United Way Worldwide:

Formation1887
Denver, Colorado,

U.S.Type: Private non-profit

Legal status: ActivePurpose: Charitable organization

Headquarters701 N. Fairfax Street Alexandria, Virginia 22314

Region served

Worldwide

President and CEO

Angela F. Williams

Revenue

$5.196 billion (2021)

[1]Websitewww.unitedway.org

United Way is an international network of over 1,800 local nonprofit fundraising affiliates.[2][3] Prior to 2015, United Way was the largest nonprofit organization in the United States by donations from the public.[4] Individual United Ways mobilize a single fundraising campaign to raise money for various nonprofits, with most donations coming through payroll deductions.

United Way Worldwide[edit]

United Way organizations raise funds primarily via workplace campaigns, where employers may solicit contributions on United Way's behalf payable through automatic payroll deductions.[5][6] After an administrative fee is deducted, funds raised locally by United Way are then distributed to various nonprofit agencies within those communities.[7] Major recipients have included the American Cancer Society, Big Brothers/Big Sisters, Catholic Charities, Girl Scouts, Boy Scouts, and The Salvation Army.[8]

Membership in United Way and use of the United Way brand is overseen by the United Way Worldwide umbrella organization. United Way Worldwide is not a top-down organization that has ownership of local United Ways.[9] Instead, each local United Way is run as independently and incorporated separately as a 501(c)(3) organization.[7] Each affiliate is led by local staff and volunteers and have their own board of directors, independent of United Way Worldwide or a parent organization.[2] Some United Way affiliates, like the Central Community Chest of Japan, choose not to use the United Way name and branding.[10]

[We have] converted United Way from a federation of local charities to a franchise model. The local franchisees bring in donations, and the worldwide organization receives a percentage of revenue. We promote the brand, provide infrastructure, and guide the strategy.

— Brian Gallagher on United Way's structure[11]

Local United Ways pay membership dues to United Way Worldwide for licensing rights to the United Way brand and must meet criteria to maintain their membership status (including independent review boards, audits, and restrictions on marketing tactics).[12][13] The membership dues to United Way Worldwide are a portion of the total funds raised by each local United Way.[14] U.S. affiliates pay a membership fee of 1% of their total funds raised to United Way Worldwide.[13] The structure has been described as similar to a "global franchise operation" by Forbes magazine.[13]

Internally, United Ways are classified by how much funds they raise on a scale of 10 levels. Metro 1 is the highest-ranking which requires raising at least $9 million annually.[15]

Functions[edit]

United Ways are federated fundraising bodies that mobilize a single fundraising campaign to raise money for a diverse range of nonprofits.[16][17] United Ways raise funds and determine how to best distribute them.

[edit]Fundraising

Example of a United Way pledge form where employees can choose how much to donate and where to designate their funds

United Ways raise funds primarily via company-sanctioned workplace campaigns, where the employer solicits contributions from their employees that can be paid through automatic payroll deductions (in the same way tax withholdings and insurance premiums are deducted from an employee's net pay).[18][6] 57% of United Way's donations come through payroll deductions while an additional 20% from corporate donations.[13]

United Way also administers many of the annual workplace campaigns for federal employees in the US called the Combined Federal Campaign.[19]

Nonprofit agencies that partner with United Way usually agree not to fundraise while the United Way campaigns are underway.[20]

Local United Way fundraising thermometer poster
United Way of Canada's campaign kick-off event where the annual campaign goal of C$31 million is announced
Savannah River Site employees reach United Way campaign goal in 2015

[edit]Distributing funds

Money raised by local United Ways is distributed to local nonprofit agencies after an administrative cost is deducted.[21] In 2002, the average administrative fee was 12.7%.[22] Where United Way distributes the funds depends on if the donor designated or restricted their donation to a specific organization or cause.[23]

[edit]Designated donations (donor-choice)

Almost all United Ways allow donors to specify (designate) which nonprofits should receive their funds.[13][24] Some United Ways let donors choose which focus area or social problems (like helping kids or the elderly) they wish to support, which allocates their gift to a relevant subset of their charities in its network. Some United Ways allow donors to direct their gifts to any nonprofit (either inside or outside United Way's preferred charity list) while some only let donors give to any charity in their region or anywhere in the country.[24]

About a quarter of United Way donations in the US are currently designated.[13]

[edit]Undesignated donations

If the donor does not earmark a specific cause or organization for their donation, the money goes into a general fund and are allocated to areas of greatest need by the local United Way's volunteer committee.[25]

Traditionally, United Ways would grant funds that can be used for any purpose by the recipient nonprofit. However, many United Ways have started giving funds to nonprofits only to be used for specific programs run by the nonprofit (e.g. a workforce training program at the local chapter of St Vincent de Paul). These funds are provided in the form of contracts in which the nonprofit must deliver programs and are subject to review and audit by the United Way's volunteer committee.[26]

History[edit]

[edit]Origins in the Community Chest movement

Community Chest appeals

The organization has roots in Denver, Colorado, where in 1887 Frances Wisebart Jacobs, along with the Rev. Myron W. Reed, Msgr. William J. O'Ryan, Dean H. Martyn Hart and Rabbi William S. Friedman began the Charity Organization Society, which coordinated services between Jewish and Christian charities and fundraising for 22 agencies.[27] Many Community Chest organizations, which were founded in the first half of the twentieth century to jointly collect and allocate money, joined the American Association for Community Organizations in 1918.

The first Community Chest was founded in 1913 in Cleveland, Ohio,[28] after the example of the Jewish Federation in Cleveland—which served as an exemplary model for "federated giving".[29][30]

Posters supporting WWI war funds

The success of the Cleveland Community Chest led to a modest spread of the concept to other cities. World War I helped disseminate the concept of the Community Chest as the model for federating giving was used to support wartime fundraising efforts. Of the 300–400 War Chests that existed during the war, most converted over to becoming Community Chests after the war ended.[31]

The number of Community Chest organizations quickly increased from 245 in 1925 to almost 800 by 1945. An observer on WWI's effects on the movement said, "there is no doubt that the federation movement gained a momentum in one year that would have required ten years of peacetime activity."[31] Mirroring the changing terminology, the American Association for Community Organization changed its name to the Community Chests and Councils, Inc in 1927

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