In the wake of a major scandal a couple of years ago at Unite Way of America, competition for workplace charitable dollars has intensified. While few would argue that United Way has been one of the most influential forces in American philanthropy, in many ways it fell victim to its own success.
United Way was a terrific idea in its day. Why have thirty different charities each soliciting funds from the same sources, when you could combine efforts into one campaign? American culture had a made-to-order mechanism for getting to John and Jane Q. Public, namely in the form of the Fortune 1,000 companies of the 1950s, '60s and '70s. They were a bureaucrat's dream: large, expanding, with a top-down management
structure tailor-made for running a fund-raising campaign.
Then, in the late '70s, American businesses started to change in fundamental ways that United Way could not, or would not, grasp. The biggies of corporate America went on a reducing diet that, to this date, has not ended. Even more fundamentally, the American people embraced a model of consumer choice that has also continued unabated. For more than a decade, even friendly critics of United Way -- myself included -- have scolded it for resisting donor choice and for not opening up their campaigns to non-United Way fund-raising efforts.
United Way historically has represented only a narrow swath of nonprofit causes, namely social services. A more diverse and savvy public supports a much greater variety of nonprofits than those offered by United Way. It favors donating to those causes throughworkplace giving, the hallmark of United Way. United Way has always viewed its main customer as the corporations who sit on its boards.
Its secondary customer market has been the social service agencies that United Way represents by its fund-raising efforts. Coming in a distant third were the individual workplace donors that put the bread on the table, so to speak. That was a fundamental, strategic error that still plagues some United Ways.
"The United Way donor was typically the last one they considered," according to Kalman Stein, executive director of Earth Share, one of the many successful alternative workplace funds now competing with United Way for work sites.
"How could United Way have known what its donor customers wanted, yet deliberately deny it to them for so long?" Stein asks, referring to donor choice and more open workplace campaigns.
As head of Earth Share, Stein, a former advertising executive, represents some 40 major, national environmental organizations in a workplace-giving program that has grown by leaps and bounds over the past decade. Included under Earth Share's umbrella are the Environmental Defense Fund, Friends of the Earth, National Audubon Society, National Wildlife Federation and World Wildlife Fund.
While its nearly 10 percent growth every year is impressive, its total fund-raising of about $9 million last year palls next to United Way's $3 billion. Still, more and more corporations are beginning allow Earth Share and other federated campaigns into their workplaces. Last year, for example, CITIBANK, Rodale Press, The New York Times Co. and Nissan Motor Corp. added Earth Share to its workplace campaigns.
The bogyman in the closet that United Way has used over the years to keep out competitors has proven to be a myth. Allowing competition from other campaigns actually increases total employee giving, according to the National Committee for Responsive Philanthropy (NCRP) in Washington. In fact, according to a recent report from the NCRP, giving to United Way increased in 75% of all workplace campaigns that allowed competing organizations.
Nonetheless, getting in the door has been a battle for alternative funds. The $3 billion-plus employee marketplace looms as a battleground in the next few years. However, there have been notable successes both by United Way and non-United Way campaigns, as the two have learned to cooperate. Next week we'll examine some of the trends toward workplace charitable competition.
(Les Picker is a philanthropy consultant. Write to him at Th Brokerage, 34 Market Place, Suite 331, Baltimore 21202. 783-5100)