Changes in donor giving a struggle for United Way

Changes in the way donors give to Northwest Montana United Way, along with the financial pressure of maintaining the Gateway Community Center are ongoing challenges for the agency, according to United Way Executive Director Sherry Stevens.

And, at a time when the agency’s donations are down, United Way has seen a dire need to stretch its services even further to help with unmet needs in the community, Stevens said.

Stevens and Jim Oliverson, the board chairman for the Westside Center for Community Change — the entity that owns the portion of the Gateway Community Center for which United Way is the fiscal agent and property manager — recently sat down with the Daily Inter Lake to address concerns voiced by both citizens and nonprofit organizations, ranging from a sizable decrease in donations over the past several years to questions about delinquent property taxes and the management of the Gateway Community Center.

Nonprofit agencies file the Form 990 with the Internal Revenue Service each year, and those tax forms are available for public perusal at https://www.guidestar.org.

Northwest Montana United Way’s 990 forms from 2015 and 2016 — the most recent forms available — show the amount of money awarded to United Way’s member agencies — now called community impact partners — dropped significantly, from $196,868 in 2015 to $72,313 in 2016.

The amount of money distributed to non-member agencies through donor designations also dropped, from $129,894 in 2015 to $97,490 in 2016.

While United Way has seen an uptick in donor-designated giving in recent years, it’s a trend that directly affects the community impact partners that provide essential services such as emergency food and shelter.

Stevens said the increase in donor-designated giving is driven by a new generation of corporate leaders who often want their money to go for specific causes, such as the environment.

“They’re picking their own charity,” she said. “What we’re under obligation to pay are the donor-choice designations. We have to pay [those] no matter what our operating expenses are.”

That means the community impact partners, the longstanding providers of essential services, are simply getting less financial support from United Way.

Along with a big upswing in donor-designated contributions, there’s also been a sea change in giving by global corporate leadership companies such as big box stores or national companies, she continued. While United Way used to count those larger corporation contributions in the campaign, “now we only count them when we get a check,” Stevens said.

“We used to get the money directly,” she said. “We don’t get that anymore; now it’s through third-party payers.”

Because United Way offers an “open donor choice,” the agency also gets local campaign donations that are sent to designated out-of-area charities.

“We don’t take out any dollars from designations,” Stevens said. “Some United Way agencies charge a percentage fee for processing, but we do not.”

Money that comes in without a specific charitable donation is the pool of money that not only is divvied up among the member agencies, but also covers the cost of United Way’s office and staff.

CoMMUNITY impact partners continue to be challenged by the downturn in donations.

Lance Isaak, program director for Flathead Youth Home, said that while United Way “has been a big support and brings a lot to the table,” the youth home has found work-arounds in dealing with the funding shortage. About five years ago the youth home moved United Way’s annual contribution to a different line item in the budget, “so we’re not as dependent on those dollars,” Isaak said.

“Anything we’d get would be icing on the cake. At the height of it, we were getting $23,000 or $24,000 [annually], maybe about eight to 10 years ago,” he said, adding that the most recent allocation dropped to around $8,500.

“We still value being a member agency,” he said, adding that the Whitefish Community Foundation’s Great Fish Challenge fundraising program is one resource that has helped the youth home offset the lower United Way contributions.

The Abbie Shelter also has struggled with the drop in donations.

“We’re still experiencing a drastic decrease [in United Way funding] and that does have an impact on how we need to run our program and how we need to make decisions about our finances,” said Hilary Shaw, director of the Abbie Shelter for women and children.

In 2015, Northwest Montana United Way’s annual campaign brought in a gross amount of $680,550. Campaigns typically include a 7 to 10 percent uncollectable amount because some potential donors don’t pay what they’ve pledged.

“We have people who die, move, get fired, or the business closes,” Stevens said.

In 2016 the gross campaign dropped to $500,212. The 2017 campaign rebounded somewhat, bringing in $545,786, but that year’s tax form is not yet available for public perusal.

Stevens cautioned that reading the 990 tax forms at face value is misleading because there are many extenuating circumstances in how the financial information is compiled.

For example, the $859,200 listed as total revenue in 2016 includes the $500,212 brought in from the campaign, along with $101,978 of in-kind donations, such as office equipment, books and clothing that United Way passes on to other agencies. It also included $257,000 for fiscal-agent work. Because United Way is the fiscal agent for several nonprofits, “those dollars roll into that $859,200, so it’s not all campaign [donations],” Stevens said.

In 2016 United Way showed revenue, less expenses, at a negative $382,308, compared to $52,786 in the black in 2015. A portion of the 2016 loss, Stevens said, is a $200,000 shortfall in donor giving. Also, United Way made an allocation to a fiscal agent that was ready to go out on its own, Stevens said.

Another misleading entry on the 990 tax form, she maintained, is the number of employees United Way employs. The 2016 tax form states 13 employees, earning $234,807, but that count includes the employees of any nonprofit for which United Way is the fiscal agent.

For example, Special Friends Advocacy’s employee is on United Way’s payroll because United Way helps that nonprofit with its bookkeeping, Stevens explained.

United Way has the full-time equivalent of 3.5 employees currently, Stevens said. That’s down from 5.5 employees in 2016 and 3.85 in 2017.

This year, Northwest Montana United Way is on track to offer assistance, both financial and/or resource services support, to 114 nonprofits. These include 36 local affiliated agencies, those listed for donor choice designation only; 27 community impact partners; 41 Montana Shares statewide agencies that are listed for donor choice designations; and 10 direct-service programs such as Leaders of Tomorrow and AARP and VITA tax assistance.

“We’re serving so many more nonprofits,” Stevens said.

There is a huge unmet need for direct services, she pointed out. United Way now offers a payee service for disabled or disadvantaged individuals who aren’t able to manage their own finances. The agency also offers a “dress for success” program, a paper shredding event for seniors and a tax-preparation service, among other services.

“Last year our volunteers helped prepare 2,000 tax returns that brought in $1.4 million in tax refunds,” Stevens said. “How we make decisions [for direct services] is by assessing unmet needs.”

Amid the changes in donor giving, many United Way agencies have switched their operation platform to a coalition-based strategy that zeroes in on one community issue. United Way of Missoula County, for example, is putting its financial resources in a 10-year plan to end homelessness in Missoula.

Stevens said the coalition idea has been discussed by her board of directors, but no decision has been made to move in that direction.

The big ongoing challenge for United Way is how to find ways to make up the funding shortfall, amid the changing dynamics of giving. A growing number of local foundations through the years also has taken a bigger share of the giving pie, Stevens acknowledged.

As United Way prepares to launch its annual giving campaign this year, the agency is working to make in-roads with new larger businesses and new donors.

“We raised $21,000 more last year than the previous year,” Stevens noted. “We worked really hard last fall.”

Features Editor Lynnette Hintze may be reached at 758-4421 or lhintze@dailyinterlake.com.