that are market-driven and collaborative, often spearheaded by nonprofits willing to take risks, government has the resources and power to make it an important partner in developing, supporting and investing in those strategies.

But in seeking closer ties with government, nonprofits must not forget it can be slow to take change or take risks, quick to meddle, and arbitrary in using its power.

Fundraising fuels social change

Charitable fundraisers are critical to the job fixing our communities, and our communities are taking on a dramatically new look.

With non-white minorities now expected to become the majority of the U.S. population in 2042, eight years earlier than previously projected, fundraisers have an unprecedented opportunity to help transform their organizations and philanthropy.

The challenge is to engage the emerging American majority in the charitable marketplace.

According to a new report from the Census Bureau, the new majority will consist of Americans who identify themselves as Hispanic, black, Asian, American Indian, Native Hawaiian and Pacific Islander.

That new majority, which will eclipse non-Hispanic whites, will reshape the demand for services from nonprofits, as well as the pool of donors, board members and volunteers that nonprofits will need to engage to sustain themselves.

Key players in helping nonprofits tap that giving pool are professional fundraisers, whose job is to connect their organizations with givers in addressing the symptoms and causes of social problems.

Fundraising aims to engage individuals and other partners and secure their money, services, products, time and know-how in making our communities better places to live and work.

And with the U.S. population undergoing sweeping demographic change, including the growing role and influence of younger generations, fundraisers have a big job to do preparing their organizations to better serve the new majority and provide it with a compelling case for getting involved in giving.

That will require that fundraisers better understand the changing dynamics and demographics of giving.

Despite the emergence of the new majority, organized philanthropy and the nonprofit sector remain predominantly white enclaves.

But that is changing.

In North Carolina, for example, a donor-advised fund known as NCGives works with consultants as partners to build the giving capacity of African Americans, Latinos, Native Americans, women and young people.

Located at the North Carolina Community Foundation, and funded by the W.K. Kellogg Foundation in Battle Creek, Mich., NCGives is working to help ensure that all Americans can be effective investors in the work of healing and repairing our communities.

With their fundraising staff leading the way, nonprofits can do a lot more to engage communities of color, women and young people as staff, board members, volunteers and donors.

By more closely reflecting and connecting with the populations they serve, nonprofits can find ways to better sustain themselves for the long-term and more effectively address the problems facing their communities.

Tough times create opportunity for nonprofits

The economy is hurting. Soaring energy costs are driving up the cost of doing business. Candidates hunting for campaign contributions are strong-arming donors. And terrorism and the Iraq war are breeding fear and uncertainty about the future.

For charities, already struggling to meet rising demand for services with limited resources, the convergence of these growing pressures and their potential impact on giving can breed despair.

But nonprofits need to move beyond gloom and doom, and the sense of entitlement to which too many of them fall prey, and focus on doing what it takes to build their organizational capacity.

Advancing their mission effectively will require being smarter about running their businesses, delivering services, generating earned and contributed income, advocating for change, forming partnerships that work, and working to help shape the public policies underlying the symptoms and causes of the social problems they exist to address.

Those changes are needed because givers, funders, volunteers, board members and prospective partners expect nonprofits to be more accountable and to increase their effectiveness and impact.

The charitable marketplace is huge, growing fast and in need of clear-headed thinking and practical, enterprising ideas to make it be as good as it can be.

Tough economic times can be a catalyst for fostering new strategies to create more productive and collaborative models for delivering services and generating the resources nonprofits need to take on the urgent social problems our communities face.

Investment needed in nonprofit policy work

Nonprofits can do a lot more to help shape the public policies that affect their work and constituents.Working to fix flawed policies at the root of social problems is a key role nonprofits should play.

But far too many nonprofits fail to play that role because of concerns that the law limits their advocacy work, and because they lack the resources to be effective advocates, says a new survey by the Nonprofit Listening Post Project at Johns Hopkins University.

Among nonprofits that engaged in any lobbying or advocacy, for example, fewer than 15 percent devoted as much as 2 percent of their overall budget to that work, the report says.

And while roughly half of nonprofits surveyed undertook limited forms of advocacy or lobbying, such as signing correspondence to public officials or distributing materials on policy issues, only a third engaged in more involved forms of participating, such as testifying at public hearings or organizing a public event.

The survey says nonprofits may shy from lobbying, compared to advocacy, because of existing laws limiting their involvement.

Lobbying consists of voicing a position to a legislative official on a specific piece of legislation, while advocacy consists of voicing a concern or information about policy without expressing a position on a particular piece of legislation.

The Johns Hopkins report recommends foundations invest more in nonprofit policy advocacy, that nonprofits be encouraged to get more involved in advocacy, that small and mid-sized nonprofits receive more training and other assistance to encourage advocacy, and that more resources be made available for policy work to “intermediary” groups in specific fields of interest.

“Our nation’s nonprofit organizations are widely expected to play a key role in helping to promote democracy and civic action, and our survey results indicate that they are making strenuous efforts to fulfill this expectation,” Lester M. Salamon, author of the study and director of the Center for Civil Studies at the Johns Hopkins Institute for Policy Studies, says in a statement. “However, financial and other constraints are limiting their ability to do so.”

Compounding the lack of resources, support and expertise for policy work, as well as the concern about legal constraints, are other hurdles nonprofits face, including rising demand for services, ongoing pressure to sustain their organizations, and fears that policy work could result in a loss of funding from foundations, givers and government.

To clear those obstacles, nonprofits should work to educate their boards and funders about the importance of policy work, and to secure their support to equip their organizations to be more effective policy advocates.