Austin Is Hot, But Workplace Giving Is Not

A 17.7 percent drop in workplace giving has forced the United Way of Greater Austin (UWATX), formerly called United Way Capital Area, to cut the number of agencies to which it issues grants from 49 to 31, reducing grants by about $1.2 million.

The organization also let go two administrative workers, will not fill the equivalent of four and one-quarter open positions, and three executives will each take a 3 percent pay cut.

Despite Austin being one of the nation’s rising jobs and technology stars, the Texas chapter’s president, Debbie Bresette, said that workplace giving campaigns fell to $14.4 million in 2011 from $17.5 million in 2008.

“With our assets reduced and fundraising flat, we need a more sustainable balance between what we raise and what we distribute, so as to not further reduce our operating reserves,” Bresette said, one of the executives taking a pay cut. She earned $96,506 in fiscal year 2010, according to UWATX’s most recent federal Form 990.

Despite UWATX’s troubles, United Way Worldwide’s (UWW) Director of Media and Public Relations, Bill Meierling, said he believes it to be an outlier among United Way chapters. “That’s not the trend across the United States,” he said. “That speaks well for the nonprofit sector as a whole. United Way is just ahead of Charity Navigator’s (fundraising growth) estimates (of 3.0 percent for 2010).”

Because United Way chapters are autonomous, staffing and funding decisions fall to the chapters level, said Meierling. UWW, the Alexandria, Va.-based headquarters, could not comment on the financial situations of individual chapters. According to Meierling, there are no plans for salary cuts or layoffs at headquarters.

“Local affiliates are responsible for developing their own funding and fundraising strategy,” he said. “When defunding does happen, sometimes it’s a result of that strategy.”

United Way affiliates have merged in recent years to increase efficiency. For smaller affiliates, mergers sometimes took place to maintain a presence in a particular service area, according to Meierling. There were about 60 affiliates in 2008, but now there are roughly 30. Four more mergers of United Way affiliates went into effect this summer, including seven affiliates in the Philadelphia and southern New Jersey area, Michigan, Florida and Wisconsin.

UWATX board chair Bill O’Brien said that more organizations are running their own workplace giving programs instead of campaigns managed by the United Way (called United Way Branded Campaigns). O’Brien said he believed this, along with the state of the economy and more employees working from home, contributed to the decline in funds raised from workplace giving campaigns.

Of the 49 agencies formerly funded by UWATX, 27 will receive no change in funding and four will take a funding reduction. Most of the 18 wholly defunded agencies have missions relating to health, though some had financial opportunity missions. No education nonprofit will have their funding cut.

“We have thought leadership in the community in education, but not in financial opportunity and health to the same degree,” said O’Brien. “In (financial opportunity and health) we have not had those programs in place as long, we have less subject matter expertise on staff, and we have not seen as much measurable results.”

The chapter used money from its financial reserves to keep grantmaking steady in 2010 and 2011, distributing $3.84 million and $3.4 million, respectively. UWATX plans to distribute $2.2 million in grants this year. O’Brien said the chapter dipped into its reserves as much as it could until it became untenable.

“We put our reserves to work in the community,” said O’Brien. “I think that was the right thing to do, and I’m at peace with the decision.”