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December 30, 2018

Where Does $100 to United Way Go?

by Anne Paddock

United Way may refer to a number of charitable organizations throughout the world but in the United States, United Way generally refers to United Way Worldwide (formerly United Way of America) and/or one of the 1,800 local offices in 40 countries and territories that operate as a separate 501 (c) (3). United Way Worldwide 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 United Way Worldwide to support operations.

Based in Alexandria, Virginia, United Way Worldwide (UWW) is known as the organization that raises revenue to distribute to other non-profits through grants. At the UWW level, the IRS Form 990 (2016) reports information on revenue, expenses, grants, assets, liabilities, net fund assets, and other pertinent information that is beneficial to those supporting or considering a donation. So, if you made a $100 donation to UWW and want to know how your donation was used, read on.

REVENUE

UWW raised $109 million in 2016 which came from the following sources:

  • $ 68 million (63% of revenue):  Contributions, Gifts, and Grants
  • $ 31 million (28% of revenue):  Membership Dues
  • $  9 million (8% of revenue):  Courses, Conferences, Promotional Materials, Service Income, Etc
  • $  1 million (1% of revenue):  Investment Income, Gains, Royalties

As illustrated above, the largest source of revenue is from contributions, gifts and grants but 40% (both membership dues and the revenue from courses, conferences, materials, etc) comes from the network of United Way organizations.

EXPENSES

In 2016, UWW spent $118 million on expenses, 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 their major role 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 specifically how much revenue is distributed as grants.

Expenses By Broad General Category

The $118 million in expenses were reported as follows:

  • $62 million (57% of revenue):  Grants
  • $49 million (45% of revenue):  Program Services
  • $ 5 million (4% of revenue):  Management
  • $ 2 million (2% of revenue):  Fundraising

As illustrated above, the largest portion of revenue – $62 million – was awarded in grants while $49 million was spent on program services (primarily compensation and fees for services provided by non-employees).

It is interesting to note that fundraising expenses only include $79,496 for compensation of key employees but the list of compensation for key employees reports that the SVP of Major Donor Relations (Maureen Grant-Hayes) received $219,076 in compensation.

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

$100:  Revenue

-$ 45:  Program Services

-$   4:  Management

-$   2:  Fundraising

-$ 51:  Subtotal Program, Management, and Fundraising Expenses

$  49:  Revenue Remaining

-$ 57:  Grants

-$   8: Amount Overspent

As illustrated above, UWW spent $108 for every $100 in revenue collected. The organization was able to do this because they had $47 million in net fund assets and could absorb the loss.

Expenses by Specific Line Item Category

The $118 million in expenses were reported as follows:

  • $62 million (57% of revenue):  Grants
  • $29 million (26% of revenue):  Compensation-related Expenses
  • $16 million (14% of revenue):  Fees for Services by non-employees
  • $ 4 million (4% of revenue):  Travel and Conferences
  • $ 4 million (4% of revenue):  Office-related Expenses
  • $ 3 million (3% of revenue):  Advertising/Other Expenses

As illustrated above, after grants, the largest expense for UWW is compensation-related costs ($29 million for 247 employees which equates to $117,000 per employee) followed by fees for services by non-employees. According to Schedule O of the IRS Form 990, most of these fees were paid to consultants ($11.4 million) for unnamed services and $3.5 million for miscellaneous (again, no detail).  However, the 990 does report that 53 independent contractors were paid in excess of $100,000 with the five largest recipients listed below:

  • $3,000,000:  Everfi, Inc. for consulting to launch digital platform
  • $1,202,535:  Birdsall, Voss and Associates  for consulting
  • $ 796,104:  Turner Construction Co for construction
  • $  705,443:  Blue State Digital for building and maintaining website
  • $ 629,226:  Acumen Solutions, Inc. for consulting services

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

$100:  Revenue

-$ 26:  Compensation-related Expenses

-$ 14:  Fees for Service by non-employees

-$  4:  Travel and Conferences

-$  4:  Office-related Expenses

-$  3:  Advertising and Other Expenses

-$ 51: Subtotal Compensation, Services, Travel, Conferences, Office, Advertising, and Other Expenses

$ 49: Revenue Remaining

-$57:  Grants

-$  8: Amount Overspent

As illustrated above, UWW used more than half the revenue collected to pay for employee compensation, outside services, office, travel and conferences, advertising and other expenses.

GRANTS

UWW distributed $62 million in grants, $22 million of which went to domestic organizations and $40 million to foreign organizations.  Internationally, the five regions that received the largest dollar amount of grants were:

  • $14.9 million:  East Asia and the Pacific
  • $10.4 million:  Europe
  • $ 4.2 million:  South Asia
  • $ 3.9 million:  South America
  • $ 2.6 million:  Canada and Mexico

Domestically, UWW made 696 grants greater than $5,000, with the 10 largest recipients listed below:

  • $1,092,908:  1% for the Planet
  • $ 500,000:  United Way Central Indiana
  • $  450,000:  Save the Children/Federation
  • $  324,501:  100 Black Men of America
  • $  321,710:  10,000 Degrees
  • $  287,204:  FHI360
  • $  191,458:  10 Books a Home
  • $  160,000:  United Way of Metropolitan Dallas
  • $ 155,000:  United Way of the Bay Area
  • $  130,000:  Room to Read

ASSETS

UWW reported $76 million in total assets at year-end. These assets were concentrated in 4 areas:

  • $29 million:  Land, Building, and Equipment (primarily leasehold improvements)
  • $16 million:  Cash
  • $16 million:  Publicly traded Securities
  • $10 million:  Receivables and Pre-paid Expenses

LIABILITIES

UWW reported $36 million in liabilities, summarized as follows:

  • $13 million:  Accrued Pension Liabilities, Post Retirement Benefits, Etc.
  • $12 million:  Payables
  • $ 6 million:  Deferred Revenue
  • $ 4 million:  Escrow/Custodial Account Liability

NET FUND ASSETS

At the beginning of the year, UWW had $47 million in net fund assets. After deducting the $8 million spent in excess of revenue, and adding $2 million in changes in other assets (pensions), UWW had $41 million in net fund assets at year-end, $27 million of which was unrestricted, $10 million of which was temporarily restricted, and $4 million permanently restricted.

To review the IRS Form 990 (2016) for UWW, click here. To review the United Way IRS Form 990 for a specific location, find out the name of the local United Way (i.e. United Way of Central Indiana), go to the website and look for the link that shows financial information.

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