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May 18, 2003Nonprofit agencies wade in to revampReorganization exciting for some, a concern for othersByRecord-Eagle staff writer TRAVERSE CITY - One thing is for certain, the United Way of Northwest Michigan is not what it was. And what it is or what it is trying to become is a hotly debated topic within the organization and the community that has come to depend on the United Way's annual $1 million fund-raising drive. One of the area's most recognizable nonprofits, no one questions the United Way is changing. But into what? And why now during this time of economic uncertainty? As those answers slowly emerge, the United Way revolution has left some scars: - Three of the 17 members of the United Way board have resigned. - Three long-standing organizations including The Salvation Army were denied United Way funds this year. - All nonprofits associated with the United Way have been stripped of their "partner agency" status and voting voice. - A more than 20-year partnership with labor unions was severed when the board voted to fire the staff liaison. - A perceived emphasis on funding youth programs at the expense of basic human services has frustrated some agencies and former board members. United Way says change was necessary in order to remain relevant to donors during a tough economy and to fulfill the group's mission of identifying and solving community needs. As the United Way untangles itself from the traditional perception of what a United Way does, namely, raise money for programs that clothe, feed, shelter, aid and protect people, detractors are saying it's not so much united as it is untied. Some agencies worry the transformation will hurt their ability to help people during a time of tremendous need for crisis counseling, affordable health care and well-stocked food banks. Annette Marquis, executive director of Third Level Crisis Center, which receives United Way funds, says it feels like United Way is saying agencies aren't doing enough. "It should be a cooperative working relationship instead of the divisive (one) that it has become," she says. United Way representatives say it's still very much cooperative. In fact, "collaboration" is now a requirement for any agency that hopes to receive future funding. That, and eliminating the entitlement mentality - agencies that have received money then automatically expect it - are two of the most talked about changes. "When we began our strategic planning six years ago, we became convinced that we had to add value to donor gifts," says Becky Beauchamp, United Way executive director. "We had to cause things to happen - add value - or they (donors) should not give to us." Change is not always bad, says board member Jim Lievense. He says that while the United Way may not look and act like its former self, it is more relevant, more in tune with community needs and now actively seeking answers to community problems - even if it means solving those problems itself. In fact, supporters say the give-and-take of the organization some find objectionable just proves United Way is doing its job: Don't expect the United Way to stand still when the whole world, especially the world of fund-raising and nonprofits, is changing. "Where the needs are, that is where we will go," Lievense says. The changes Repositioning United Way as a risk-taking, need-based grant maker has been Beauchamp's vision almost since her arrival in the Traverse City office in 1996. But this is the first year the donating public and recipient agencies have begun to see the results of that vision. United Way is now thinking in terms of solving community problems. Fund-raising is now "a tool rather than an end," Beauchamp says. As the United Way planned for this transformation, the nearly 20 partner agencies were warned that criteria for awarding grants would become more strict, Beauchamp says. Agencies were told that to be competitive, applications should focus on collaboration with other agencies and demonstrate in detail how the money will be used for specific programs. "We only have so much money to work with, and we have to spend it on programs that best meet the goals of the United Way," says board member Linda Wayne. "Before they (agencies) came in with a sheet, and it says 'I need X amount of dollars,' and they don't tell us where it is going." Beauchamp says change was necessary because agencies had grown accustomed to relying on United Way dollars to plug holes in their budgets. "If all we do is divvy money up, donors don't need us, and we should just go," she says. The collaboration component has been especially stressed because United Way hopes agencies who partner with one another will stretch the charity-dollar even further for greater impact, Wayne says. Beauchamp says these changes were difficult for agencies such as The Salvation Army, which had received funding for the 54 years since the United Way was founded here. This year, The Army as well as Addiction Treatment Services and Child and Family Services of Northwest Michigan were denied United Way funds. United Way also has tweaked its goals. Previously, agencies submitted an application for funds under three separate United Way goals. Those goals included helping youth succeed; meeting basic needs; and overcoming crisis, violence and substance abuse. Beginning this next fiscal year, United Way's goals have changed to fund programs that build assets in youth, support critical human services and invest in innovative community solutions. All of this may be well and good - until agencies can't afford to provide services the community depends on, says the Third Level director. "I certainly understand there are changes in the world of fund raising and that United Way has need to re-evaluate," Marquis says. "I can't see that abandoning the organizations that are out there makes a lot of sense." Marsha Clark, director of the Girl Scout Crooked Tree Council, is worried she might have to come up with innovative rather than core programs in order to receive United Way funds. "The concern I have is that it doesn't sound like they will be funding activities that we are currently doing," Clark says. "It is always difficult to come up with innovative programs." And if the Girl Scouts do come up with something new, Clark wonders if during the next application year the program is still considered "innovative." "There is always a great need to support existing programs," she says. "My greatest loss is the loss of stable funding. It forces agencies into a position of more and more fund raising, which is not necessarily our expertise." Another shift was the decision of the United Way in February to change its bylaws to make the organization "board-driven," Beauchamp says. Previously, United Way was a member-driven agency with 90 to 110 members made up of labor union and partner agency representatives