Where Does $100 to United Way Go (2021)?

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 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 (2021) 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 $58 was spent on organization expenses and about $36 was used for grants, while $6 was allocated to the general fund in 2021.

REVENUE

UWW raised $113 million (compared to $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, from these sources:

• $69 million (61% of revenue):  Contributions, Gifts, and Grants
• $38 million (34% of revenue):  Membership Dues
• $  6 million (5% of revenue):  Courses, Conferences, Promotional Materials, Service Income, Etc

As illustrated above, the largest source of revenue is from contributions, gifts and grants, of which $5 million came from the government.

EXPENSES

In 2021, UWW reported $109 million in 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 $109 million in expenses can be categorized as follows:

• $41 million (36% of revenue):  Grants
• $55 million (49% of revenue):  Program Services
• $11 million (10% of revenue):  Management
• $ 2 million (2% of revenue):  Fundraising

As illustrated above, the largest expense – $55 million – were program service expenses (primarily compensation and “consulting services”) followed by $41 million awarded in grants (or 36% of revenue). The question becomes how does an organization spend $55 million to make $41 million in grants?

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

$100:  Revenue

-$ 49:  Program Services

-$ 10:  Management

-$  2:  Fundraising

-$ 61:  Subtotal Program, Management, and Fundraising Expenses

$  39:  Revenue Remaining

-$ 36:  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.  UWW started the year with $38 million in net assets. After adding unspent revenue ($4 million)  and $5 million in changes in assets ((primarily pension related changes and gains on debt extinguishment), UWW ended the year with $47 million in net assets.

Expenses by Specific Line Item Category

The $109 million in expenses were reported as follows:

• $41 million (36% of revenue):  Grants
• $33  million (29% of revenue):  Compensation-related Expenses
• $26  million (23% of revenue):  Fees for Services by non-employees (primarily consultants)
• $ 4   million (4% of revenue):  Office-related Expenses
• $ 2   million (2% of revenue):  Miscellaneous Expenses

As illustrated above, after grants, the largest expense for UWW is compensation-related costs ($33 million for 286 employees which equates to $115,000 per employee) followed by fees for services (primarily consultants), at $26 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 83 independent contractors were paid in excess of $100,000 with the five largest recipients listed below:

• $7.3 million:  Salesforce, of San Francisco, CA for digital platform services
• $6.1 million:  Beyond the Horizon Technology, of Dallas,TX for digital integration
• $1.1 million:  IBM, of Armonk, NY for consulting services
• $1.0 million:  UpPurpose, of Denver, CO of digital platform services
• $0.7 million:  Community Counselling, of NY, NY for consulting services

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

$100:  Revenue

-$ 29:  Compensation-related Expenses

-$ 23:  Fees for Service by non-employees

-$  4:  Office-related Expenses

-$  2:  Miscellaneous Expenses

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

 $  42: Revenue Remaining

-$ 36:  Grants

 $  6: 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. $36 out of every $100 was awarded in grants, primarily to other UW entities.  In total, UWW spent $94 for every $100 in revenue received.

GRANTS

UWW distributed $41 million in grants, $11 million of which went to domestic organizations and $30 million to foreign organizations. It appears UWW greatly reduced grants to domestic organizations in 2021 while keeping grants to foreign organizations at nearly the same level as the previous year.

Domestically, UWW made 122 grants greater than $5,000 (compared to 3,357 the prior year), with the 10 largest grants listed below, all of which were for health and human and social services:

• $654,739:  UW of NYC, of New York City, NY
• $611,000:  UW of CA, of South Pasadena, CA
• $420,080:  UW of King County, of Seattle, WA
• $353,553:  NJ211 Partnership, of Cedar Knolls, NJ
• $327,446:  UW of Greater Atlanta, of Atlanta, GA
• $262,768:  UW of Sat Lake, of Salt Lake City, UT
• $254,872:  UW of Greater Houston, of Houston, TX
• $239,204:  UW of Westchester and Putnam, of White Plains, NY
• $208,202:  UW of SE Louisiana, of New Orleans, LA
• $178,930:  Interface Children and Family Services, of Camarillo, CA

It is important to note that donation dollars to UWW have the overhead costs (58%) deducted before being awarded in grants, in 2021.  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 and donations given directly to the grant recipient.

NET FUND ASSETS

At the beginning of the year, UWW had $38 million in net fund assets. After adding unspent revenue ($4 million and $5 million due to changes in net assets (primarily pension-related and debt reduction), UWW had $47 million in net assets at year-end.  $35 of which was restricted and $12 million which was not restricted.

To read the IRS Form 990 (2021), click here.