United Way lays off workers, shifts funding amid economic mobility push

United Way Executive Director Sean Garrett
United Way Executive Director Sean Garrett dhinshaw@charlotteobserver.com

In a multimillion dollar push to reduce generational poverty in Charlotte, United Way changed its funding priorities this year and gave money to dozens of Charlotte-area nonprofits for the first time.

The organization, which is one of the largest non-government providers of money for health and human services in the area, will also lay off nine staff members and reduce or eliminate funding to 47 local organizations in an attempt to balance its budget and focus on economic mobility.

Some of the cuts target organizations that provide basic needs, like shelter and emergency financial assistance. Instead, money will go to prevention and early intervention, so that people don't need as much of a safety net down the road, Chief Impact Officer Laura Clark said.

Sixty-five of the 110 partner agencies either got more money than the year before or were funded for the first time, United Way leaders said. The shift in funding is a response to the 2014 report that ranked Charlotte ranked 50th out of 50 major cities in upward economic mobility.

Altogether, United Way's board approved $24.6 million in community spending for the 2018-19 fiscal year on Thursday. Of that, $14.6 million will go to agencies around the Charlotte area, a 10 percent reduction from the year before.

Focus on neighborhoods

When the report showing Charlotte's lack of economic mobility came out in 2014, Mack McDonald knew one thing.

"Charlotte has not lacked for effort," he said.

McDonald grew up in Charlotte and now runs the nonprofit Renaissance West Community Initiative, which works on redeveloping a former public housing project in west Charlotte with mixed-income housing, a school and other services.

The economic mobility report said that compared to children in other cities, Charlotte children born to parents in the bottom 20 percent of national income distribution are less likely to reach the top 20 percent in income during their lifetimes.

McDonald said he took the report as a signal that Charlotte needs to devote its good intentions to something different. One option was to support place-based neighborhood initiatives like the Renaissance West program.

On Thursday, United Way's board approved a $2.4 million investment over three years in the Renaissance and Grier Heights neighborhoods, both of which have faced challenges in recent years. Renaissance West Community Initiative organized support in the Renaissance neighborhood, while CrossRoads coordinated support in Grier Heights.

Both neighborhoods held community meetings, where residents talked about their greatest needs.

In Grier Heights, residents pointed out that a lot of neighbors had preschool-aged kids, so early childhood education became a priority, said CrossRoads executive director Don Gately.

Renaissance residents pushed for more support for new mothers and summer programs for kids, among other initiatives, McDonald said.

Then the grant process began. Residents helped decide which organizations would get money to come into the neighborhood, based on their experience and what they'd heard from their neighbors.

Helping families get ahead

United Way's funding for the Latin American Coalition more than doubled, to $184,651. Executive director José Hernández-Paris said he was almost speechless when he heard the news.

He said the money will support initiatives including the Latin American Coalition's labor rights work and its Worker Center, which gives day laborers a safe place to find employment.

In the long term, he said the coalition will be able to help the families and U.S.-born children of service workers build their lives in Charlotte.

Hernández-Paris said the money comes at a time when Charlotte's Latino community is growing and some immigrants have had to question whether the city is truly welcoming. The United Way funding is validating for the community, he said.

Response to cuts

United Way made it clear during the past year that their priorities were changing, according to the leaders of two Charlotte nonprofits that had their funding cut this year.

The Men's Shelter, which had a 9 percent cut in its United Way funding, is working on its budget and plans to maintain the same level of service to the community, said Executive Director Liz Clasen-Kelly.

Clasen-Kelly said she understands why United Way is focusing on economic mobility, and the Men's Shelter should see the results of improved economic mobility in the future.

"In the long run, fewer men will be needing shelter," she said.

Crisis Assistance Ministry lost 7 percent of its United Way funding, and the cuts will come out of emergency assistance services, which helps people avoid eviction, CEO Carol Hardison said.

Crisis Assistance also provides coaching to help people regain economic stability, and funding for that service was not cut, Hardison said, because it falls in line with United Way's economic mobility focus.

Hardison said the Crisis Assistance board is working hard to raise enough donations to make up the budget gap, and if the organization can do that within one fiscal year, they won't have to cut services.

United Way generally caps its support at 30 percent of an agency's overall budget, Executive Director Sean Garrett said, so groups facing cuts also have other funding sources available.

For the 23 organizations facing a cut of more than 40 percent of its United Way funding, United Way will reduce its support over the course of two years.

United Way itself has spend millions of dollars from its reserve fund since the recession, when it had to choose between seriously cutting services or making up the difference with reserve funding, board chairman and BB&T regional president Wes Beckner said.

This year, with the cuts and internal layoffs, the organization will spend less than $1 million from the reserve for the first time in years.

Jane Wester: 704-358-5128, @janewester