Inside Philanthropy

A blog on philanthropy and nonprofit news and issues. A publication of Philanthropy Journal.

July 11, 2011

Charity business model evolving


By Todd Cohen

Like all charities, local United Ways are rethinking the way they do business.

In the wake of the scandal nearly 20 years ago over misuse of funds by the then-CEO of United Way of America, local affiliates wrestled with changes in their fundraising model to address anger and protest among local donors.

Rapid and continual advances in technology, along with changes in employment patterns and the increasing transfer of workers, have accelerated the evolution of the business model for local United Ways, a process intensified by the breakdown in the economy and more recent scandals like the one over the big compensation package the board at United Way of Central Carolinas in Charlotte rubber-stamped for its then CEO.

The effort to transform Charlotte’s United Way since the ouster of the CEO three years ago offers a glimpse of the direction in which other local United Ways, as well as other charities, may be moving in their fundraising.

Under its new executive director, Jane McIntyre, United Way of Central Carolinas is working to transform how it operates and to infuse its organization with a culture rooted in the connection between giving and community.

It also has taken the bold step of recognizing that United Way cannot be everything to everyone, and that making a difference will require narrowing the focus of the problems it addresses.

Based on recommendations from the Urban Institute at the University of North Carolina at Charlotte and a series of panels of 62 community leaders, United Way is planning changes in the way it distributes funds and in the types of programs it supports.

The root cause of most community needs is poverty, and the top health-and-human services priorities in the region United Way serves are programs that address programmatic education in the areas of education, housing and poverty, and health and mental health, the study says.

It recommends United Way focus its funding on “fewer, select causes,” ask agencies to respond to requests for proposals, provide funding on a multi-year basis and based on evaluation of “reliably strong programs,” and fund programs that use “best practices.”

Those changes would mark a dramatic departure for United Way, which runs an annual campaign to raise money to provide annual support to partner agencies that offer health-and-human-service programs that address priority needs United Way identifies.

But like its local counterparts and other charities throughout the U.S.,

United Way in Charlotte is trying to reinvent its business model so it can best fulfill its mission and meet community needs.

Like United Way and other fundraising federations, individual charities are recognizing they may be taking on too much, particularly in an economy and charitable marketplace in which generating revenue has become much tougher and more complicated.

So nonprofits are taking a hard look at the services they offer and the way they do business and raise money.

In a growing number of communities, for example, organizations that address the similar social problems or serve similar constituents are looking for ways to work together, sharing space and back-office services, and beginning to think about the possibility of joint fundraising initiatives.

It has been 100 years since the model for the modern foundation was pioneered by the likes of Carnegie, Ford and Rockefeller.

But just as foundations are revamping that model so they can serve as more engaged social investors, United Ways and individual nonprofits are retooling their fundraising to survive and make a difference in a more complex and challenging charitable marketplace.

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