Businessweek Archives

Keeping A Sharper Eye On Those Who Pass The Hat


Top of the News: Commentary

KEEPING A SHARPER EYE ON THOSE WHO PASS THE HAT

Few slogans are as familiar to Americans as "Give the United Way." But these days, the pioneer of the workplace-based charity campaign is looking like a victim of its own success. On Feb. 28, allegations of lavish spending and mismanagement forced longtime United Way of America President William Aramony to resign. While the misconduct may turn out to be limited to Aramony personally, the affair has thrown a harsh spotlight on this venerable charity--and sparked questions about its cozy monopoly on corporate workplace drives.

At the least, United Way's problems have indicated some serious lapses in accountability. The indiscretions "should have been detected far earlier," complains Stanley C. Gault, chairman of Goodyear Tire & Rubber Co. "Where was the board? The outside auditors?" Already, the United Way of Tristate, which coordinates fund-raising for 35 United Ways in New York, New Jersey, and Connecticut, has seen an abrupt halt in pledges at six campaigns, says President Betty Beene. About a dozen new drives, scheduled to start this month, have been postponed. "It taps into people's worst fears about charity's abuses," says Kalman Stein, executive director of Washington-based Earth Share, an umbrella organization for 43 environmental groups. Some nonprofit executives worry that the controversy could even lead companies to discontinue workplace campaigns altogether.

MAINSTREAM CAUSES. Dropping office drives would be a mistake, however. Such campaigns relieve corporations from having to deal with thousands of solicitations. Most of all, federated giving provides an efficient way for charities to raise a lot of money with relatively little overhead. Nevertheless, the crisis at United Way should force both the group and employers to look beyond what's the easiest way to make donations, to what's the best way.

The modern United Way has its roots in the local Community Chests of the 1920s. They evolved into the united-fund movement, which adapted the payroll-deductions system from war-bond drives. In the ensuing years, United Way thrived partly because it had little competition and partly because it was shrewd enough to invite the business community into its affairs: Sitting on a United Way board is considered a status symbol among CEOs. The mainstream nature of its causes--the YMCA, American Red Cross, and the Boy Scouts are typical recipients--also helped its popularity.

But as the number of competing federations has grown, so have complaints about United Way's lock on payroll deductions. And as the world has changed, so too have the social issues, such as the environment and women's rights, that appeal to employees. There's solid evidence that diversifying workplace campaigns can work: These days, about 10% of charitable payroll deductions go to non-United Way funds, vs. 3.5% in 1980, according to Washington-based National Committee for Responsive Philanthropy.

At American Telephone & Telegraph Co., for instance, employees in the New York metropolitan area can use payroll deductions for United Way or regional Black United Funds, another federated campaign. In Boston, Polaroid Corp. and Lotus Development Corp. allow workers to donate to Community Works, which supports groups such as the Boston Women's Health Book Collective and the Gay & Lesbian Advocates & Defenders.

Similarly, Ecolab Inc., a chemical maker in St. Paul, Minn., eliminated its United Way-only policy in the early 1980s to help charities whose budgets shrank when the Reagan Administration began cutting funds to nonprofits. Employees can make payroll contributions to the Cooperating Fund Drive, a group of 34 small nonprofits in areas such as housing rehabilitation and crime prevention, and to the United Arts Council.

HEAVY BURDEN. The United Way scandal should also encourage local United Ways and their donors to review fund-raising campaigns. Although reports of improprieties at the locals are rare, corporate board members may want to investigate accounting procedures and perks. Companies should also examine the way the local handles its donor-choice program, which allows employees to designate a non-United Way charity. Too often, critics contend, the pledge forms are vague, rarely providing lists of unaffiliated charities.

And almost everyone agrees that corporations that permit these charity drives should eliminate the much-resented arm-twisting. United Way of Tristate is discontinuing awards to campaign managers for 100% employee participation. Admits Beene: "If participation is 100%, it means someone has been coerced."

If there is a time when charitable organizations need help, it's now: Government cuts and rising unemployment put a heavy burden on charities. The United Way scandal gives business the chance to enhance and improve, not eliminate, the concept that charity begins at the office.Susan B. Garland


The Good Business Issue
LIMITED-TIME OFFER SUBSCRIBE NOW
 
blog comments powered by Disqus