Do we still need the United Way?

The Star Tribune’s article today describing the new landscape for the Twin Cities’ United Way does not dissuade the reader from the conclusion the organization does not have a future in the new reality.

At one time the United Way was a staple of charitable giving; you filled out a pledge card at the beginning of the year (usually under pressure from the boss as I recall from my early working days), the money was deducted from your paycheck, and the United Way took care of the rest, vetting the organizations who wanted and needed some of the money.

But it’s not the 1970s anymore.

Last year the United Way eliminated funding to domestic violence prevention programs because giving had dropped so much. So why would you give money to the United Way if stopping domestic violence was one of your charitable priorities? And in the era of direct appeals and the ability to give online, why do we need a “middle man” to intercede on our behalf?

The answer is that even in the world of non-profits, there are “haves” and “have nots”. Some charitable organizations don’t have the development administration to fundraise successfully nor the name recognition to rise above the din of everyone who’s asking for help.

It’s not easy finding what organizations those are on the Twin Cities United Way website, but this would seem to be one such organization.

And yet there is no easily accessible annual report on the United Way’s website to see a list of who’s getting the money. It requires extensive searching and registration on Guidestar.org, on which, by the way, the Twin Cities United Way has the highest rating.

Eighty-three percent of the United Way’s revenue comes from workplace giving campaigns.

That’s a landscape the United Way occupies that feels outdated in 2018, which is why the new strategy is to appeal directly to individuals. That puts it in direct competition with dozens of other non-profits.

The situation couldn’t have come at a worse time.

The new tax law has also removed the incentive — beyond altruism — for people to donate money to charitable causes at all because so many more people will no longer be itemizing deductions on their tax returns.

“This is the new reality,” United Way CEO Sarah Caruso tells the Star Tribune about the organization’s revenue that has been declining since peaking in 2014.

And there’s one more reality working against charitable organizations. The new generation, saddled with college debt, job insecurity, and comparatively lower wages and opportunities, doesn’t have the money to give to any charities in the manner previous generations did.

Discussion: What’s your charitable giving program and how do you decide where your money goes?

  • We’ve tried different approaches: and my wife still gives to United Way in her workplace campaign. We used to do $100-$200 to about 10-20 different charities, but we’ve narrowed in on a couple bigger gifts to a couple charities. I also wonder how many people think that giving to Go Fund Me campaigns is their charitable giving – so people are directly helping friends and neighbors who are sick, or victims of a fire or flood – and with stagnant wages there isn’t much left over to donate to nonprofits. It’s a real issue.

    • Barton

      Related: some GoFundMe pages are for actual 501(c)-3 charities when dire needs come up. Such as a rescue organization who has a dog/cat needing expensive surgery that could wipe out their vet budget. Or a housing charity trying to raise funds to help after a fire/flood/disaster displaces dozens of people or a whole community. So, there are real “charitable” giving opportunities on GoFundMe, as it does have the ability to reach a lot of people quickly.

      That said, I do have a friend who last year tried to claim on his taxes his giving to someone trying to cover their medical expenses via GoFundMe. The friend honestly felt they had been hoodwinked into thinking it was a charity. It was quite clear (if you read the page) that it was not.

  • BJ

    The nonprofit board I sit on had a long discussion about giving at our last board meeting. We don’t do much fundraising, maybe 0.1% of our budget is from donations the rest is from the fees we charge for our programs. We had wanted to increase that but now not sure it is worth the effort.

  • wjc

    I haven’t worked in an organization that has been a part of the United Way campaign for a couple of decades, so that doesn’t apply.

    We have focused our giving on food-related organizations, Simpson Housing, and Avenues for Homeless Youth.

    We try to consider who has the greatest need for our dollars, and like Jason, we have somewhat moved away from a more scattershot approach to fewer, larger donations.

  • David Brauer

    Re charitable deductions – Strib story references donor-advised funds. Our family has looked into this, it’s basically a way for rich people to continue to itemize in the Tax Cut era. It involves – and I love this phrase – “bunching” several years of contributions into one. Say you give $10,000 a year … it’s probably not enough to itemize with the new cap on state/local tax deductiblity. But if you roll 5 years of giving into your new donor-advised fund, you can itemize that 50k for Year One and then just take the standard deduction in years 2-5.

    Overall, your charitable contributions are delivered the same, $10,000/year, but the federal government gets even less revenue than tax cuts will deliver. And of course, normal people can’t front $50k, or $25k, or $500k. Inequality, I tell ya.

    PS local foundations get a 1% fee for managing these funds. So it’s good for them. Vanguard charges less, but that admin money goes out of MN.

