Pass-Through Becomes Passé

“We are no longer cutting a check and asking organizations to send us a report,” said Timothy Johnson, vice president, community impact at United Way of the National Capital Area, which serves the Washington, D.C. region.

Timothy Johnson

During the past five years, this United Way has streamlined its focus to a few key intervention areas, including middle school success, financial stability, and basic needs. Organizations that work within coalitions addressing multiple causes of a problem have an inside track for receiving funds.

That’s not the only change. The United Way changed its allocation process three years ago. Organizations are awarded oneyear grants with specific performance stipulations. If they meet goals and make timely reports, they automatically receive the second year’s dollars. Partner organizations have expressed appreciation for being able to budget over two-year cycles.

Other United Ways are using data to guide mission, and favoring potential partners that align with those newly discovered needs.

Within the past four years, United Way of Treasure Valley in Boise, Idaho has begun gathering qualitative need assessment data by interviewing aid recipients. Idaho is one of 18 states in which United Ways are using ALICE (Asset Limited Income Constrained Employed) data, which quantifies the needs of the working poor.

Merging these data streams has allowed this United Way to modify its letters of intent when it opens its grant process. “I can see our grant process getting more and more specific as time goes by,” said Robynn Browne, United Way Treasure Valley’s director of development and community engagement. “We are going to be facing problems [that come with] 40 percent of the people in our state falling into the ALICE category,” she said.

There is a core of donors who will give as they please. In some areas, that core is growing.

United Way of Greater St. Louis had roughly an 8-percent rate of designation to specific partners during 2013, as opposed to discretionary funds, according to Orv Kimbrough, president and CEO. That designation rate is now more like 16 or 17 percent.

Orvin Kimbrough

Kimbrough embraces the idea of responding to the future of donations. His affiliate helped launch Philanthropy Cloud, which United Way developed in conjunction with Salesforce.com. Philanthropy Cloud is an online platform that lets potential donors pick their areas of interest, or even specific recipients, and designate donations.

Kimbrough has sought to demonstrate the value of having an organization that directly awards grants and evaluates their community impact since joining the organization in 2013.

Managers at United Way of Greater St. Louis had been tracking 5,000 metrics for evaluating program successes. Standardization reduced metrics to 60 key drivers, which provide a basis for community needs assessment.

Sara Newell

The move has given United Way staff the confidence to issue longer term grants. Under a new distribution model, it will soon be entering into three-year agreements, as opposed to open-ended relationships, with partner organizations.

“We had to do a lot of work in terms of bringing our donors and our agency partners along,” Kimbrough said. “This is a significant change for our United Way and for our partners. Our objective is to create more stability by giving them a long runway.”

Part of that acclimation process is getting recipients to understand that even though they will receive funding over three years, the amount of their grants might change based on what the United Way raises in unrestricted donations.

There has been a little pushback as there would be with any new structure. “The nonprofit market moved,” said Kimbrough, referring to the shifts in unrestricted funds. “We had to make a tough decision, and we made that tough decision,” he said.

Not all United Ways are experiencing decreasing amounts of restricted funds. Senior Vice President of Community Impact Sara Newell at United Way of Central Alabama in Birmingham said 94 percent of its campaign funds are unrestricted.

“In the late ‘80s, early ‘90s, there was a big push toward designation in United Way campaigns,” Newell said. “That was rejected by our board pretty heartily. We didn’t want to become a middleman,” she said.

This United Way maintains ongoing funding relationships with its partner organizations.
Partners go through an annual certification process which reviews board governance and financial oversight. Once they qualify, United Way funds can go toward what the partner organizations deem most essential, whether programming or keeping the lights on.

United Way of Central Alabama does maintain a half-million-dollar fund for mission- focused grants that help partners meet education, financial stability, and health-related goals. Those funds are dispersed through its five-year-old Bold Goals Coalition, which funds coalition programs based on the likelihood of moving key success metrics.

Susan Parks

Sue Parks, president and CEO at Orange County United Way, advocates high levels of transparency as a means of smoothing resistance to changing fund allocation practices. In 2014, the Irvine, Calif.-based affiliate convened a summit of community leaders who developed quantifiable goals around dropout, obesity, homelessness, and financial stability measurements.

“We started aligning all our funding into outcome-driven programming,” Parks said. “Some of the programs we create and do ourselves. In other cases, we find best practices partners and bring them into a collaboration with us,” she said.

Orange County United Way furthers its transparency orientation by hosting a scorecard event every year, in which it publicly evaluates its progress. Doing so allows potential recipients a clear view of the results this United Way expects. Between 80 and 90 percent of its funding is tied to this effort.

By using data to demonstrate the need for the initiatives they fund, or by demonstrating the power of coalitions aligned toward common goals, United Ways offer clues for those soliciting their help. At the same time, the business cases they are creating offer keys to keeping donations flowing.