United Way tries to find right path


Has the United Way of Central Maryland lost its way?

The well-known charity, which can trace its origins back 85 years in Baltimore, is trying to regain ground lost in recent years when the state's faltering economy and a national scandal cut into contributions.

Even if the campaign meets its $31.3 million goal this year, it will be back at the donation levels for the 1991 campaign, when the charities it serves were cut 15 percent across the board. The 1992 campaign posted a five-year low of $28.4 million.

Nationwide, almost all United Way organizations suffered setbacks after last year's furor over the high salary and perquisites enjoyed by William Aramony, the head of the United Way of America who was forced to resign.

But few have fallen so far or so fast as the Central Maryland organization.

"It's trying to be Hutzler's in a world where people want to shop at boutiques," said a former employee, one of several who said they left because they were disenchanted with the agency's direction after Norman O. Taylor took over in 1991.

Even local United Way officials concede that baby boomers want something quite different from charities -- greater control over their donations, whether they are for specific causes or agencies. But the officials insist they are on the cutting edge among United Way organizations in trying to meet donors' needs and desires.

Slumping donations are only one of the problems facing the local United Way.

* It saw contributions from private workplaces, the traditional benchmark for the annual campaign, fall by more than 9 percent in 1992. Among the top 20 United Ways in terms of dollars collected -- which include Central Maryland -- only Cleveland had a steeper decline.

* Designations -- dollars earmarked for agencies not under the United Way -- are up, which means United Way has less money to distribute to its chosen agencies. One dollar out of four goes to an outside group. That totaled about $7 million from the last campaign.

* There is not much flexibility with the dollars that remain within the agency, about $20 million. United Way of Central Maryland has contracts with seven affiliates -- the American Cancer Society, American Heart Association, American Red Cross, Associated Black Charities, Associated Catholic Charities, the Associated Jewish Federation of Baltimore, and the Combined Health Agencies -- that receive almost half the money available. That leaves about $10 million to be distributed among 50-plus member agencies.

Givers who designate certain charities are engaged in a largely symbolic act. The United Way sets allocation levels for all its charities; only those that exceed these levels come out ahead through designations. Ultimately, only a few popular charities such as House of Ruth and Parents Anonymous attract donations above their allocations.

* Internal management problems and missteps. Some Baltimore City Council members have talked about taking the city's Combined Charity campaign to another fund-raising agency. Also, about 50 employees have left in the past two years, but that is a turnover rate that United Way officials say is consistent with other United Ways.

* Salary issues continue to plague the organization. Although Chief Professional Officer Norman O. Taylor, after two years on the job, makes at least $45,000 less than the $200,000-plus salary of his predecessor, he received an 11 percent raise last year, just months after the Aramony scandal and in the midst of cuts to local agencies. The increase is on a par with those for other United Way chiefs, although larger organizations in Houston and Seattle pay their top officers less.

Among Maryland nonprofit chiefs, Mr. Taylor is one of the best-paid; his $155,000 salary puts him in the top 10 percent, according to one study. It is higher than the salary earned by the governor.

* United Way has to serve three masters: the corporations that welcome it into workplaces each year, ensuring a monopoly on )) employee-giving; the employees, who increasingly want to control and direct their gifts; and the member agencies, in competition for those gifts.

How does a charity nonprofit serve three groups with such conflicting desires? That may be the toughest question facing United Way. Answering it will be crucial, said Peter Berns, director of the Maryland Association of Nonprofits.

"You have to look at a real fundamental question," he said. "What does the public really want in terms of giving? It seems to me part of the answer is they want choice and they want alternatives."

In a recent interview, Mr. Taylor said, "We're trying to make sure we indeed please all." He added later, "Maybe we haven't done as good a job as we're going to do."

His solution is an in-house marketing study to identify donor needs. The giver has to be the first priority, Mr. Taylor says. But those familiar with United Way say the reality is that the corporations come first.

Eleanor L. Brilliant, a professor at the Rutgers University School of Social Work who has written about United Way, said the corporate world has always been "very seductive" for the nonprofits.

"It's at the border of the business world constantly, and that is problematic," she said. "It becomes very hard for them to play this balancing act of multiple constituencies. United Way employees are constantly being shocked by the fact that they're suppose to be dealing with people who have problems."

Beth Daley, assistant director of the Washington-based National Committee for Responsive Philanthropy, one of the few groups openly critical of United Way, recalls a cartoon of two corporate types laughing over Mr. Aramony's $463,000 salary. "I would never work for such a low salary," one says.

It's more than a joke, Ms. Daley said. Because so many CEOs sit on United Way boards, their for-profit values permeate the nonprofit. The National Committee predicts the problems experienced nationally will be played out at local United Ways throughout the country.

Certainly, CEOs make up much of the membership on the United Way of Central Maryland board of directors -- James T. Brady of Arthur Andersen, Frank Bramble, recently of MNC Financial Inc., Richard P. Sullivan of J. L. Wickham Co., Bailey A. Thomas of McCormick & Co. Among Maryland's top 20 publicly held companies, CEOs earn $1.6 million on average.

But who approved Mr. Taylor's raise? The United Way of Central Maryland declined to release the names of members of the compensation subcommittee. Board members asked about the pay increase said it was irrelevant.

Procter & Gamble's John A. Saxton, the current campaign chairman, citing United Way's low overhead, said flatly: "I don't think individual salaries are significant."

Mr. Saxton is right about overhead. Even in bad times, United Way can point to one of the lowest administrative overheads in the charity business -- less than 15 percent of all receipts. The National Charities Information Board recommends a maximum of percent.

Mr. Taylor also says he has cut overhead in his two years, trimming about $800,000 from a $4.6 million budget over three fiscal years.

Given this, does his salary matter? Daniel Langan, a spokesman for the National Charities Information Board, said that citizens who call his New York-based agency seem to think $100,000 is the maximum acceptable for running a charity.

"It's an issue, whether you like it or not," Dr. Brilliant said. "Most nonprofit executives do not get high salaries -- [they get] about $60,000. The average is not high compared to the corporate world, and people are happy about that because it suits the idea of a nonprofit business."

Mr. Taylor, who did not get an increase this year because of an executive-level wage freeze he implemented, said of his salary: "I can look in the mirror every day and say, 'I'm not taking, I'm giving.' My day is a 12-hour day and, sometimes, a 14-hour day."

He is hopeful that this campaign will reverse recent trends. Two early efforts -- at Mr. Saxton's company and Signet Bank -- did well.

But national data indicate that United Way contributions have been falling while other charities are enjoying boom times.

A survey by the Chronicle of Philanthropy found that charity donations are outpacing inflation, and the two largest charities -- the Salvation Army and Catholic Charities USA -- saw 12 percent increases in donations. Nationwide, United Way had a 4.1 percent decrease -- the first since World War II.

"Charities on the whole have not gone down, but United Ways have gone down a lot," Dr. Brilliant said. "If the pie were getting constantly bigger, none of this would be a big crisis. But it's not."

Still, she has confidence in United Way's ability to adapt and survive.

"United Way is a very clever organization in some respects. It is extremely adaptable," Dr. Brilliant said.

UNITED WAY FUND RAISING, TOP SALARIES -- United Way private workplace campaign

1988 .. .. .. .. .. .. .. .. ..$28.8 million

1989 .. .. .. .. .. .. .. .. ..$31.1 million

1990 .. .. .. .. .. .. .. .. .. .$32 million

1991 .. .. .. .. .. .. .. .. ..$31.4 million

1992 .. .. .. .. .. .. .. ... .$28.4 million

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