    • Mike Hess

      These families are the same ones likely, who if they have that kind of income to support that kind of charitable giving, in Minnesota at least have lost a lot of their deductions with the SALT limitations. Even with rate reductions their federal tax are probably going up if their income is wage based vs living off investments. So if you are targeted by the tax code for even more payment, not less, it makes sense to use what tools remain.

      • David Brauer

        Mike, don’t forget about the rate cuts. The largest gains from that are at the top (39.6% rate to 37%, etc.) – believe me, I know. We are paying less even before charitable machinations & even with the shift from itemized to standard.

        The game is rigged.

        • Erik Petersen

          OK, I gotta ask, having restrained myself from poking around your public humble-bragging before…

          Context: Your wife is a law executive here in town, has an executive income. You got a great big family income, might be 7 figures.

          You regaled us a month ago on twitter with your quest to pre-pay property taxes before the SALT deduction sunset-ed. You regale us now with your quest to maintain a charititable deduction under the Trump tax code, in which you benefit in other ways.

          Figure, you’re looking to mitigate 5k here or 10k there on a 6 figure annual income tax bill.

          Why do you obsess over that as a rich prog family that’s ostensibly ‘happy to pay’? Why?

          • David Brauer

            I’d like to think of it as full disclosure rather than humble-bragging. And I disclose fully to make my own follies/foibles known. (Note: it’s not 7 figures.)

            Because I examine scenarios doesn’t mean I act on them. Frankly, we usually end up with the “taxes pay for things we want, let’s pay them.” But I try to make it clear this isn’t theoretical, and I’m not wearing sackcloth.

            As to the SALT deduction, frankly, that was a GOP-screw-the-blue-states thing. Remember, one of the goals was to force blue states to lower taxes (by capping them). It didn’t make the tax code progressive, at least with respect to blue/red states. So I didn’t mind taking that one.

            I can’t rationalize the charitable deduction similarly (though backing it out of itemization will hurt charities), so I could very well not do it. But part of my thought process involves thinking out loud in public, to expose myself to comments, including yours!

            I do think it’s helpful to understand how this tax maneuvering works, from someone who has time to figure it out for his own family.

          • Erik Petersen

            thanks, I take that as pretty forthright answer

          • Erik Petersen

            To redirect this more to the topic… it feels like you as an affluent prog are overly concerned with planning your giving around the tax code, when your ‘from each, to each’ charitable action there could be more intensely focused on how much you can give and what you want to give to…. ya know, as a first principle. Seems at odds.

          • Let’s kinda nip this in the bud as it strays dangerously close to violating the NewsCut rules. A better suggestion for sticking on topic is to answer the question asked about your own giving rather than judging the motives of others who are giving.

            David answered the question you asked.

          • Erik Petersen

            Well, it was a serious question asked of someone who is capable of articulating a serious answer, on a serious comment thread, so ultimately I asked it, in a sensible way, without being terribly indiscreet. Cant we do that? I also think if you are going to talk taxes you are obliged to talk practical numbers, and I admire David for his indulgence there.

            I get your point though.

          • I have no problem with the original question, however I try to protect commenters here on the rare occasions when they’re introspective and honest. Subjecting them to judgment from other commenters when they are diminishes the willingness of commenters to engage in such an enlightening way.

            So what we are encouraging is for you to share your own values and charitable philosophy rather than to question the others. In return, we’ll protect you, too.

          • Erik Petersen

            I think the vituperative, blue view of the SALT deduction repeal is misplaced. You say the ‘GOP was trying to screw the blue states’. Well a true and quite dispassionate explanation of rationale is the blue states were gaming a bit of a free ride, a subsidy basically, off federal income tax revenues, and the GOP was merely trying implement their policy preferences to end that. That’s politics.

            that is all…

        • Mike Hess

          Understood but if you have say $50k in Minnesota income tax ($500k ish taxable income) living the dream, house close to a city lake, with $15k property tax, maybe a cabin, you just had $70k of federal deduction go to $10k. So now unless you can still itemize by charitable contributions you have dropped from $70k to $24k standard deduction and that $46k is now subject to the 35% federal bracket costing an additional $16k in federal tax, offset by the lower rate on the rest of the income. If you looked at the rate cut, where most upper brackets are reduced say 4% you need to subject over $400K to the new top rate brackets to save back this $16k so the person above would see much less income favored that way- So you are right it’s rigged but it’s very much a red vs blue state rig hitting wage income folks worse than investment income. These calcs above I think are reasonably close but tell me if I’m missing something. It’s a complex topic to try and predict.

