Where Does $100 to United Way Go (2019)?

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 1,800 local offices in 40 countries and territories that operate as separate 501 (c) (3)’s.

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 oversight 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 (2019) reports information on revenue, expenses, grants, 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, the short answer is that about $30 was spent on organization expenses and about $70 was used for grants.

REVENUE

UWW raised $249 million in 2019 (compared to $219 million in 2018) from these sources:

• $197  million (79% of revenue):  Contributions, Gifts, and Grants
• $ 28  million (11% of revenue):  Membership Dues
• $ 24   million (10% 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 2019, UWW spent $255 million (not including $2 million in depreciation) 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 primary 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 actually distributed as grants.

Expenses By Broad General Category

The $255 million in expenses can be categorized as follows:

• $180 million (72% of revenue):  Grants
• $ 64  million (26% of revenue):  Program Services
• $  7  million (3% of revenue):  Management
• $  4  million (2% of revenue):  Fundraising

As illustrated above, the largest portion of revenue – $180 million – was awarded in grants while $64 million was spent on program services (primarily compensation for the 279 employees and consulting fees from outside consultants).

UWW spent more than they raised but were able to cover the expenses because the organization had $51 million in net fund assets at the beginning of the year, which was reduced to $38 million at year-end.

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

$100:  Revenue

-$ 26:  Program Services

-$   3:  Management

-$   2:  Fundraising

-$ 31:  Subtotal Program, Management, and Fundraising Expenses

$  69:  Revenue Remaining

-$ 72:  Grants

-$   3: Amount Overspent

As illustrated above, UWW spent $103 for every $100 in revenue collected. The organization was able to do this because they had $51 million in net fund assets and could absorb the loss.

Expenses by Specific Line Item Category

The $255 million in expenses were reported as follows:

• $180 million (72% of revenue):  Grants
• $ 34 million (14% of revenue):  Compensation-related Expenses
• $ 32 million (13% of revenue):  Fees for Services by non-employees (primarily consultants)
• $  5 million (2% of revenue):  Travel and Conferences
• $  4 million (2% of revenue):  Office-related Expenses

As illustrated above, after grants, the largest expense for UWW is compensation-related costs ($34 million for 279 employees which equates to $122,000 per employee) followed by fees for services.  According to Schedule O of the IRS Form 990, most of these fees were paid to consultants ($28 million) for unnamed consulting services.  However, the 990 does report that 46 independent contractors were paid in excess of $100,000 with the five largest recipients listed below:

• $8.7 million:  Salesforce Org of San Francisco, CA for digital platform consulting services
• $5.6 million:  Beyond the Horizon of Dallas, TX for digital integration consulting services
• $3.3 million:  UpPurpose, of Denver, CO for digital platform services
• $1.1 million:  Community Councelling Services, of NY, NY for consulting services
• $1.1 million:  Everfi, of Washington, DC for consulting services

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

$100:  Revenue

-$ 14:  Compensation-related Expenses

-$ 13:  Fees for Service by non-employees

-$  2:  Travel and Conferences

-$  2:  Office-related Expenses

-$ 31: Subtotal Compensation, Services, Travel, Conferences, Office, Advertising, and Other Expenses

 $  69: Revenue Remaining

-$ 72:  Grants

-$  3: Amount Overspent

As illustrated above, UWW $31 out of every $100 in revenue reports to pay employee compensation, outside services, office, and travel and conferences. $72 out of every $100 was awarded in grants, primarily to other UW entities.  In total, UWW spent $103 for every $100 in revenue received.

GRANTS

UWW distributed $180 million in grants, $151 million of which went to domestic organizations and $29 million to foreign organizations (primarily Europe and East Asia and the Pacific).

Domestically, UWW made 4,672  grants greater than $5,000, with the 12 largest recipients listed below:

• $2,558,503:  UW of Central Iowa, Des Moines, IA for operations
• $1,685,083:  St Jude Children’s Hospital, Memphis, TN for health
• $1,143,521:  UW of Metropolitan Dallas, Dallas,TX for operations
• $  983,745:  ATT Employee Relief Fund, Dallas, TX for operations
• $  831,505:  We Care Fund, Charlotte, NC for ops
• $  768,200:  UW of Greater Atlanta, Atlanta, GA for ops
• $  663,418:  Greater Twin Cities UW, Minneapolis, MN for ops
• $  656,417:  American National Red Cross, Medford, MA for health
• $  632,345:  American Cancer Society, Atlanta, GA for heal5h
• $  616,514:  Austin Pearce Academy, Austin, TX for education
• $  579,997:  UW of Central North Carolina, Charlotte, NC for operations
• $  513,269:  UW of the Columbia-Willanette, Portland, OR for operations
• $  502,919:  UW of Greater Atlanta, Atlanta, GA for operations

It is important to note that donation dollars to UWW have the overhead costs (31%) deducted before being awarded in grants.  The grant awarded to another 501 (c) (3) deducts their overhead costs and then utilizes the funds, which means donation dollars would go further if United Way were bypassed.  For example, $1.7 million was awarded to St Jude Children’s Research Hospital. St. Jude deducted about 29% for fundraising costs, put about 21% in the endowment and awarded about 50% to the hospital (who used 43% putting the other 7% in savings). So, that $1.7 million grant was used to pay $500,000 in fundraising costs, put $350,000 in the endowment, and pay $850,000 to the hospital who used $730,000 and put $120,000 in the endowment.

NET FUND ASSETS

At the beginning of the year, UWW had $51 million in net fund assets. After deducting the revenue spent in excess of revenue and changes in assets (pension), UWW had $38 million in net fund assets at year-end, $15 million of which was unrestricted and $23 million of which was restricted.

To read the IRS Form 990 (2019), click here.