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United Way Fraud Scandal and Scams

Updated on February 25, 2016

Middle Man Fees?

In an era when many Americans are feeling disenchanted by mega-corporations and conglomerates in general, it is time to see the United Way for what it is; the biggest corporate charity in America. It is time to take a good, hard look at the national and local United Way(s). Questions need to be asked of the United Way and all charities. My intent is to help people come up with the necessary questions to ask.

Most people have heard the news stories about the fraud and scandals at the national and local level within the United Way, thus deeper scrutiny is needed. After all, it is our money, and we need to make sure it is being put to good use and that the charities they support do not have fraud and scandals of their own. How do your local United Way and the charities they support fair as far as scandals and fraud? Does your local United Way support a charity with a recent scandal?

The United Way is not a charity in and of itself; its main purpose is fundraising and distribution of those funds to the charities that fit their mold. Some people do not realize by donating to the United Way (a middle man) they pay two sets of administration fees. The first is to United Way, and it can be anywhere from 15-30% depending on the local United Way agency. The second is to the charity actually helping the people in need. It does not matter if you send a check to the United Way, a payroll deduction, or if you designate your monies to a specific charity, or give via social media. The United Way takes its fee no matter how or where the donation comes in or goes out. Do you want to pay the United Way to redistribute your money? If you know what charity you want to help, it is best to cut out the middle man (the UW) and give directly to your charity of choice. Direct giving gets 15-30% more of your money into the hands of people in need. In addition, the charities do not receive funds monthly from the United Way. Funds are typically distributed annually, in select cases quarterly. Therefore, United Way banks that money and earns interest on it while the charities wait for much needed charitable dollars.

Charity Ratings

Charity Navigator is one good tool for researching your charity, but it cannot end there. An example: The United Way of Butler County reports it sent 83% of all funds raised to charities they support or designated by you in 2014. However, Charity Navigator also reported an article about questionable accounting practices within local United Way agencies.The article brings up questionable accounting such as, double counting, calculating volunteer times as monetary donations, and in kind gifts as contributions. The article brings up good questions to ask your local United Way. Do they count donations in kind as contributions toward operating costs? Are volunteer hours counted as monetary donations? How do they calculate donations raised in cooperation with another charity or fundraising organization? Do they count the entire amount or a percentage based on the capital put into the fundraiser by United Way? In other words, if a fundraiser is financed by three companies or non-profits, and UW donated 33% of the capital needed for the event. Does the UW count the total dollars raised as part of their yearly totals, or 33% of the dollars raised toward their yearly totals? If the UW reports only 33% as dollars that went to fundraising, but 100% of the total raised into their annual donations collected, it skews the numbers in their favor by 67%, as they invested 33%, but reported 100% of the profit. Watchdog groups like Charity Navigator cannot track questionable accounting practices. Is your local United Way willing to show you records of specific fundraisers and how it breaks out the costs and profits associated with the fundraiser?

United Way at the Local Level

One promise local United Ways make to us is that your money is kept in your local community. It is, to a point, the majority of your donation stays local to the community, but a portion is also sent as membership fees to United Way of Pennsylvania and United Way Worldwide. Not all states see the need for a statewide United Way umbrella to funnel money to, but PA is one that does. If a United Way agency pays .5% to each UW Worldwide and UW of PA and the agency raised 1 million dollars, $100,000 would be sent out of our community. A good question to ask is how much or what percentage your local United Way sends to the statewide and worldwide umbrellas. How many executives do you want to support when you donate money to charity? I also believe the directors and board members should live within the United Way community they serve and not in another county or community. It is a question to ask your local United Way: Do your director and board members live within the area they serve? The answer for Butler is “no”.

On a more local and personal level, when I was investigating our local United Way agencies I found a few disturbing facts. In 2014 the Tribune-Review reported the United Way of Butler County cut funding to the Butler Salvation Army. In turn, the Butler Salvation Army disaffiliated from our local United Way and I do not blame them. The Salvation Army serves “the least of these”. It is a shame the United Way of Butler County does not want to be a part of that. The United Way of Westmoreland County also decreased funding to their local Salvation Army, essentially ending that partnership as well.

In 2015 the Cranberry Eagle reported the Boy Scouts ended the 30 year partnership they had with United Way of Butler County, essentially walking away from $7,500. The reason given by the Boy Scouts was very non-committal and leaves me wondering what really happened.

In 2015 the New Castle Salvation Army ended its affiliation with United Way of Lawrence County citing decreased funding and limited times the Salvation Army was allowed to fund raise throughout the year per the New Castle News. I looked into that and to my surprise many local United Ways write a “black out” period into the contracts with the charities they support. More or less, telling the charities they cannot hold fundraisers of their own between Sept. and Dec. of each year. On the surface it does not sound too bad, unless you are one of the charities that received decreased funding and cannot make that up for four months of the year.

One issue I came across was local United Ways bringing the media into a situation that could have been handled privately. On July 1, 2015 the United Way of Allegheny County and the United Way of Westmoreland County merged into the United Way of Southwestern PA. The two agencies went through proper channels and had the name approved by the national United Way. However, at least three local agencies took exception to the name and went to the media to voice their disappointment. It shows disrespect between agencies and is unprofessional.Triblive and Ellwood City Ledger

Charities are only transparent and accountable if we ask the necessary questions. Get to know your charity and where your money is going.

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      ap21 12 months ago

      You might want to correct your math. If they raised $1,000,000, and 0.5% was given to two different places for membership fees, that adds up to 1%, or only $10,000 outside of the community. The number you have is 10% which is why it seems so bad. I'm not saying it's acceptable, but it should be correct at least.