          • David Brauer

            Yes, you’re missing a key thing: that person used to pay Alternative Minimum Tax. With the threshold raised considerably, they probably don’t. That’s what is reducing our taxes so much in 2018.

          • Mike Hess

            Good point. Hope that works out that way.

  • MrE85

    (For the record: I work for a charitable organization)

    We are selective in our giving, donating to a variety of organizations. One provides helper dogs for deaf folks. Another provides food and shelter to homeless people in Saint Paul. We also donate to several health charities, including the one I work for. Also public radio, television, and MinnPost.

  • MrE85

    Both my wife and I have led United Way campaigns in our respective workplaces. Neither offer the option any longer.

  • Barton

    While I still give to UW through workplace giving (b/c otherwise I cannot get the “perks” such as the ability to wear jeans on a Friday), I do it AND direct my donation to a specific charity, which may or may not be on the UW’s list of charitable organizations it helps.

    The one I specifically give through the UW is not on their list, by the way, and it does give me some joy to know they are using their admin budget to give to an organization I believe it, but they do not. Petty? Yes, definitely. But still the money gets where I want it to go, and I get that coveted jeans sticker for Fridays.

    • Hamliner

      The MN Environmental Fund operates like a UW for environmental groups. They allow funds to be directed too. I’m going to wear jeans today in honor of the UW…

  • Gary F

    Catholic Charities. Locally, and if there is a hurricane, flood or other disaster, just go on line to the local diocese and donate.

    Being in sales, I get asked to buy or sponsor lots of stuff. My policy is if I know the family or school, I’m an easy sale. Someday one of those raffle tickets just might win me something. My backseat was full of Girl Scout cookies, I hand a box out to the people at the end of the freeway exits.

    • Veronica

      Catholic Charities had some really great prenatal and birth care that they eliminated in the last 2 years, which was very disturbing.

  • Patrick

    Charitable giving is nice, but charity is not a substitute for the state. In a recession we need the government to pick up some of the spending slack when most (including donors and charities) are tightening belts. A charity like the United Way will never be able to provide the counter-cyclical spending that the government can provide when “charity” is needed most.

    We should be spending about $2 trillion more a year on social welfare, and there’s no problem if we do spend that money.

    http://peoplespolicyproject.org/2018/03/26/the-u-s-spends-far-too-little-on-social-welfare/
    https://www.vice.com/en_us/article/a34n54/modern-monetary-theory-explained

    • Jerry

      Charities seem better at fighting the symptoms than the disease. For example, funding affordable housing is more effective than funding a homeless shelter.
      But I feel like people like charities because they can discriminate with their donations and only give to the type of people they agree with. This is especially true with faith-based charities, including the Salvation Army.

  • Hamliner

    Our household looked at donor-advised and found it to be another way the financial houses hold on to our money. (I agree with Mr. Brauer.) We pick a top three to support big, and then the rest are small courtesy giving because we get asked.

  • Jim in RF

    I work for one of the largest banks in the history of the planet. It has no provision for the UW or any other charity, and ASFAIK does not match private donations. They do have UW captains for each building, though. I wonder if its partly because of its size, with operations around the globe and too many different local options to consider and account for. It does pay for me to volunteer for from 3 days to 3 months (certain circumstances), and gives millions as a corporation.

    We gave just over $1200 last year, with no more than $150 to any one org. Local and national conservation, food pantries, women’s shelter, parks, school lunches (which I never got a thank you/tax letter for!), ACLU.

    • KTFoley

      ACLU doesn’t count as a charitable organization, does it? At least not with regard to the tax deductions. Ditto for donations to government bodies such as a public school.

      • Jim in RF

        Both the ACLU and Mother Jones have sister-foundations that are 501c3s. I have no idea how they move money back and forth.

        • KTFoley

          Cool, thanks for the clarification.

        • Veronica

          Do you mean fiscal agents?

  • crystals

    When my partner and I first got together he was working for a big MN corporation who did United Way drives. As a non-profiter who has never experienced them, it was fascinating. He was donating little amounts of money to things he knew nothing about so he could wear jeans on certain days. It felt like a broken model then, and like maybe not much has changed since.

    I also think it’s interesting to note the huge rise in giving through Give to the Max Day each year. That’s how many folks now see an ability to give directly to an org of their choice while still participating in a broader “thing.” I think the United Way needs to be thinking about the habits and motivations of people today, not trying to go back to what once was. There are a lot of smart people involved, so I hope/expect they are, but the changes need to be big and visible and do things to draw people like me in and away from GTTM. (And I will gladly go to a good alternative for GTTM!)