as well as donors of more than $100 a year. At annual meetings, members heard financial reports and voted on board appointments and any amendments to the bylaws. But after securing at least an 80 percent vote of the members in February, the United Way became board-driven, meaning its 17 board members controlled its operation. "The bylaws have changed, and I think it is somewhat symbolic," Marquis says. Lievense of the United Way board says from a strategic planning standpoint it was necessary to create a new organizational structure so agencies don't feel entitled to United Way funds. He says the new system does not mean the board makes all the decisions, but that grants will be awarded based on need. The board will be involved in some stages of the grant-awarding process, but Beauchamp says volunteer citizens will continue to decide where the majority of the money should go. "To me we are even being more of a partner," Lievense says. "Just because we are getting rid of the technical word 'partner' doesn't mean anything." Us and them The United Way of Northwest Michigan is changing, but what about United Ways elsewhere? The national trend, according to a spokesman for United Way of America, is to make the organization more "relevant for the 21st century" in a world where donors have a plethora of ways to distribute their dollars. "This is a system with more than 100 years; this is a natural evolution of United Way," Philip Jones says. "To have differential between United Way and another charity, you have to have value. If you add value the money will follow." In Michigan alone, the number of nonprofit groups now exceeds 38,000, according to Sam Singh, president of the Michigan Nonprofit Association. Singh says between 1989 and 1999 the nonprofit sector increased by 50 percent. "There are way too many nonprofits out there competing for money, competing for the hearts and minds of donors," Jones says. Some of these problems aren't so new. In Denver, Colo., in 1887, a handful of people decided there had to be a better way for the city's 22 charities to raise money for the poor mining families in need of social services. The predecessor to the modern United Way was born. Since then, the United Way has grown in fund-raising dominance, fueled by a strong partnership with labor unions and a message of giving one time to support all local charities. In 2001-02, United Ways across the nation raised $5 billion. Although the United Way is a billion-dollar brand, the proliferation of nonprofits made it challenging for the fund-raising machine to be the sole supporter of all charities. According to Chris Nelson, president of the Michigan Association of United Ways, 40 years ago United Way funds represented about 80 percent of community agencies' budgets. Now, he says, the United Way contribution is about 18 percent. Each local United Way is an individually incorporated nonprofit, accountable for is own finances. As such, the transformation sweeping through United Ways across the county has begun at a grassroots level, Nelson says. "Really, local United Ways across the country were just recognizing that we aren't keeping pace with agencies across the country," Nelson says. Singh of the state's nonprofit association says he has seen all kinds of nonprofits take new tactics because of the tough economy and competition for charity dollars. "We are seeing organizations being more aggressive in the marketing and branding of their name, and fund-raising is taking a more ambitious tone," he says. United Ways throughout Michigan have seen these factors play out in their local organizations to various degrees. The United Way here began its strategic planning six years ago. Others are just now thinking about transforming from a purely fund-raising machine to a "community relationship builder," which is what the Michigan Association of United Ways has identified as the new function of United Way. "We decided we want to change, but we aren't sure how much," says Nichole Bliss, executive director of the Isabella County United Way in Mount Pleasant. Bliss says it's hard to compare one United Way to another because each United Way was built to be a reflection of the community it serves. "There are not too many of us that actually fund things in the same way," Bliss says. "Some of us have the same partners, some of us don't and some don't have partners at all." The United Ways in Jackson County and Bay County have found new direction by providing their own community programs. Both of them are involved in a youth initiative funded through the United Way. "In the last two or three years, we have a new executive director and he has really changed the focus of us as a fund-raising type of organization to an organization that really looks at being a service to the community," says Tom Stobie, coordinator of Full Circle, a youth initiative of United Way of Jackson County. And in Bay City, where the United Way of Bay County director has ushered in a similar youth program, the fund-raising role of the organization also has diminished. "If we raised $2 million one year and $1.7 million the next year, that is not what we want to judge our particular success by," George Heron says. "We want to look at what are some of the things we want to change in our community." Heron says he chose to lead his United Way in this direction because it was the best-positioned agency to begin solving community problems. That, and change was needed to find a niche for the United Way to continue to "survive and be relevant," he says. Robert Collier, president of the Council of Michigan Foundations in Grand Haven, says United Way isn't the only giver of grants that is changing the way it does business. Community foundations too are focusing on collaboration and demanding detailed proof of how their money is at work. "There has been a renewed sense that they (foundations) want to help meet important community needs," Collier says. "They are tightening their grant requests." Still, not all United Ways have thoroughly rejected the old United Way. Clark of the Girl Scouts works with six United Ways throughout the area. She says United Way of Northwest Michigan has undergone a more dramatic change compared with those she works with elsewhere. Specifically, Clark says, the number of United Way direct services, the removal of the partner agency status and the focus on funding innovative programs will take some getting used to for the Girl Scouts and other former partner agencies. "This is a much greater shift than I have seen in any other United Ways," Clark says. If that's a criticism, it's one Beauchamp can handle. "We are a pretty unusual United Way," she says. "I haven't really found one like us." Backlash in a backward economy Some believe the timing for a major overhaul of the United Way system just could not be worse. Even on the inside, those such as Sister Augusta