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March 28, 2016

Where does a $1 contribution to United Way of Central Iowa Go?

by Anne Paddock

United Way of Central Iowa (UWCI) is just one of 35 United Way chapters in Iowa and one of 1,256 chapters in the United States, but this mid-west chapter office raised more than $29 million last year and distributed $21.9 million (75%) in grants to local organizations that focus on health, education, and income. United Way is – for lack of better words – a way to unite people and organizations – with UWCI focused on the people and organizations in central Iowa.

UWCI is a non-profit 501 (c) (3) organization that is required to submit an IRS Form 990 annually which reveals important financial information about the organization including revenue, expenses, grants, key employee compensation, assets, liabilities, and more. The 2013 IRS Form 990 (which covers the year ending June 30, 2014) reveals the following with regards to the financial activities of the organization.

  • The organization has $33.8 million in assets:  $11.7 million in pledges receivable, $10.3 million in cash and public securities, $2.8 million in land, buildings, equipment, $8.8 million in a beneficial interest in a Community Foundation Fund, and the remaining in accounts receivable and prepaid expenses.
  • The organization had $3.2 in liabilities (primarily accounts payable, accrued expenses, and refundable advances) leaving $30.6 million in net assets/fund balance.
  • $262,000 was paid to United Way Worldwide as a membership payment.
  • $699,000 in compensation was paid to four key employees, with the highest compensation ($220,000) paid to the corporate secretary followed by $173,000 to the chief financial officer, $146,000 to the chief advancement officer, and $142,000 to the chief community impact officer. $18,000 was also provided to key employees with no detail given.
  • Of the $29.1 million in revenue collected, $28 million (97%) came from contributions with the remaining $1.1 million (3%)  from government grants, service fees, other revenue, and from gaming activities.
  • $5.6 million (19% of revenue) was spent on expenses, of which $4.0 million was spent on compensation and benefits for the 58 employees (average compensation/benefit  package is nearly $70,000); $856,000 on occupancy, office, supplies, equipment, legal, accounting, organization dues; $323,000 on unexplained expenses; $262,000 to United Way Worldwide; and $184,000 on travel, conferences, conventions, and meetings;
  • $1.6 million (6% of revenue) was not spent or distributed in grants, which partially contributed to the organization increasing its fund balance (think of this as a savings account) from $28.1 million to $30.6 million.
  • $21.9 million (75% of revenue) was distributed in grants with the recipients receiving the largest grants listed as follows:
  1. Orchard Place:  $1.1 million
  2. Visiting Nurse Services: $897,000
  3. Des Moines Independent School:  $861,000
  4. Community Health Charities of Iowa:  $710,000
  5. Des Moines Health Center:  $696,000
  6. Children and Families of Iowa: $673,000
  7. American Red Cross:  $663,000
  8. H.O.M.E.Inc:  $399.000
  9. Employee and Family Resources: $399,000
  10. YMCA of Greater Des Moines:  $354,000
  11. Youth Emergency Services and Shelter:  $345,000
  12. Youth Law Center:  $329,000
  13. Boys and Girls Clubs of Central Iowa:  $324,000

Each of the above organizations and the dozens and dozens of other non-profits that received grants from UWCI all have a layer of functional expenses which means a contribution directly to one of the organizations that United Way gives grants to would go further than if given to UWCI because UWCI distributed 75 cents of every dollar received. For example, $1 in revenue received by UWCI was spent as follows:

$1.00:   Revenue/Contribution

-$0.13:  Compensation and Benefits to Employees

-$0.03:  Office, Occupancy, Supplies, Equipment, Legal, Accounting, Dues

-$0.01:  Unexplained Expenses

-$0.01:   To United Way Worldwide

-$0.01:   Travel, Conventions, Meetings

-$0.19:   Subtotal Functional Expenses

 $0.81:   Amount Remaining

-$0.06:  Amount kept at organization in Fund Balance

$0.75:   Amount Remaining: Distributed to non-profits in the central Des Moines area.

Bottom Line: A $1 donation to any of the organizations listed on the Form 990 would go further than a contribution to UWCI who would deduct 25 cents to pay for their functional expenses (primarily the compensation for 58 staff) and savings before distributing the funds.

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