Top 10 Towns
September 17, 2012 Don McNamara
Austin, Texas is hot – and it’s not just the mercury in the thermometers outside that in the summer routinely dance with 100-degrees. The city and surrounding suburbs are teeming with technology jobs and people there are pulling down good salaries.
The area ranks fourth on the 2011 Milken Institute Best-Performing Cities Index. The institute ranks U.S. metropolitan areas by how well they are creating and sustaining jobs and economic growth.
You’d never know Austin was doing so well by seeing the results of the workplace giving campaigns from 2008 through 2011. Campaigns through the United Way declined 17 percent in the area during that period. The campaigns raised $17.5 million during 2008 and just $14.4 million for 2011.
Workplace giving, long a staple of American philanthropy, is in flux. Traditionally, it’s been easy for donors: They make a pledge in the fall, and a designated amount is automatically deducted from their paychecks. According to a 2010 study from The Center on Philanthropy at Indiana University (CoP), 36 percent of full-time employees worked at a company with a workplace giving campaign, and 54 percent of those contributed.
Comparable statistics of whether this is an increase or decrease are not available. According to Una Osili, Ph.D., director of research for The CoP at Indiana University, “Previous studies haven’t sampled in the way we did.” Asked if in her opinion the number was up or down, she said: “There are many different approaches to workplace giving now, and companies are really thinking about ways of introducing technology and increasing engagement with nonprofits. With that sort of diversity, it’s hard to say if it’s going up or down. The main point is it’s changing.”
A changing workforce, slow economy and shifting priorities for corporations have contributed to a decline in workforce giving in many cities. United Way chapters have traditionally administered most workplace giving campaigns — 70 percent, according to CoP’s survey. United Way chapters reach 50 million donors annually through workplace giving. But even in the strongest U.S. regional economies, the campaigns are generally flat or in decline.
Roughly 80 miles north of Austin, the Killeen-Temple-Fort Hood area of Texas was the fifth hottest U.S. economy during 2011, according to the Santa Monica, Calif.-based Milken Institute. Though it had the fastest salary growth in the country in 2011, contributions from workplace giving were, “in a word, flat,” according to Aaron Montemayor, executive director of United Way of the Greater Fort Hood Area in Killeen. It reported $654,140 in 2011 and $655,411 in 2009.
United Way chapters in the other nine areas ranked as the top 10 best performing overall cities by the Milken Institute largely echoed Montemayor’s sentiments. United Ways and other groups such as EarthShare and the Workplace Giving Alliance are still collecting money from employees at companies small and large and from public sector employees. But, the general sense is workplace giving just isn’t what it used to be.
“The workplace is changing,” said Elizabeth Miller, vice president of resource development at United Way of Anchorage in Alaska, number seven on the Milken Institute’s list. “Baby boomers have been great supporters of workplace giving, and their giving has been part of their corporate culture for so long. For every baby boomer who leaves (due to retirement), there is a young person coming on behind them, and for the new folks coming in, there’s not that same culture.”
Anchorage benefited last year from oil and gas exploration, an industry that brings with it high-skilled and high-paying jobs. Those types of exploration companies are often not conducive to workplace giving, said Miller. Revenue generated from workplace giving campaigns by United Way of Anchorage has been falling since 2008, generating $700,000 less in 2011 than in 2010.
“Work is still being done in other states,” she said. “There’s not a huge employee presence here. They don’t know how long or how successful they’re going to be here. Unless they have a robust workplace campaign at their home office, they’re not ready to get involved with us.” The Milken Institute’s list measures nine metrics: job growth from 2005 to 2010, 2009 to 2010 and 2010 to 2011; wage and salary growth from 2004 to 2009 and from 2008 to 2009; technology output from 2005 to 2010 and from 2009 to 2010; concentration of technology sector jobs compared to the national average; and the number of technology subsectors compared to the national average. The report does not weigh population in the calculations.
“Best-Performing Cities is solely an outcomes-based index,” according to the report. “It does not incorporate explicit input measures. These measures, although important, are vulnerable to large variations and can be highly subjective, making them less meaningful than more objective indicators of outcome.”
Workplace giving has a history stretching back to the height of World War II, when the federal government began withholding income tax from Americans’ paychecks with the 1943 Current Tax Payment Act. That same year, Community Chests, forerunners to the United Way, began asking workers at private companies to voluntarily designate charitable withholdings from their paychecks, according to Sherrie Brach, executive vice president of investor relations for United Way Worldwide in Alexandria, Va. Three-quarters of the campaigns were held in the fall, as most are today, and by 1945, “payroll giving became a mainstay of nearly every Community Chest campaign,” said Brach.