  • BReynolds33

    My priorities for charitable giving are as follows:

    Must have something to do with children. The more it has to do with children, the more likely I am to give. If I could simply hand money to children that need it, I would do that. Details beyond that would include prioritizing needs over things that are really nice to have (ie: food and water over sports equipment).

    I also give regularly to research diseases that people I know have battled or lost loved ones to. Here again, I will give to a research charity that researches something like SIDS over something like Alzheimer’s.

    There is no right or wrong way to do this, I have gathered. As long as it is something you care for, and the non-profit uses the money to do what they say they are going to do… the tax benefit shouldn’t be the motivator.

  • jon

    No.
    Information is far more available, giving in now far easier, and ultimately our personal goals can be more easily funded… and I suspect younger people are more likely to want to fund their own personal beliefs/objectives (if they can afford to)… I guess you could go with the headline “millenials are killing the united way” (though it’d be about as reasonable as the millenials are causing potholes headline a few years back…)

    That being said, I suspect the biggest bang for the buck is effective political lobbying organizations…
    If a corporation can get 400-500% return on investment by lobbying then it seems only reasonable that the nonprofit world can do the same… they need only justify themselves by saying that the return on investment is 30-40% higher than direct giving (so as to accommodate the tax deductible difference in amount given).
    If $100 will give one person a bed and a meal for a week, or a month, but $70 spent convincing local politicians to build and fund a housing first initiative will give 20-30 people homes for years to come, seems like the money is best spend on lobbying…

    I’m not saying it’s right, or even reasonable… but clearly lobbying the government is where the smart donation money should go, particularly given the tax breaks that discourage tax deductible giving… nothing gets your priorities taken care of faster than buying a few politicians…

  • KariBemidji

    Our workplace UW campaign is in August. At open enrollment in November, as I go through my list of deductions from a paycheck, there is a calculator on the side of the page keeps a running total of how much will be deducted next year. So in August, someone has all of the good intentions of giving to the United Way (and many of the agencies in my area, this is their biggest funder) but the bottom line wins out and they can change or eliminate their United Way contribution.

  • Angry Jonny

    The program I manage where I work receives about 1/4th of its annual funding from our local United Way. Our agency has a voluntary employee donation option for United Way donation, also. The amount we donate to them each year doesn’t amount to a great deal in the grand scope of things, but I think it appeals to employees’ sense of philanthropy. I know I’d be in a tight squeeze if it weren’t for their support. They are very active in our community, in both their funding and their direct activity. We’re not the metro, however, so things are clearly different. I worry how the new tax law will affect not only their budget, but our own ability to improve our community by helping low income families.

  • amycrea

    We prefer to donate directly to organizations, and do try to find smaller orgs that aren’t as likely to be recipients of big donations. That said, we’re a sucker for animal welfare organizations large and small. And organizations that are meaningful to friends and family.

  • Carol S.

    I purposely AVOID giving to the United Way and other organizations through company-promoted campaigns. Not sure what my current employer does; I haven’t been here long enough to know if they have a campaign. At previous employers, although they all claimed not to have access to the information, they did clearly have access to some of the information because they were tracking how many people participated and which groups were getting the most donations. I decided it was none of my employer’s business who I give my donations to, or if I choose to give at all.

    As a result, the groups I choose to make donations to get their donations from me directly. At the moment, most of my money goes to small, local, animal rescue groups and MPR. Occasionally I will give to an arts organization, particularly textile-related groups. Many of my donation decisions are based on the overall awareness of the group and whether they support causes I believe in. Smaller groups with little public awareness need my help more than the United Way. But I ALWAYS do my research!

  • Renae

    I have an elementary-aged child, so we give to his school. It’s getting really ridiculous though. This year the district cut our school so much that they threatened to eliminate an entire classroom unless parents kicked in enough money to cover the teacher’s salary. This was the “compromise” they made.

    • KariBemidji

      WHAT THE….? Do your kids attend a private school? How much did you have to kick in? $1000 x 30 kids (which is ridiculously high) = $30,000 (which is ridiculously low).

      • Renae

        LOL, I wish. This is Southwest Minneapolis where apparently our “affluence” allows us to be targets of extortion. We had to kick in $60,000. We are not an affluent neighborhood, and are actually a very small Title 1 school, though our numbers there are dipping so we’re losing funding every year. The real black hole is special education funding. If special education were fully funded at the state/federal level the district would have a budget surplus. It’s criminal.

        • Jeff C.

