United Way of Central Carolinas in Charlotte, N.C., needs to find its way fast.
Ousting Gloria Pace King as president and launching a probe into its board’s approval of her lavish pay and benefits are important first steps.
But United Way is headed for a perfect storm, and its board cannot afford to wait too long to change the way it does business.
On Sept. 5, United Way kicks off its annual fundraising drive, which last year raised a record-high total of nearly $45.3 million.
This year, the slumping economy and rising costs are driving up demand for services at United Way’s partner agencies and putting added pressure on givers.
Even before United Way’s board announced Aug. 26 it would fire King if she does not quit by Sept. 30, at least two employers had scrapped their United Way workplace campaigns in the wake of disclosures about her compensation.
That number now has grown to at least 12 employers that accounted for $160,000 in giving in last year’s drive.
Dumping King may buy United Way a quick cosmetic fix for its annual drive, but its board needs a major makeover, both in its mindset and in its policies for setting employee compensation.
The board also needs to find a better way to tell United Way’s story.
Since a financial scandal in the early 1990s at United Way of America seriously eroded trust in local United Way affiliates throughout the United States, United Way has worked hard to revamp its business model and restore its reputation as a respected and important community player that promotes charitable giving and invests donors’ dollars in critical health and human services.
United Way of Central Carolinas has been one of the biggest success stories. Under King, it has dramatically increased the dollars its raises.
Key to United Way’s effectiveness has been the compelling story it has to tell: The Charlotte region’s booming affluence masks entrenched social problems and urgent human needs for those living in poverty or on its margins, and United Way serves as an indispensable broker in tapping that affluence to address those problems.
Equally critical to United Way’s success have been corporations that sponsor United Way workplace campaigns, make corporate gifts to United Way, and employ many of the individuals who make larger gifts, which now account for over half the dollars it raises.
Corporate executives have played a big role on United Way’s board, which ultimately is accountable for the organization, its operations, its impact and the trust on which its effectiveness depends.
Ultimately, charity is about trust: People give their money, time and know-how to charities not only because they address causes the givers care about but also because they have earned the givers’ trust by serving as smart and effective stewards of the resources they receive.
But United Way’s board has not been smart enough: It is not enough just to care, and it is not acceptable to look the other way on pay in exchange for fundraising success.
Trading excess in pay for success in fundraising can trigger a public-relations storm that can sink even the most established and productive money-raising efforts.
A board, like a parent, must set boundaries and enforce discipline.
But United Way’s board abdicated its responsibility.
And the board’s decision to pay its $20,000 a month for up to four months to Mac Everett, a retired Wachovia executive who has been named interim president, is not likely to persuade donors it has learned its lesson.
Nonprofits play a vital role in addressing community needs, and they need executives and staffs who are smart and compensated fairly, indeed generously, but not excessively.
So board members must understand that, to fulfill its mission, a charity must be able to tell a story that makes people want to support and be part of the organization, not to shun it when it needs them most.
And today, with a recession looming, agencies serving Charlotte’s most vulnerable populations need United Way, and United Way needs the support of the community.