United Way

• 1. Introduction

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  United Way is the name behind one of the most expansive fundraising networks in the world, yet most people who donate to it do so without ever consciously choosing to. They simply check a box on a payroll form. That small, quiet act funds an organization that distributes money to the American Cancer Society, the Salvation Army, Big Brothers/Big Sisters, and hundreds of other nonprofits across the country and around the globe.

  Before 2015, United Way was the single largest nonprofit in the United States measured by donations from the public. Today it operates as an international network of more than 1,800 local affiliates, each independently incorporated, each running its own board of directors. No single headquarters owns them. The umbrella organization, United Way Worldwide, functions less like a charity and more like what Forbes magazine once called a "global franchise operation."

  How did a loose collection of nineteenth-century charity societies become a franchise empire? How did the organization survive a CEO convicted on 23 felony charges? And what happens when a system built on pooling everyone's money starts letting everyone pick where their money goes? Those are the questions this documentary will follow.

• 2. Roots in Charity Federation

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  Frances Wisebart Jacobs helped start it all in Denver, Colorado, in 1887. Together with the Rev. Myron W. Reed, Monsignor William J. O'Ryan, Dean H. Martyn Hart, and Rabbi William S. Friedman, she formed the Charity Organization Society, which coordinated fundraising for 22 agencies, bridging Jewish and Christian charities under one roof.

  The broader "Community Chest" concept took a definitive shape in 1913 in Cleveland, Ohio, where the first such organization was founded after the model of the Jewish Federation in Cleveland, which had already pioneered what fundraisers called "federated giving." The Cleveland success spread slowly at first. Then World War I accelerated everything.

  The military era produced between 300 and 400 War Chests to support wartime fundraising. Most of them converted into Community Chests after the armistice. One observer on WWI's effects captured the speed of change: "There is no doubt that the federation movement gained a momentum in one year that would have required ten years of peacetime activity." By 1925, there were 245 Community Chest organizations. By 1945, there were nearly 800.

• 3. The United Fund Era

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  World War II introduced a new complication. National health charities like the American Red Cross and the American Cancer Society gained government backing during the war and used their centralized reach to run their own local fundraising drives, competing directly with Community Chests. Business leaders grew exasperated.

  The Ford Motor Company made the frustration public by issuing a press release estimating the company lost $40,000 in executive time and employee productivity for each plant solicitation. A committee at Ford, led by Henry Ford II, delivered an ultimatum to the charities: "Federate or perish. We'll contribute to charity once a year or not at all."

  That pressure produced the first United Fund in 1949 in Detroit, Michigan, under the motto "Give Once for All." The Detroit campaign brought Community Chests, local charities, and some national charities under one roof and raised more in its inaugural drive than the separate drives had collected the year before. By 1953, there were over 1,200 United Funds operating across the country.

  The national association eventually renamed itself United Community Funds and Councils of America, or UCFCA, in 1956. But its thousands of affiliates used no fewer than 137 different names, and no consistent identity existed for donors or employers to recognize.

• 4. Becoming United Way

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  On the 13th of July 1970, the national association announced it was changing its name to United Way of America. Bayard Ewing, then president of the fund, explained the thinking plainly: "We wanted a simple name that would give people a clearer and more descriptive idea of what our organization is trying to do."

  Graphic designer Saul Bass created the new logo in 1972. The chief executive at the time, William Aramony, personally traveled to major cities to persuade local affiliates to adopt the name and the branding. In 1971, the national office relocated from New York City to Alexandria, Virginia. In 1973, United Way of America formed a partnership with the National Football League, with NFL commissioner Pete Rozelle recognizing the alliance as a way to promote United Way's work during game telecasts. United Way International was born by 1974, with staff speaking eight languages and a board drawn from more than seven countries.

  Workplace payroll deductions were central to the organization's growth. A key shift came when the federal government allowed compulsory Social Security and income tax withholding in 1942, establishing the technical infrastructure that United Way could later use. By 1956, workplace giving from employees accounted for 39.6% of United Fund and Community Chest revenue, which was the first time employee donations exceeded corporate gifts.

• 5. The Aramony Scandal

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  In January 1990, an anonymous note arrived at United Way of America on the organization's own letterhead. It was addressed to several United Way directors, including board chairman Edward A. Brennan. The note alleged that CEO William Aramony had affairs with two sisters, one of whom was a teenager, and had used charity funds to conceal the relationships. Aramony denied the allegations. The board reviewed the matter and dropped it in March 1990.

  What investigators eventually uncovered was more damaging than the original letter. Aramony had spent charity money on Concorde flights and $90,000 worth of limousine service. He had spun off two for-profit companies using United Way of America funds: the Partnership Umbrella and Sales Service/America. Those companies were ostensibly designed to offer bulk discounts to local United Ways. In practice, Partnership Umbrella had used United Way funds to purchase $1.2 million in real estate across Alexandria, Miami, and New York, including a $459,000 condominium in New York City for Aramony's personal use.

