Where Does $100 to United Way Go (2023)?

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 1,200 local offices in 37 countries and territories that operate as separate 501 (c) (3)’s.

United Way Worldwide (UWW) 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 UWW to support oversight operations and grants. UWW, in turn, also makes grants back to member United Way member organizations.  In other words, UWW is the management, leadership, and support organization for the 1,200 local offices.

So, if you made a $100 donation to UWW in 2023 and want to know how your donation was used, the short answer is UWW spent $127 for every $100 received – an overspend that amounted to $14 million in 2023.  $96 out of every $100 was spent on organization expenses (primarily compensation and fees for services including consultants while $31 out of every $100 was used for grants.  

REVENUE

UWW raised $52 million  in 2023 (compared to $98 million in 2022, $113 million in 2021, $255 million in 2020, $249 million in 2019 and $219 million in 2018), which appears to be a result of lower contributions and lower program revenue (and specifically membership dues), from these sources:

• $22 million (42% of revenue):  Contributions, Gifts, and Grants
• $28 million (54% of revenue):  Membership Dues (from member United Way organizations)
• $  2 million (4% of revenue):  Courses, Conferences, Promotional Materials, Service Income, Etc

As illustrated above, the largest source of revenue is from membership dues (whereas contributions, gifts, and grants have historically been the largest source of revenue).

EXPENSES

In 2023, UWW reported $66 million in expenses ($14 million more than total revenue), 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 one of UWW’s  roles 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 how much revenue is actually distributed as grants.

Expenses By Broad General Category

The $66 million in expenses can be categorized as follows:

• $16 million (31% of revenue):  Grants
• $39 million (75% of revenue):  Program Services
• $  9 million (17% of revenue):  Management
• $ 2 million (4% of revenue):  Fundraising

As illustrated above, the largest expense – $39 million – were program service expenses (primarily compensation and “consulting services”) followed by $16 million awarded in grants (or 31% of revenue).

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

$100:  Revenue

-$ 75:  Program Services

-$ 17:  Management

-$  4:  Fundraising

-$ 96:  Subtotal Program, Management, and Fundraising Expenses

$   4:  Revenue Remaining

-$ 31:  Grants

-$ 27: Excess Expenses over Revenue

As illustrated above, UWW spent $127 for every $100 in revenue collected so the organization relied on net assets to cover the shortfall.  UWW started the year with $62 million in net assets. After adjusting of $14 million in excess expenses and $1 million in unrealized gains, UWW ended the year with $49 million in net assets.

Expenses by Specific Line Item Category

The $66 million in expenses were reported as follows:

• $16 million (31% of revenue):  Grants
• $25 million (48% of revenue):  Compensation-related Expenses
• $17 million (32% of revenue):  Fees for Services by non-employees (consulting and contract employees)
• $ 4  million (8% of revenue):  Office-related Expenses
• $ 4 million (8% of revenue):  Miscellaneous Expenses (including travel and conferences)

As illustrated above, the largest expense for UWW is compensation-related costs ($25 million for 222 employees which equates to $113,000 per employee) followed by fees for services (primarily consultants and contract employees ), at $17 million.  According to Schedule O of the IRS Form 990, most of these fees were paid to consultants for unnamed consulting services and for contract employees.

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

$100:  Revenue

-$ 48:  Compensation-related Expenses

-$ 32:  Fees for Service by non-employees

-$  8:  Office-related Expenses

-$  8:  Miscellaneous Expenses

-$ 96: Subtotal Compensation, Services, Office, and Other Expenses

 $   4: Revenue Remaining

-$  31:  Grants

 $ 27: Excess Expenses over Revenue

As illustrated above, UWW spent $96 out of every $100 in revenue to pay employee compensation, outside services, office, and other expenses. $31 out of every $100 was awarded in grants, primarily to other UW entities.  In total, UWW spent $127 for every $100 in revenue received.

GRANTS

UWW distributed $27 million in grants (about $12 million less than in 2022), $9 million of which went to domestic organizations and $7 million to foreign organizations.

Domestically, UWW made 167 grants greater than $5,000 (compared with 282 in 2021) for a total of $9 million to United Way organizations and other non-profits, with the stated purpose reported to be disaster relief, human and social services, economic and community development, etc.

$7 million in grants were made to foreign organizations, governments, and individuals (compared to $18 million in 2022).  Most of these grants were made in Europe ($4 million), East Asia and the Pacific ($1 million) and South America ($1 million).

It is important to note that donation dollars to UWW have the overhead costs (96%) deducted before being awarded in grants, in 2023.  The grant awarded to another 501 (c) (3) – primarily another United Way member organization – deducts their overhead costs and then utilizes the funds primarily for grants to another organization, which means donation dollars would go further if UWW were bypassed and donations were given directly to the grant recipient, one of the United Way members. And, herein lies a problem:  donation dollars are diluted further and further when made to organizations whose purpose is also to make grants.

NET FUND ASSETS

At the beginning of the year, UWW had $62 million in net fund assets. After subtracting excess expenses ($14 million adding $1 million in net unrealized gains, UWW had $49 million in net assets at year-end.  $18 of which was restricted and $31 million which was not restricted.

To read the IRS Form 990 (2023), click here.