Monday, August 29, 2011

Just 55 cents of each NevCo United Way dollar reaches county's nonprofits

Updates: UWNC CEO responds, below; and (Sept 20) I've checked with some past & present recipients.

It's true that nobody could call the United Way of Nevada County's Maltman Drive digs "opulent"; nor do the salaries of their one executive director and two hourly staff seem excessive. "Vis-a-vis other United Way organizations, we probably fall in the lower quartile of expenses", UWNC Board President Rich Bulotti told me.

But in a small community, the modesty of these administrative costs are more than countered by the modesty of the donations collected - and nearby counties banded together under a single "umbrella" United Way group manage to have considerably lower overhead.

The UWNC FAQ asks "What will United Way of Nevada County do with the money raised?", answering that it "raises money for twenty agencies that deliver services in the eight highest priority areas this community has identified..."

But according to the group's 2005-2009 IRS Form 990 filings, administrative costs took up 45 cents of every dollar the group spent during this five-year period, the most recent available.

What's reasonable? Local resident Helen Williamson said that for her, "25% would be an outer limit" for overhead "unless there were powerful reasons"; she'd have to look carefully before giving to a group with higher overhead.

What do you think?

For context, a quick Google reports that "The average American believes 22.4% is a reasonable amount for a charity to spend on overhead and that a typical charity spends 36.3% of donations on overhead, according to a February 2008 study by Ellison Research, a marketing company." (link)

Not every county has its own United Way group, and it looks like our neighbors who don't go it alone have lower overhead. I went looking for a Placer County United Way, to compare with NevCo, and found instead the United Way California Capital Region, "... in Amador, El Dorado, Placer, Sacramento and Yolo counties". In 2008, when Nevada County's United Way delivered 52 cents of every dollar it collected, the California Capital Region United Way delivered 71. (The breakdown: of its $12.4 million total expenses that year, $8.8 million went to nonprofit grants.)

Another multi-county group, Reno-based United Way of Northern Nevada and the Sierra ("throughout northern Nevada and the Lake Tahoe Basin"; Form 990s here), was intermediate that year, granting 65 cents of each dollar ($1.776m of %2.745m) to nonprofits.

The other rural single-county group I looked at, United Way of Merced County (990s) had higher overhead than Nevada County's United Way - in 2008 it gave out just 45% ($204k of $448k total expenses) as grants.

2011-09-01 update:
I spoke Wednesday with Nevada County United Way CEO Megan Timpany (she'd been unavailable earlier), who acknowledged "yes, the idea has come up" but laid out reasons for keeping a local United Way group rather than using the services of the multi-county United Way California Capital Region.

She said our local United Way protected our county's nonprofits (especially smaller ones?) - it's connected to them and informs employees about them in a way that a multicounty UW wouldn't - it wouldn't give our nonprofits as much attention, there are lots of nonprofits down in the valley.

She also said giving to UWNC keeps the money in our community.
(My thoughts on this: yes, the 45% overhead does go to Nevada County, where otherwise it wouldn't; but (so far) it's unclear to me whether this argument also applies to the nonprofits receiving money - it would depend on whether the multi-county UWCCR gives to a county's nonprofits in proportion to that county's donations. [ 2011-09-16 update - earlier this month I spoke with a UWCCR rep. who said no, they're "county-blind" in granting money.] Also, are employee pledges higher, in a county with a local UW? and if so, are they higher enough, to substantially overcome the higher overhead? )

She also said that if you make a directed donation, the cut they take for overhead is lower, ranging from 10-20% depending on the size of your donation.
And overall the UWNC sends a small amount - I think she said 1 or 2% - to the national United Way, from which they receive marketing.

She noted that UWNC does require that its member agencies undergo an audit every 2 years (would UWCCR do likewise?) and suggested that I talk to these partner (recipient) agencies, to see how they'd feel about being under the umbrella of a multi-county United Way.

So I have homework...

...which (Tue Sept 20 update) I did.
I talked to several people who'd been with groups that were past & present United Way recipients (who go unnamed here; only one was willing to have her name used, & then only if I ran the text by her first, which I don't feel comfortable doing.) - in each case, asking about what would be reasonable overhead, or what overhead they thought United Way was taking. Answers were typically 20-30%, none were aware it was 45%. One person noted that United Way's audit requirement weighed heavily on a small group - that it ate up half the money United Way sent them; while another said a group getting federal grants needed to have the audit anyway.

A couple of other points they made - first, that if your employer is matching your United Way contribution, then (from your perspective) it's as if there's *no* U.W. overhead taken out of the money you give (although in the greater scheme of things, ...). Second, giving to a local United Way group (and nobody I talked to thought we shouldn't) is akin to "buying local", in our shopping; the same reasoning (that although it's more expensive, it supports our friends & neighbors and facilitates community cohesion) applies.

...though it's antithetical to GiveWell's philosophy, of "we want to get the most "doing good" bang for our buck, and we find that opportunity when we get away from our own locale"; a divergence that's thought-provoking.


Methodology note: in this post I measured "overhead" as "1 - grants/total_expenses", not as grants (to nonprofits) as a % of workplace and other general-public donations. The latter metric would be more accurate, but not as simple to compute.

Here are the United Way of Nevada County data (year, grants made (thousands), total expenses (thousands))
2009 115/226
2008 120/230
2007 130/220
2006 117/202
2005 131/229

Total 613/1107 = 55% of our United Way's expenses consisted of grants.

And if you're curious which nonprofits got the UWNC money, in 2009 they were:
Food Bank 20K
Community Recovery Resources 14.5k
Big Brother/Big Sister 11k
Sierra Family Medical Clinic 6K
Gold Country Community Council (Senior Nutrition) 6K
Telecare 5.5K
Habitat for Humanity 5K
Sierra Senior Services 5K
Tahoe Women's Services 4K
Child Advocates of Nevada County 3k
Parners In English Language Learning 2.5K
Sierra Foothill Aids Foundation 2.5K
Sierra Forever Families 2K
Area for on Aging/Helpline 2k
Sundry 22K


Dixie Redfearn said...

Anna, that is precisely why I quit the United Way board. Too much expenses vs. money distributed.

Anna Haynes said...

Thanks for your insight Dixie.