Where Does $100 to United Way Go (2020)

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 (2020) 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 $31 was spent on organization expenses and about $66 was used for grants, while $3 was allocated to the general fund.

REVENUE

UWW raised $255 million (compared to $249 million in 2019 and $219 million in 2018) from these sources:

• $204  million (80% of revenue):  Contributions, Gifts, and Grants
• $ 33  million (13% of revenue):  Membership Dues
• $ 17  million (7% 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 2020, UWW spent $250 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 $250 million in expenses can be categorized as follows:

• $169 million (66% of revenue):  Grants
• $ 62   million (24% of revenue):  Program Services
• $ 16  million (6% of revenue):  Management
• $  3  million (1% of revenue):  Fundraising

As illustrated above, the largest portion of revenue – $169 million – was awarded in grants while $62 million was spent on program services (primarily compensation for the 274 employees and consulting fees from outside consultants).

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

$100:  Revenue

-$ 24:  Program Services

-$   6:  Management

-$   1:  Fundraising

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

$  69:  Revenue Remaining

-$ 66:  Grants

 $   3: Excess Revenue:  To General Fund

As illustrated above, UWW spent $97 for every $100 in revenue collected with the remaining $3 added to the general fund.  Although UWW spent $4 million ($3 out of every $100) less than the organization raised, changes in pension allocations and losses in investments resulted in net assets remaining virtually unchanged at $38 million at year-end.

Expenses by Specific Line Item Category

The $250 million in expenses were reported as follows:

• $169 million (66% of revenue):  Grants
• $ 36 million (14% of revenue):  Compensation-related Expenses
• $ 36 million (14% of revenue):  Fees for Services by non-employees (primarily consultants)
• $  5 million (2% of revenue):  Office-related Expenses
• $  3 million (1% of revenue):  Miscellaneous Expenses
• $  1 million (less than 1% of revenue):  Travel and Conferences

As illustrated above, after grants, the largest expense for UWW is compensation-related costs ($36 million for 274 employees which equates to $131,000 per employee) followed by fees for services, also at $36 million.  According to Schedule O of the IRS Form 990, most of these fees were paid to consultants 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:

• $7.0 million:  Beyond the Horizon Technology, of Dallas,TX for digital integration
• $4.0 million:  Salesforce, of San Francisco, CA for digital platform services
• $2.8 million:  UpPurpose, of Denver, CO of digital platform services
• $2.5 million:  IBM, of Armonk, NY for consulting services
• $0.8 million:  Community Counselling, of NY, NY for consulting services

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

$100:  Revenue

-$ 14:  Compensation-related Expenses

-$ 14:  Fees for Service by non-employees

-$  2:  Office-related Expenses

-$  1:  Miscellaneous Expenses

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

 $  69: Revenue Remaining

-$ 69:  Grants

 $  3: Excess Revenue:  To General Fund

As illustrated above, UWW $31 out of every $100 in revenue reports to pay employee compensation, outside services, office, and travel and conferences. $69 out of every $100 was awarded in grants, primarily to other UW entities.  In total, UWW spent $97 for every $100 in revenue received.

GRANTS

UWW distributed $169 million in grants, $137 million of which went to domestic organizations and $32 million to foreign organizations.

Domestically, UWW made 3,357 grants greater than $5,000, with the 10 largest grants listed below:

• $4.5 million:  UW of NYC, of NY, NY for disaster relief
• $3.6 million:  UW of Metro Chicago, of Chicago, IL for disaster relief
• $3.6 million:  UW of Greater Atlanta, of Atlanta, GA for disaster relief
• $3.5. million:  UW for SE Michigan, of Detroit, MI for disaster relief
• $2.4 million:  UW of Greater LA, of LA, CA for disaster relief
• $2.3 million:  UW of SE Louisiana, of New Orleans, LA for disaster relief
• $1.3 million:  UW of Central Iowa, of Des Moines, IA for operations
• $1.2 million:  NAACP Legal Defense and Education Foundation, of NY, NY for operations
• $1.2 million:  Feeding America, of Washington, DC for disaster relief
• $1.0 million:  St Jude Children’s Hospital, of Memphis, TN 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 million  (rounded) was awarded to St Jude Children’s Research Hospital for operations.  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, which has $9 billion). So, that $1 million grant was used to pay $290,000 in fundraising costs, put $210,000 in the general fund, and pay $500,000 to the hospital who used $430,000 and put $70,000 in the savings.  The purpose of the grant to St. Jude was for operations.  With $9 billion in net assets, St Jude does not need a $1 million grant from United Way.

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 (2020), click here.