Where Does $100 to United Way Go (2022)?

United Way is one of the most recognizable charitable organizations in the United States and throughout the world.  In the United States, “United Way” generally refers to United Way Worldwide (formerly United Way of America) and/or one of the 1,100 local offices in 37 countries and territories that operate as separate 501 (c) (3)’s.

United Way Worldwide (UWW) is the leadership and support organization for the whole United Way network. Each organization collects funds and makes grants to local organizations, and also contributes a portion of the revenue collected to UWW to support oversight operations and grants. UWW, in turn, also makes grants back to member United Way member organizations.

So, if you made a $100 donation to UWW and want to know how your donation was used, the short answer is that about $58 was spent on organization expenses and about $27 was used for grants, while $15 was allocated to the general fund in 2022.

REVENUE

UWW raised $98 million (compared to $113 million in 2021, $255 million in 2020, $249 million in 2019 and $219 million in 2018), which appears to be as a result of lower contributions due to the the covid pandemic which was still going on in 2022, from these sources:

• $54 million (55% of revenue):  Contributions, Gifts, and Grants
• $38 million (39% of revenue):  Membership Dues (from member United Way organizations)
• $  6 million (6% of revenue):  Courses, Conferences, Promotional Materials, Service Income, Etc

As illustrated above, the largest source of revenue is from contributions, gifts and grants.  ,

EXPENSES

In 2022, UWW reported $84 million in expenses (85% of revenue), which can be viewed two ways:  by broad general category (program, grants, management, and fundraising) or by specific line item category. Both provide valuable insight into the organization with the latter providing more specific detail on expenses.

It is also important to point out that UWW groups program and grant expenses together since one of UWW’s  roles is to make grants but these are separated below so that the reader can see how much UWW is spending to make the grants and also see how much revenue is actually distributed as grants.

Expenses By Broad General Category

The $84 million in expenses can be categorized as follows:

• $27 million (27% of revenue):  Grants
• $46 million (47% of revenue):  Program Services
• $ 8 million (8% of revenue):  Management
• $ 3 million (3% of revenue):  Fundraising

As illustrated above, the largest expense – $46 million – were program service expenses (primarily compensation and “consulting services”) followed by $27 million awarded in grants (or 27% of revenue).

Using the above information, every $100 in revenue was used as follows:

$100:  Revenue

-$ 47:  Program Services

-$  8:  Management

-$  3:  Fundraising

-$ 58:  Subtotal Program, Management, and Fundraising Expenses

$  42:  Revenue Remaining

-$ 27:  Grants

 $  15: Excess Revenue:  To General Fund

As illustrated above, UWW spent $85 for every $100 in revenue collected with the remaining $15 added to the general fund.  UWW started the year with $47 million in net assets. After adding unspent revenue ($14 million)  and $2 million in changes in assets and -$1 million in unrealized losses on investments), UWW ended the year with $62 million in net assets.

Expenses by Specific Line Item Category

The $84 million in expenses were reported as follows:

• $27 million (27% of revenue):  Grants
• $26 million (27% of revenue):  Compensation-related Expenses
• $23 million (23% of revenue):  Fees for Services by non-employees (consulting and contract employees)
• $ 5 million (5% of revenue):  Office-related Expenses
• $ 3 million (3% of revenue):  Miscellaneous Expenses

As illustrated above, after grants, the largest expense for UWW is compensation-related costs ($26 million for 244 employees which equates to $107,000 per employee) followed by fees for services (primarily consultants and contract employees ), at $23 million.  According to Schedule O of the IRS Form 990, most of these fees were paid to consultants for unnamed consulting services and for contract employees.

Using the above information, every $100 in revenue was spent as follows:

$100:  Revenue

-$ 27:  Compensation-related Expenses

-$ 23:  Fees for Service by non-employees

-$  5:  Office-related Expenses

-$  3:  Miscellaneous Expenses

-$ 58: Subtotal Compensation, Services, Office, and Other Expenses

 $  42: Revenue Remaining

-$  27:  Grants

 $ 15: Excess Revenue:  To General Fund

As illustrated above, UWW spent $58 out of every $100 in revenue to pay employee compensation, outside services, office, and other expenses. $27 out of every $100 was awarded in grants, primarily to other UW entities.  In total, UWW spent $85 for every $100 in revenue received.

GRANTS

UWW distributed $27 million in grants, $9 million of which went to domestic organizations and $18 million to foreign organizations.

Domestically, UWW made 282 grants greater than $5,000 (compared with 122 in 2021) for a total of $9 million, which means UWW made more grants but at lower amounts with the stated purpose reported to be covid relief, disaster relief, health and human services, economic and community development, etc.

$18 million in grants were made to foreign organizations, governments, and individuals.  Most of these grants were made in Europe ($8 million), East Asia and the Pacific ($5 million) and South Asia ($2 million).

It is important to note that donation dollars to UWW have the overhead costs (58%) deducted before being awarded in grants, in 2022.  The grant awarded to another 501 (c) (3) – primarily another United Way member organization – deducts their overhead costs and then utilizes the funds primarily for grants to another organization, which means donation dollars would go further if UWW were bypassed and donations were given directly to the grant recipient, one of the United Way members. And, herein lies a problem:  donation dollars are diluted further and further when made to organizations whose purpose is also to make grants.

NET FUND ASSETS

At the beginning of the year, UWW had $47 million in net fund assets. After adding unspent revenue ($14 million and $2 million due to changes in net assets and deducting $1 million in unrealized losses on investments, UWW had $62 million in net assets at year-end.  $39 of which was restricted and $23 million which was not restricted.

To read the IRS Form 990 (2022), click here.