Carlos Evans, the new chairman of United Way of Central Carolinas, is on the mark when he says the agency should become “totally transparent.”
Evans appears to understand what's at stake when the United Way gets a reputation for hiding administrative costs and paying excessive salaries.
Until now, unfortunately, the United Way has been more opaque than transparent, especially in disclosing administrative costs. More disclosure might have prevented the recent fiasco over ex-President Gloria Pace King's compensation, which led to her firing in September.
When news broke in June that she received a compensation package worth $1.2 million last year – news made public only by enterprising reporting by NewsChannel 36 and the Observer – the public was outraged. One result: The United Way campaign this year is struggling.
Sunday, the Observer's Kerry Hall and Eric Frazier reported on another part of the charity's finances: how it reports its administrative costs, plus its creation of several in-house programs.Those programs have received millions of United Way dollars over the years but get nothing like the scrutiny given to the outside agencies the United Way helps.
The local United Way was following the guidelines of the United Way of America in forming its in-house programs and in attributing a proportion of their administrative costs, including salaries, to programming instead of overhead. But several accounting experts have said that's a questionable practice. And it misleads donors.
The way charities' costs are tallied is significant. Reputable charities are expected to spend less than 25 cents of every dollar they receive on salaries and administrative expenses. The local United Way in the past has said 85 cents of every dollar raised went to charities. If the in-house programs' administrative costs are counted as administrative, not programming, that lowers it to about 75 cents.
The four in-house programs saw budget increases of 28 percent from fiscal years 2006 to 2007. Meantime, dollars given to the 91 United Way charities rose just 3.3 percent.
Further, at least one of the in-house programs, CommunityWorks, seems to have a murky mission. Despite a budget of almost $1.5 million in 2006-07 and seven full-time employees, its original planning and public policy role has changed, although it isn't clear to what.
Evans is right to want to know more about those programs and to consider reducing the money they receive. He should also look at how and why the programs were created and whether what they do is valuable work, or work within the United Way's mission. After all, the millions spent on those programs are millions not spent on worthy local groups that help thousands of people in need – especially vital in an economic downturn.
Evans has opened United Way board meetings to the public and says board meeting minutes will be publicly available. Those are excellent steps. The United Way is a valuable community institution. It needs to reassure a suspicious public and regain its trust.