Stratz, secretary of the United Way board, question why now. "I feel with the economy the way it is, United Way is needed more than ever to reach out to the agencies who were surviving on minimal budgets," Stratz says. "This will certainly affect the people they serve." A "tsunami of human needs" is indeed crashing in on the area, Beauchamp says, which is exactly why change is needed now. "This is exactly the time to do this because business as usual can't meet the demand," Beauchamp says. Roger Adkins, a former labor representative on the United Way board since 1991, who resigned this spring, wonders about the emphasis on youth and the creation of United Way direct services. "I don't understand how they can feel GivEm 40 and YouthFriends can be so important when there are kids in the community who are starving," Adkins says. "There was a time when United Way was broader, more general. At one time we had five primary goals, now we have three." Beauchamp counters that most of the direct service budget comes from outside sources including government funding, foundations and other community groups. About 10 percent of the 2002 campaign went to direct services including the two youth initiatives, the volunteer center and the Retired Senior Volunteer Program. "Children are our priority, and it should be because they are the ones that need the most help in the community," says Wayne, a board member. Still, to John Toth, another labor representative to the board who resigned in April, the focus on youth, though important, far exceeds what it should during a weak economy. "GivEm 40 and YouthFriends is good, but do we have to sacrifice our partner agencies?" he says. That emphasis was only one of many reasons why Adkins, Toth and Rob Naugle says they gave up their spots on the United Way board as union representatives. The bylaws read that four of the 17 board positions are to be held by union members. Debbie Lewis, the fourth union member, could not be reached for comment. Push really came to shove when the board voted this spring to eliminate the United Way labor liaison staff member. Beauchamp says it was a sound business decision based on numbers only. Union donations came in at $172,000, which was short of the $200,000 goal. She says union donations also had slipped in the past years from about 25 percent to 17 percent of the total campaign. Beauchamp fears the elimination of the $50,000 a year position is the central reason why the union representatives are discontent with United Way. "Now after we make a decision they don't like, now they say the United Way is bad," she says. Naugle, the former board member, disagrees. "Actually, it wasn't about the labor position at all," Naugle says. "It was about the direction the board was going." One of those questions that brought particular consternation to the former board members as well as some agencies is why the United Way listed partner agencies on pledge forms only to deny three of them money collected through the general fund. Gifts totaling $204,000 that donors specifically earmarked to particular agencies were passed on to all agencies regardless of if their grant requests were approved. A benefit of giving to United Way is that employees can donate directly to the campaign out of their paychecks. "When people give to the United Way they have no real idea where their money is going - that is the real shame of it," Naugle says. Beauchamp says United Way is working on the wording of the pledge forms for the next campaign so there won't be any confusion. "I will be the first to admit that we need to do a better job of communicating," Lievense says. "Our communication has been a weak point, but that doesn't mean we are doing a bad job." For Stratz, the board secretary, talking to with the donating public and the agencies on this and other issues will be crucial to United Way's success. "This could be viewed in the community and by some service providers that there was a trust broken between United Way and some service providers," she says. "These are all perceptions, and when you are dealing with perceptions it takes a lot of communication." The bottom line So what does it all mean, really? For the agencies, changes at the United Way will mean a more rigorous grant process. Some agencies might be cut off completely. Others will need to begin earnest fund raising on their own. For United Way board members it means more work to complete the transformation from a fund-raising machine to a community problem-solver. For the United Way administration it means more communication with the public and more consultation with program providers. But the $1 million question is what it means to donors. "We are always changing the product," Beauchamp says. "You have to have an array of products for different people. In philanthropy we have to have an array of ways people can make a difference in the community." The director of the state United Way association says United Ways that go through versions of this transformation usually come out better for it. "Clearly, the opinion is that it has helped strengthen campaigns," Nelson says. "Donors want to know that the money that they are giving is being used with impact." Others argue that while donors might have a better idea of what kinds of services their money might be used to support, they no longer know exactly which agencies will receive their donation. "The concern I have heard from donors is that if they give money to the United Way, there is no understanding. It may go to the Girl Scouts or it may not," Clark says. Already, workplaces with unionized labor are talking about possible decreases in donations for the fall campaign. Naugle, who is an international representative for the United Auto Workers Region 1-D, is predicting a fall out. "I think the campaign will be down," he says. Others are not so sure. At employee giving sites such as Harleysville Lake State Insurance Co., Huntington National Bank and ITW Coding Products in Kalkaska campaign coordinators say there has not been talk of dissatisfaction, or much talk at all. All three workplaces are often in the top 20 in United Way donations. "I haven't heard any opinions as far as the stand of United Way as far as local support," says Ann Rix, human resource representative at Harleysville. "They've seen the impact of United Way donations on a personal level; it's always been very positive on this end." Pledge loss, or the amount people promised to donate but later rescinded, is already higher than average at $55,000 for the 2002 campaign. Beauchamp fears it could climb higher if workplace layoffs continue. Beleaguered but not beaten, Beauchamp says the strength of United Way is in its commitment to community, and donors will recognize and reward that. "Will this United Way survive? Absolutely. Absolutely," she says.
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