Developing nearly concurrently with Community Chests’ private workplace giving campaigns was the Combined Federal Campaign (CFC), a program of the Office of Personnel Management. Precursors to the CFC solicited federal employees for charitable donations in separate fall and spring campaigns, and the campaigns were officially consolidated into one fall campaign in 1961. The CFC now solicits more than a million federal employees and takes in about a quarter-billion dollars a year. United Way chapters often administer the CFC in their areas.
“The CFC is the granddaddy of the public sector workplace giving world,” said Marshall Strauss, CEO of the Workplace Giving Alliance in Salem, Mass. He added that many local and state governments have their own CFC analogs. The CFC collected $272 million in 2011, down from $282 million in 2009, according to the Federal Advisory Commission Report on the Combined Federal Campaign, published in July 2012.
Participation in the CFC has been dropping since 1965, despite there being roughly 250,000 more non-military federal employees during 2010 than in 1965. Roughly 24 percent of the federal workforce participates now and the average gift size has been increasing. In 2011, the average gift was $284.27. Statistics are not available for CFC in 1965.
The United Way for Greater Austin in Texas (UWATX) made some tough choices early this year when it decided funding would be eliminated or reduced to more than 20 constituent organizations, and slashed three executives’ pay by 3 percent each, largely due to lagging workplace giving contributions.
“With our assets reduced and fundraising flat, we need a more sustainable balance between what we raise and what we distribute,” said the Chapter President Debbie Bressette.
Most gains seen in the top 10 cities were modest. In Provo, Utah, ranked number nine by the Milken Institute, The United Way of Utah County saw an increase of less than $17,000 in 2012. That’s after a $9,000 loss the previous year. And Montemayor in Killeen didn’t even call his chapter’s $9,000 gain last year an increase. He said he was happy to take what he got. “(Being flat is) not necessarily a bad thing, given the economy,” said Montemayor.
United Way of El Paso County in Milken’s number two location El Paso, Texas, has also seen little growth, according to Jason Brewer, vice president of marketing and community building. “Workplace giving hasn’t changed very much,” he said. “About four years ago it dropped, but it has been steadily climbing and now we’re back.” After falling from $3.2 million in 2007 to $2.76 million in 2008 for workplace giving, the El Paso County chapter held steady, bringing in $2.78 million in 2011.
Brewer said he could not with certainty link the improving economy in the area with giving. In addition to the economic downturn nationally, there was increased border violence related mostly to illegal drugs. El Paso is across the border from Ciudad Juarez, one of the most violent cities in the world, which had more than 3,000 murders in 2010.
Elsewhere, workplace giving at United Way of Salt Lake, which serves Milken’s number six area Salt Lake City, Utah, has been steadily decreasing during the past four years, losing about $1 million since 2009. Workplace giving stood at $9.67 million this year.
In Huntsville, Ala., the eighth best performing city, the United Way of Madison County’s workplace giving fundraising decreased by about 0.8 percent, to $5.94 million, in 2011. It had increased 4 percent between 2009 and 2010. Senior Accountant Brenda Segroves said workplace campaigns overall and giving per employee has remained consistent, but acknowledged that might change in 2012.
“The economic downturn is just now hitting Huntsville,” said Segroves. “Employment in Huntsville is heavily tied to the defense industry and those budget cuts are just now making it downstream.”
The other direction
One city that has consistently bucked the trend of falling workplace giving is San Antonio, Texas, the best performing city on the Milken Institute’s list. Since 2009, its workplace giving program has increased by nearly $3 million, to $48 million in 2011.
The city, which jumped 14 spots from the 2010 list to take the top spot in 2011, has benefited from nearly $2 billion of construction contracts, mostly on and around the three area military bases. Like Anchorage, San Antonio has also seen an influx of oil and gas companies thanks in part to the Eagle Ford shale formation that lies beneath the region, which is attractive to hydrofracturing natural gas extraction companies.
“We’re seeing traditional growth of campaigns because of the growth of the economy, and new companies coming to town because of the huge oil and gas play here in south Texas,” said Lyndon Herridge, president and COO of United Way of San Antonio and Bexar County.
