Steph Moores used to chip in $10 a month for her company’s annual United Way campaign. Then she joined a United Way donor community group to help homeless LGBTQ youth, and she supersized her monthly giving to $250.
“This is so near and dear to my heart. This is a personal passion,” said Moores, a 3M Co. employee.
The Greater Twin Cities United Way, in an effort to reverse recent fundraising shortfalls and become less dependent on the check-the-box workplace giving campaigns that became its trademark, is turning to different and creative methods to attract a new generation of donors like Moores who want more control over their giving.
Those methods include courting individual donors outside the office; promoting community giving groups around topics that inspire passion, such as the one for LGBTQ youth; offering fee-based consulting services to businesses with philanthropic arms; and building United Way’s $52 million endowment with legacy gifts to smooth the ups and downs of annual giving.
It’s part of the nonprofit’s new strategic plan to diversify and grow its $87.9 million in revenue while better engaging donors eager to take a more active role in their own philanthropy.
“We are living in the era of individuality. More and more we want to have a direct relationship with individuals. We don’t feel we need to have an intermediary in every case,” President and CEO Sarah Caruso said. “The company campaigns will not go away. Now there is a whole menu of ways to give.”
Almost 90 percent of United Way’s donations come through workplace campaigns and 10 percent come from individuals. United Way’s goal is to increase individual donors to 30 percent and to offer its workplace donors opportunities to join giving groups and volunteer.
As part of the planning, the Twin Cities nonprofit is also focusing on three core areas it’s calling “ecosystems” — education, jobs and safety net. For the first time it’s crafted a vision statement: “A united community where all people realize their full potential.”
“It’s aspirational. It’s bold. It’s broad enough to include everyone. It’s very non-pejorative,” Caruso said.
The new strategy has been in the works for nearly two years, since United Way enlisted Minneapolis-based consulting firm McKinsey & Co., which donated its time, to conduct research and host dozens of community and stakeholder meetings.
United Way Board Chairman Tim Welsh, a vice chairman at U.S. Bank, cautioned that not every new effort will pan out. “Almost by definition, some of this stuff won’t work. We are innovating and trying new things,” he said.
Facing financial challenges
How United Way spends its dollars is also evolving.
Historically, United Way selected nonprofits and awarded them grants from the donations collected in workplace campaigns. Now the portion of donations that people designate to specific charities is expected to climb from 17 percent a decade ago to 40 percent in the next few years.
Because charitable dollars typically make up a small part of what’s spent on social issues, United Way also is partnering with other foundations to hire lobbyists and analysts to influence public policy and how government funds are spent. Examples including MinneMinds, which lobbies for early childhood education, and MSP Win, which lobbies to influence how the state spends worker training dollars.
“We know there is a lot of public money spent in the job training sector. We think it can be spent more efficiently,” Caruso said.
The new plan has gained new urgency as the United Way regroups from an unanticipated $6 million revenue shortfall last spring that forced it to cut grants by at least 5 percent and lay off nine employees. It also cut its Safety from Family Violence grant program, which helped fund more than a dozen local domestic violence programs, and its Reading by Third Grade grant program.
Caruso said at the time that those cuts were made because emergency shelter programs did not align with the United Way’s larger strategy.
United Way chapters across the country have been struggling with similar financial challenges, said Daniel Borochoff, president of CharityWatch, a Chicago-based nonprofit watchdog.
A cultural change
Founded in 1915, the Twin Cities United Way is one of the largest in the world. It gave away $70.2 million in grants last year to more than 200 community nonprofits and schools and spent about 13 percent of its revenue on administration.
Its grants included $1.4 million to the Greater Twin Cities YMCA, $426,000 to St. Paul Public Schools, $425,000 to the Salvation Army, $248,000 to the Boy Scouts’ North Star Council and $245,000 to Second Harvest Heartland.
The United Way historically has been a trusted liaison connecting middle- and working-class donors with community charities vetted by its staff. In the new era of crowdsourcing and direct online giving, people don’t always understand the United Way’s value, Borochoff said.
On the other end of the giving spectrum, well-heeled individuals are turning more and more to donor-advised funds — individual charity accounts that offer immediate tax breaks but can be spent down over many years.
The United Way is “a big institution that people once automatically supported. There has been a lot of rapid change in society including the ways we give,” Borochoff said. “It’s an identity crisis for the United Way.”
Given that culture change, he said that it makes sense for the United Way to adjust its mission and its traditional relationship with donors. But it must clearly explain those changes and the new work it’s doing, he said.
Now that anyone can set up a fundraising website, the United Way’s vetting of charities and its larger understanding of community needs — including those less obvious and heartwarming — may be even more vital, he said.
“You shouldn’t just throw money around without studying the needs of the community and which nonprofits are better able to help with those needs,” Borochoff said.
Donor and volunteer Sheri McGrath said she likes having the expertise and help of United Way staffers, but that having some say in how her money is spent matters, too.
McGrath, a vice president at U.S. Bank, initially connected with United Way at work, but it’s her personal passion for the Women United group that keeps her volunteering time and donating dollars. The United Way group makes grants to nonprofits helping women with education, job training and family needs.
“I grew up with a single mom, so financial stability for women really resonated [with] me,” McGrath said. “It was more laser-focused for me, and I could see where my dollars were going.”