United Way Allocations Debated

July 25, 2007
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GRAND RAPIDS — Nonprofit human services agencies across Kent County are either rejoicing or ruing their Heart of West Michigan United Way allocations, announced in June, for the first year of a three-year funding cycle.

Grappling with a stagnant level of donations in Michigan’s slow economic atmosphere, the local United Way has decided to alter its business model, President Bob Haight said. The organization, which markets fundraising through workplaces, has added a “focused impact” on developing early childhood and literacy programs as a partner with selected agencies and Grand Rapids Public Schools. United Way has moved about $625,000 from other agencies to support programs such as Grand Rapids Reads, FACTS and child care accreditation, he explained.

“Change is hard,” Haight said. “We’ve worked closely with the agencies in that regard. If United Way didn’t change, I think you were going to continue to see declining revenue.”

Jim Dunlap, regional president of Huntington Bank and chair of the United Way board, agreed. “Change had to happen,” he said. “Fundraising was dropping, community activity was eroding.”

Level or reduced United Way allocations combined with uncertainty over the still-unresolved 2008 state budget have some nonprofit leaders worried that programs or even entire agencies may end up tottering at the financial brink.

“That certainly leaves a gap in services that were provided in the community, services that the community’s citizens invested in, in United Way,” said Sharon Loughridge, executive director of D.A. Blodgett Services for Children and Families, 805 Leonard St. NE, where United Way funding for the Pregnancy Counseling Program was sliced by 23 percent. The agency reported $6.63 million in total revenue for 2005, according to an Internal Revenue Service filing. United Way allocated $304,630 to D.A. Blodgett last month.

Mike Reagan, CEO of Proaction Behavioral Health Alliance, 330 Eastern Ave. SE, and chair of United Way’s steering committee of agency executives, said his $16.5 million nonprofit lost 20 percent of its United Way funding. That will translate into 3,000 to 6,000 fewer hours of outpatient mental health counseling, he said.

In fiscal 2006, Proaction’s Life Guidance Services received $561,680, and its Project Rehab division received $161,630, according to a United Way Internal Revenue Service filing. For fiscal 2007, United Way has awarded Services $389,374 to Life Guidance Services and $165,687 to Project Rehab, according to United Way’s Web site.

Reagan said the agencies “were made fully well aware there was going to be a shift of 10 percent,” Reagan said. “We’re fully supportive and will work with United Way in every way we can. As agencies, we hope we’d be part of being able to identify what are the needs and gaps that we see.”

Degage Ministries failed to secure a spot on the list of agencies eligible for United Way funding through 2009, after receiving $7,500 per year in the last three-year funding cycle.

“We did apply and were very disappointed our funding got cut,” Executive Director Marge Palmerlee said. The money supported the Open Door women’s drop-in program, which houses homeless women overnight.

“This year we applied for $15,000. Instead of getting $15,000, we got zero,” said Palmerlee, whose organization is in the midst of a capital campaign for renovations of the facility at 144 S. Division Ave. “I was shocked we didn’t get renewed funding.”

The Open Door program, which recently expanded to seven days, occupies about $100,000 of the organization’s $660,000 annual budget, Palmerlee said. “It’s not a huge portion of our funding, but it was funding that we counted on,” she said of the United Way allocation. She said the agency plans to turn to foundations and churches to prop up Open Door.

Haight said the local United Way spent several years researching the move toward focused issues, and communicating with agencies, donors and the business community about the concept. He said the trend is growing among the 1,300 organizations that belong to United Way of America, with some moving entirely to the focused impact model, some avoiding focused impact, and others, like the Heart of West Michigan United Way, aiming for a blend of focused impact and traditional funding.

Dunlap said the Endorsement Council, a committee of 22 to 24 former campaign chairs and board chairs, was formed three years ago to hold United Way accountable to its mission.

“This was a brand new methodology United Way had never used,” Dunlap said. “That’s unusual, in my mind, for a nonprofit to be that transparent and accountable to this community.”

In its focused impact areas of early childhood and literacy, Haight said United Way already has forged partnerships with organizations such as Grand Rapids Public Schools, the Hispanic Center of Western Michigan and Kent Regional Community Coordinated Child Care. He said any additional partners would be approached by United Way, outside the request-for-proposals process of application and review for Agency Impact funding.

He said United Way intends to seek additional outside funding for the focused impact areas, such as grants from foundations and the government, and has hired a grant writer. Most funders prefer applications from a collaborative of community groups, and United Way can take the lead in pulling that together, Haight said. United Way also will join with local foundations, such as the Steelcase and Frey foundations, in addressing early childhood issues.

“We will try to raise additional resources for focused impact work. It’s going to take a lot more than United Way,” Haight added. “United Way can do its part.”

At Kent Regional 4C, which received money under both focused impact and agency impact, “our charge has been to support and increase the quality of care in child care programs throughout Kent County by helping programs work toward and achieve national accreditation,” said Director of Education Jennifer Griffith. The organization had revenue of about $5.3 million in fiscal 2005, according to an IRS filing.

About 49 Kent County child care centers and two homes can claim National Association for the Education of Young Children accreditation, Griffith said. NAEYC has recently upgraded its standards, and United Way focused impact funding is paying for Kent Regional 4C to guide providers through the accreditation process and to help them cover the cost.

“We would not be able to give that kind of support and help to these programs without the focused impact area,” Griffith said.

For the FACTS program — Families and Communities Together for Students — United Way is seeking to boost its reading tutor force by 1,000 volunteers, Haight said, and to improve the connection between tutoring sessions and classroom work.

United Way is seeking other revenue sources, Haight said. For example, it processes pledges for Battle Creek’s United Way, which pays for the service.

Haight points to a speech a few years ago by Steelcase CEO James Hackett, who noted that United Way’s business model, effective for 90 years, had hit its peak and was ready for change. Peak performance “couldn’t be sustained,” Haight said.

United Way also operates the 211 telephone number for emergency needs referrals, the Kent County Tax Credit Coalition, which uses volunteers to help people apply for low-income tax credits, and the Emergency Needs Task Force.

Jack Greenfield, CEO of Arbor Circle, 1115 Ball Ave. NE, which received the largest allocation from United Way this year at $545,689, serves on two United Way committees.  He said Arbor Circle, which saw a total cut of more than $100,000 from its 2006 United Way funding level, is still trying to determine how to patch the money gaps. For example, United Way eliminated funding for the Neighborhood Drop-In Center for child care, Greenfield said. For the 2006 fiscal year, Arbor Circle drew $7.3 million in total revenue.

“They (United Way) have indicated that they have limited funds and a wide variety of needs in the community, and that they are going to continue to fund the special focus areas that have evolved,” Greenfield said. “I can only assume there will be tough choices in the future regarding the funding of existing services.”  

HEART OF WEST MICHIGAN UNITED WAY
2006 Total Raised: $13.9 million
Agency Impact: $6.72 million to 117 nonprofit programs
Directed Donations: $2.58 million
Emergency Needs: $650,000
Focused Impact: $625,000 to early childhood, literacy

CAMPAIGN HISTORY
2001: $14.49 million
2002: $13.95 million
2003: $13.8 million
2004: $14 million
2005: $13.8 million
2006: $13.9 million

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