Most of the top 10 cities either have large installations like military bases and universities, a growing number of high-tech companies, or some combination. What they have in common is a large percentage of the workforce is new to the area. Employees new to the area might be reluctant to sever ties with charities they supported in their previous city, said Bill O’Brien, board chair of UWATX.
“If you’re an employee just moved in, you may designate your gift back home,” he said. O’Brien added that more employees are working from home, which means it is more difficult for United Ways to engage them and convince them to participate in campaigns.
The Austin area, like many of the cities on the Milken Institute’s top 10, has a high concentration of technology companies such as Dell, AMD, IBM and Apple. Similar to the energy sector, technology sector jobs have many high-paying positions for highly skilled workers.
“High-tech cities have a high-tech base,” said CoP’s Osili. “Many firms have non-manufacturing jobs, which implies perhaps more mobility.” It also might take some time for new companies to develop a workplace giving program. Getting essential operations up and running in a new area is the focus for most businesses; extras like workplace giving campaigns come later.
“The newer businesses that create hot economies often respond first to local asks from local charities (everything from Little League to the local United Way),” said William Borden, executive director of EarthShare Washington in Seattle. “Workplace giving typically comes as the business becomes more established.”
EarthShare, with national headquarters in Bethesda, Md., is a federation of environmental and conservation nonprofits that works with companies to develop workplace giving campaigns that benefit member charities.
Montemayor said that although Fort Hood has grown in terms of housing and support for the military, “that doesn’t really translate to local donations.” The base’s workplace giving campaign has shrunk to about half the size it was during the early-2000s. “It’s not as high a priority as it was before we went to war,” he said. Multiple deployments have also affected Fort Hood’s campaigns, since the military runs a separate campaign for overseas servicemen.
Brewer said a similar situation affects Fort Bliss, an Army base near El Paso. Though the fort more than doubled in population since 2005 and has benefited from the Base Realignment and Closure Act of 2005, overseas deployments have affected United Way of El Paso’s workplace giving campaigns.
Today’s companies want to be good citizens, and United Ways in areas with a strong sense of community have held steady or seen growth. The CoP survey found that “Community attitudes affect the likelihood a company will undertake a campaign and the motivations of employees to give.” The Milken Institute’s number three area, Fort Collins-Loveland in Colorado, shot up the chart after being ranked 50 in 2010. The top 10 workplace giving campaigns at the United Way of Larimer County, which serves the area, saw a 10 percent growth in 2011 and a 5 percent growth in 2012, and in total the chapter brought in $5.8 million from workplace giving in the most recent year.
“The quality of life is what keeps companies here or makes them want to relocate,” said Kate Hagdorn, vice president of marketing and communications. “Companies want to maintain that for their employees and see giving back to the community as a way to do that. People are proud to live here.”
Beverly Weber, president and CEO of the United Way of Benton and Franklin Counties in Kennewick, Wash., which serves the Milken Institute’s number 10 area of Kennewick-Richland-Pascoe, said her chapter has consistently been in the top 5 percent nationally in per capita giving. The average workplace gift at her chapter is $57.73.
“There’s just a mentality of generosity and a strong sense of community,” she said. Weber’s chapter collected $4.21 million from workplace giving in 2011, down from $4.39 million in 2010. Workplace giving at the chapter had increased about 4.5 percent between 2008 and 2010.
Workplace giving must adapt to changes in both the public and private sectors. Not only is the workforce shifting, corporate culture is also evolving, and companies are looking for more varied methods of philanthropy. “There’s a big interest in volunteering options,” said Osili. “Many companies are interested in campaigns that advance their corporate goals and want to work with partners that can help advance those goals.”
The most successful campaigns incorporate these two elements, said Osili. They are focused and targeted to a company’s nature and goals, and they leverage the specific skills of the company’s employees. Osili gave the example of a corporation’s analysts helping rate entrepreneurs on the microlending website Kiva.org.
The United Way understands this, and is working to revise its workplace giving campaigns. It has made plans to test an Enhanced Workforce Campaign that seeks to target companies’ goals, add options for employee volunteering, engage upper level staff and provide year-round opportunities for philanthropy. And, social media allows for more connection than ever between United Way chapters and corporation employees, even those who work part time or off-site.
“We’re seeking more one-to-one direct engagement, enhanced communication and making sure (employees) understand what their dollars are doing in the community,” said United Way Worldwide’s Brach, in addition to providing options for donating throughout the year, not just in the fall. “It will be less transactional and more relational.” NPT