The agency begins sharing donations with nonmember groups, scaling back on its funding of members
After nearly two years of planning and often heated debate, the United Way of the Columbia-Willamette is about to scrap an 80-year-old system for distributing money to Portland area social service agencies in favor of a controversial new formula.
Under the new system, the charitable organization is cutting back on the money it provides longtime member agencies and giving it to groups that haven't received United Way funds before.
The changes will make the agency more accountable to donors, United Way officials say, through what they describe as a more efficient, results-oriented way of doing business.
But for nearly 90 United Way member agencies Ñ such as Friendly House in Northwest Portland, the YWCA of Greater Portland and the Portland chapter of the American Red Cross Ñ the resulting loss of a stable, reliable source of income will mean the curtailment or elimination of some programs.
Member agencies will lose up to 40 percent of their current United Way funding under the new system, said Jean DeMaster, YWCA executive director and president of the United Way Agencies Association, made up of directors of the United Way's member agencies.
Friendly House, for example, is losing about $70,000 of the $142,000 it received in United Way funds last year Ñ money that helps pay for services for low-income seniors, preschool and youth programs and other community services.
The YWCA, which has its headquarters downtown but sponsor programs throughout the Portland area, will lose about $80,000 of the nearly $200,000 it receives from the United Way, DeMaster said.
The cuts mean that the YWCA, which has a $4 million overall budget, will eliminate a self-esteem program called Smart Choices for fourth- through seventh-grade girls and trim at least $20,000 from the $225,000 budget for its domestic violence shelter, Yolanda House, DeMaster said.
But other community service programs stand to benefit. Eamon Molloy hopes his is one. Molloy is the director of a Portland-based program called Growing Gardens, whose staff and volunteers plant vegetable gardens for low-income families and individuals. He applied for United Way money after learning that one of its new funding priorities is to make sure people that have access to nutritious food.
'To be fair to United Way, there will be a whole new group of people to get services' under the new system, DeMaster said.
'The problem is, it robs Peter to pay Paul. For those who get new services, somebody else's program was cut to make that happen.'
The change was necessary, said United Way Executive Director Larry Norvell, because the old model was no longer working.
Donors were demanding more accountability for the way their dollars were being used and were increasingly taking advantage of a 'donor option' program, which let them earmark funds for specific agencies rather allowing the money go into the United Way's overall fund.
Said Norvell: 'Our reality is, if we didn't make the model change this year, five years from now our agencies would be experiencing the same loss of money and we'd have no control over the situation. There would be no money for new initiatives, and our agency would still end up with 40 percent or 50 percent less money.'
Though the reorganization has been in the works for more than 17 months and member agencies were planning for the United Way cuts, they did not anticipate two other events that drastically cut into charitable donations last year: the Sept. 11 terrorist attacks and the recession.
Contributions to the United Way were down from $21.4 million in 2001 to $19.2 million this year, making even less money available for the agencies than they had expected.
To help agencies adjust to the change, 70 percent of this year's contributions will be distributed to current members; 30 percent will go to fund new proposals submitted by dozens of area agencies and chosen by volunteers and the United Way board of directors.
Dollars leave the area
After Sept. 11, donors wanted to help fund disaster-relief work in the East. United Way of the Columbia-Willamette collected $225,000 for those efforts. In all, the local United Way, the American Red Cross and other local nonprofits collected about $1.5 million Ñ money that 'left our community for good deeds in New York,' Norvell said.
Donations from corporations and businesses also fell off as companies pummeled by the recession curtailed 'matching gift' donations.
The loss of corporate headquarters through mergers and acquisitions has taken a toll, too. Traditional supporters, such as Minneapolis-based U.S. Bank, which once had its headquarters in Portland, have cut back on sizable donations since its head offices moved.
Still, member agencies should be able to cope, Norvell said, because United Way dollars make up a small part Ñ an average of only 9 percent Ñ of their budgets. Moreover, they had 17 months to look for other sources of funding, he said.
'It is a wonderful opportunity to look at collaborations' with other agencies, he said.
But it's not that easy, agency heads say.
'When those dollars go, they're difficult to replace,' said Friendly House's executive director, Peter Freedman, who calls the United Way's new business model 'an unmitigated disaster.' United Way money accounts for 9 percent of this year's $1.5 million Friendly House budget.
Looking for new funding sources of money, Freedman has joined the throng of local agencies in applying for United Way money that will fund new proposals.
But there is no guarantee that any of his requests Ñ or the others Ñ will be funded. The United Way has received 141 applications that total $8.2 million, said Stacey Graham, United Way communications vice president. But the agency can fund only $2.1 million of those, she said.
Freedman had asked the United Way board to ease into the change by using only 10 percent of contributions for new agencies and initiatives. But that would not be enough to make effective changes, Graham said.
While not all agency heads share Freedman's characterization of the United Way change as a disaster, they are worried about the transition
'Our disappointment,' said the YWCA's DeMaster, 'is that it will be a very bleak picture for next year.'
Red Cross hit hard
Among agencies hit hardest by the cuts is the American Red Cross' Portland chapter, a longtime member that receives about 24 percent of its $6.4 million budget from the organization.
The new allocation formula, combined with cuts from the United Way's lower-than-expected campaign totals, means a loss of $800,000, or more than half of the money the chapter gets from the organization, said Sue Hildick, director of the Oregon Trail chapter.
Though chapter officials supported the United Way changes, 'the cuts are deeper than we anticipated,' Hildick said. 'We don't blame United Way. They're in a tough situation, and we're in a tough situation.'
Still, such a steep cut means the Red Cross will dip into reserve funds, eliminate some positions and cut back on youth training and disaster education programs that reach about 35,000 kids.
Molloy, the director of Growing Gardens, won't know until late this month or early in June whether his group will receive United Way funding. That's when United Way is expected to announce which agencies will be funded and how much they will get.
Growing Gardens also teamed with GEARS Ñ a nonprofit program operated by Metropolitan Family Services that provides translators Ñ to submit a funding request.
This proposed collaboration is just the kind of project the United Way hopes to fund under its new model.
Such joint ventures will provide 'more dollars to work with in the community. There are a lot of exciting opportunities focusing not just on immediate needs but on long-term change,' Graham said.
'I think there probably isn't a member agency that hasn't been apprehensive over the last 17 months,' she said. 'But the new United Way and our focus will bring new money and new volunteers. Everyone, including current agencies, will benefit from that.'