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Challenge and Change at United Way

In 1887, Denver became the first city to establish a united organization to raise funds in order to meet community needs. Other cities adoptedthe idea, creating organizations that were commonly called the Community Chest, later becoming known as United Way (www.unitedway.org). By 2003, there were more than 1,400 local United Ways, raising almost $ 4 billion to support a broad range of nonprofits in their communities (Wolverton, 2003). Local United Ways are independent nonprofit organizations. The national office provides support and assistance to local United Ways, and the local organizations are required to meet certain standards in order to use the name. In 1995, the president of the United Way of America, then the national umbrella organization, was convicted of stealing funds for personal use, eroding public confidence. Another blow came in 2001, when the CEO of the United Way of the National Capital Area, the local chapter serving the Washington, DC, region, was charged with similar abuses. But larger forces also were at work, presenting challenges to the United Way and its model. By 2003, the amount of gifts to United Way that were designated for specific nonprofit organizations had risen 13 years in a row (Ogden, 2008). That approach to giving denied the United Way the ability to select recipient nonprofits, reducing its influence. More donors were bypassing the United Way altogether to make gifts directly to nonprofits that interested them. Some were questioning the continuedrelevance of the United Way model, which raised funds through workplace fundraising campaigns and provided support to a wide variety of nonprofit organizations. Both individual and corporate donors were becoming more interested in the impact of their gifts and less interested in giving to a fund that would benefit any nonprofit organization that qualified (Philanthropy News Digest, 2007). In addition, a national economic recession in 2003 had led to a significant decline in workplace giving by employees, which accounted for 66 percent of United Way revenues, and support for United Way from corporations, which comprised the balance (Wolverton, 2003). Brian Gallagher, who had worked in local United Way chapters for 20 years, had been appointed as the new President and CEO of the United Way of America in 2002. He recognized the urgent need for change. Gallagher raised a basic question about the mission of United Way: was it to raise funds or to have an impact on communities? “We are in the business of changing people’s lives,” he concluded, “Fundraising is a strategy.” He explained, “We had forgotten to connect with donors as customers and to combine community interests and corporate interests because we were so focused on raising money in the workplace using a monopoly position” (Boston Consulting Group, 2011).

Gallagher committed to undertaking a significant transformation. Although the idea had preceded Gallagher’s presidency, he began to promote a plan in which United Way would move from being just a fundraising organization to one that would focus its resources and be measured by its impact on communities. But it would not be easy to accomplish such change in an organization with so many decentralized and independent components, each of which supported a wide range of local nonprofits that depended on the funds. Supported organizations would be worried about the possible loss of United Way support, and local United Way organizations might remain committed to the old model Gallagher brought together local United Way leaders from across the country to discuss the new model. About half were receptive to the proposed new approach, but the other half wanted to remain primarily fundraising organizations (Wolverton, 2004). Gallagher focused the discussion on the question about the mission, helping to build greater consensus (Boston Consulting Group, 2011). He also hired new people for the national staff who were less committed to the old way of thinking. He surveyed United Way professionals in various communities to learn what issues concerned them and consultedexperts from think tanks, foundations, and government to identify the most pressing social problems facing the country (Ogden, 2008). Gallagher created new channels to increase communication among local United Ways, including webinars and other online tools, so that they could exchange ideas on best practices (Philanthropy News Digest, 2007). “United Way has a theory about how to create changes of this magnitude,” Gallagher wrote. “It begins with declaring bold goals [italics original]. When the stakes are high, Americans will rise to the occasion” (United Way of America, n.d.). But some resisted the new vision, including some employees both at local United Ways and the United Way of America (Wolverton, 2004). Gallagher knew that change would take time and require a shift in his organization’s culture. “Your field of vision has to be really wide,” he explained, “and you have to be willing to take risks. You have to be flexible and adjust as you go” (Boston Consulting Group, 2011). Six years later, in 2008, United Way or America adopted a ten-year plan reflecting the new approach. It would emphasize the health, education, and finances of working families and be focused on achieving three “Goals for the Common Good” by 2018: cut in half high-school dropout rates across the United States, cut in half the number of families with working parents who don’t earn enough to cover the family’s basic expenses, and increase by one third the number of Americans who are healthy and avoid risky behaviors (Schwinn, 2008). Rather than distributing funds widely, United Way would focus on organizations that were achieving progress toward the three goals and would hold them accountable for specific performance metrics (Schwinn, 2008). Gallagher recognized that United Way could not do it alone and sought to establish partnerships with other national nonprofits, including the YMCA and Boys and Girls Clubs of America. United Way also would increase its advocacy efforts to encourage government to spend money on the three priorities (Schwinn, 2008). Charities that had traditionally received United Way support continued to be concerned that they would be shut out of the new program. Gallagher stated that many could still qualify for United Way support, but they would need to adopt a different approach as well: “Activity is not going to be enough anymore, [for example,] saying we served 200,000 seniors last year. The question is, what are we doing to increasethe financial stability of seniors?” (Schwinn, 2008) A tracking system would be established for local United Ways, which would report data to United Way of America so that progress toward the goals could be measured at a community level (Ogden, 2008). In 2009, United Way of America merged with United Way International to form United Way Worldwide. Brian Gallagher became CEO of the new organization and turned his attention to promoting the impact model internationally. In 2012, Stacy Stewart became the new president of United Way USA, the national organization in the United States. There remained work to be done. Stewart identified her challenges to include the need to continue building the United Way culture; to achieve cooperation among the many local United Ways, while maintaining local flexibility; and to encourage donors to designate their gifts for one of the three community impact priorities (Donovan, 2012).

Questions Related to Case 5.2

1. Which leadership theory or theories seem to best describe the leadership of Brian Gallagher at United Way?

2. In what ways does the process for change at United Way reflectKotter’s model?

3. If you had been the CEO of a nonprofit organization that had been receiving United Way funds, how would you have prepared for the changes that Brian Gallagher led?

4. What advice would you give to Gallagher’s successorabout how to keep the change process moving forward?

QUESTIONS FOR DISCUSSION

Are leaders born or made? Can anyone learn to be a leader or does it require some innate qualities or characteristics of the individual?

Could one individual be a great leader in government, a corporation, or a nonprofit? Why or why not? Is leadership necessarily moral?

Was Hitler a leader even though he was evil? Why or why not? Who are some contemporary leaders that you would identify ascharismatic? How do they exhibit the behaviors of charismatic leaders identified in this chapter?

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