  An outside law firm hired in December 1991 to investigate found "sloppy record-keeping" and "inattention to detail" but stopped short of finding specific wrongdoing in its preliminary report. Aramony resigned on the 27th of February 1992 via teleconference with local United Ways. He was due to retire anyway in July 1993, and in leaving he cited the media attention "overshadowing the importance of the work of United Way."

  In April 1995, Aramony was convicted on 23 counts of felony charges including conspiracy, fraud, and filing false tax returns. He was sentenced to seven years in prison and served six. Two associates, Thomas J. Merlo and Stephen J. Paulachak, were convicted and imprisoned as well.

  The fallout nearly broke the national organization. Local United Ways boycotted United Way of America by refusing to pay dues. Of the 1,400 local affiliates, only 532 were making any dues payments in 1992. Representatives from 13 of the country's largest local United Ways told interim President Kenneth Dam they wanted to see United Way of America cut to half its current size. IBM vice president Kenneth W. Dam was named interim CEO; Elaine Chao succeeded him and remained until 1996.

• 6. Donor Choice and the Funding Dilemma

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  United Way officially embraced donor designation in 1982, allowing donors to direct their gifts to specific nonprofits. The idea had originally been Aramony's, introduced as a defensive measure to prevent large employers from letting alternative fundraising campaigns compete alongside United Way in the workplace.

  The rollout was slow. A 2000 article in Fortune described the pace as "glacial." By 1990, only 14% of gifts went to outside charities; by 1999, United Way of America estimated nearly 20% did. About a quarter of all United Way donations in the US are now designated.

  The dilemma is structural. Designated donations drain the general fund that local United Ways rely on to address community needs at their own discretion. In one case, the expansion of donor-choice contributed to the near-bankruptcy of United Way of Santa Clara County as the organization continued allocating the same amounts year after year while its unrestricted pool shrank.

  Kevin Ronnie of the National Committee for Responsive Philanthropy described the bind precisely: "If they want to be the workplace campaign, they have to offer choice because that's what people want. But, gosh darn it, if you offer choice, people will do it, and that comes at the expense of what the United Way also wants to be: the community caretaker."

  Brian Gallagher, who became president and CEO in 2002 after heading United Way in Columbus, Ohio, was blunter: "Sometimes I think we kid ourselves into thinking that by creating more choice we raise more money. That's just not proven out. I think we somewhat dilute our giving if we're dividing our giving among thousands of agencies."

• 7. Competition and Accountability

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  The Charitableway startup raised $43 million in 2000 and signed agreements with Hewlett-Packard and Morgan Stanley to run their workplace giving campaigns. When the dot-com bubble burst, Charitableway folded. But the competitive window it had opened did not close.

  Benevity, founded in 2008, became the workplace giving platform of choice for Apple, Microsoft, PayPal, T-Mobile, TripAdvisor, Charles Schwab, and Nike. Benevity processed $649 million in donations in the 2018 fiscal year. A 2020 report counted 51 employee-giving technology platforms competing in the market. In 1988, United Way's share of US charitable contributions was 3.16%, at a time when there were 450,000 nonprofits in the country. By 1999, when the number of nonprofits had grown to 715,000, United Way's share had fallen to 1.98%.

  To respond, a consortium of 50 United Ways developed the United eWay online pledge system with technical assistance from Microsoft. The product ran as a subsidiary of United Way of America until 2008, when CreateHope Inc. purchased it and spun it off as a for-profit company called TRUiST, Inc. In 2018, United Way Worldwide partnered with Salesforce.org to launch Philanthropy Cloud, a workplace donation platform that by January 2020 was in use by more than 200 companies, including 25 local United Ways.

  Accounting transparency became a parallel battleground. After questions arose in 2002 about double counting donations across United Way territories, United Way of America adopted new reporting standards in 2003. The 150 largest affiliates were required for the first time to submit financial information to outside accountants. Some affiliates could not meet the new standards and 61 United Ways were disaffiliated. In one documented case, the United Way of Volusia-Flagler Counties in Daytona Beach eliminated around $400,000 from its campaign results when in-kind donations could no longer be counted in totals.

  Angela F. Williams took over as United Way Worldwide CEO on the 15th of October 2021, following Brian Gallagher's resignation amid an investigation into the termination of three female employees who had filed sexual harassment complaints with the Equal Employment Opportunity Commission. Williams is the first female and African-American to hold that position. She previously served as CEO of Easter Seals and as executive vice president and general counsel of YMCA of the USA.