          At my kid’s school they raise money by having the kids raise money for the Apex Fun Run (https://www.apexfunrun.com/). They take kids out of the classroom to “build student leaders” for the week leading up to the Fun Run. Apex keeps 49% of the money raised. Total scam. That said, it is also the best-performing fundraiser at the school (blows the direct-ask campaign and the bake sale out of the water). If we could only fund schools at the appropriate level. (Taxes aren’t bad, people — they pay for things like schools which go on to educate our future leaders and inventors! Everyone benefits when we have great leaders and inventors! Even people who don’t have kids in schools but still pay taxes that go to schools!)

        • crystals

          SING IT. Minneapolis Public Schools was underfunded by $53.4 million dollars for special education in FY2016; it adds up to about $694 million for all public schools in Minnesota. The legislature is making progress this session on convening a “working group” to study the issue in depth.

          It is completely amazing to me that a lawsuit on this ridiculousness hasn’t been filed yet.

  • Veronica

    I’m fervently against professional fundraising organizations, including the clever, but slightly predatory GTTM. Professional fundraising arms make money by skimming a percentage off the top, so if you have an organization you want to support, give directly. Many of them have the capacity to give x amount each month, too.

    • Another pro tip: Give cash instead of in-kind gifts, which are often not needed and can actually take away from existing resources. And don’t “designate” the gift if possible, since the organization should have the flexibility to choose the use of greatest need.

  • Terri DesLaurier

    The last time I was able to give to the United Way through my workplace was in 2010-11. Since changing employers, it has not been an option. However, I prefer to give directly to the organizations I choose to support. At my income level, it’s not about a tax break, but about trying to help a cause I believe in.

  • KTFoley

    United Way dropped off the radar at my workplace. It’s still there, but the month-long October campaign to gather pledges and raise funds via events is history. Same for the month-long March campaign for Foodshare.

    They’ve been replaced by a website for employees to either donate directly or report funds donated via other channels. The company foundation forwards the direct donations to the recipients, plus matches all funds dollar for dollar. I guess this allows the foundation to follow the priorities of the employees, and tempers the bias toward charitable organizations located near the US-based offices.

    The downside and the upside are the same: All giving is personal now.

    Charities that had too little infrastructure/organization to raise funds for their entire budget but just enough to apply for United Way sponsorship and report back yearly on metrics are the ones that are missing out.

    I see the irony that Charity Navigator (and other similar sites) rates these organizations on the percent of funds that go directly to delivering service vs. to overhead. Those that have to make up for the United Way gap are hard-pressed to do that without reducing services and taking a hit to those very ratings.

  • Justine Parenteau Wettschreck

    I can’t help but wonder if local United Way chapters in smaller areas are operated differently. I have covered numerous stories about our local United Way goals, what organizations they give to, how the process works, etc. Each year, the goal is raised slightly, and I only remember one time in years that it wasn’t met. But the dollars donated locally stay local, and the board (all volunteers) are very transparent about who is receiving the funds.

  • My last quarter-century of work was at a nonprofit, so I’ve been keeping an eye on this for some time. When I retired a couple of years ago, United Way simply disappeared from my consciousness. The fact of the matter is that we need no “help” deciding which charities we support, and we do support the mitigation of domestic violence as well as other causes that UW might not consider worthy.

  • Kassie

    We have something called Combined Charities at work. You can choose from a number of federations to give pre-tax dollars to. Some of those include chapters of the United Way. And within them, you can designate a specific organization if you want. I think this is a public link which shows the options we have: https://mn.gov/mmb/combined-charities/charities/

    • This is what I do also. Thanks for sharing this list because I think there are some newer ones from the last time I looked at our options (had been just renewing my existing contributions).

  • It took me a long time before this wasn’t the first thing that popped into my head when I heard “United Way”

    https://www.youtube.com/watch?v=uEEYbXVCoT0

  • Jack

    Given the past history of United Way operating expenses that I personally found offensive, I refuse to donate to them. Instead, I donate directly to the groups that support food security, housing, and mental health assistance. None of these organizations are religious based.

    For the record, I lose all benefit of charitable giving with the new tax code but I will continue to support the causes I feel to be important. It was never about the tax savings – but then again, I’m the resident Returned Peace Corps Volunteer on this board so that explains my philosophy towards giving.

  • Real Bedard

    I believe United Way is a very misunderstood charity. I view United Way as my philanthropic advisor. Just like I use a financial advisor, I use United Way. They know the needs of my local community. They know which charities have the greatest impact. They know all about those hidden charities who need the money to help the forgotten people. Yes, they pay their staff. My financial advisor gets paid as well. Is there waste, sure, sometimes. Are mistakes made, of course. But I know United Way will ensure the greatest return on my investment.