After a decade of relying on its savings, Charlotte-based United Way of Central Carolinas is ending that practice and cutting its contributions to area nonprofits by 25 percent, agency officials announced Monday.
The cuts come as donations to the United Way continue to fall. Despite an improving economy, revenues slid 8 percent last year, and the agency predicts the same decline this year. The decline reflects a national trend, as companies have opened up their charitable giving beyond the United Way, the Charlotte agency says.
United Way says the cuts to its 73 nonprofit partners are needed for it to stay financially healthy and continue to serve hundreds of thousands of residents.
The agency also will trim $1 million from its operating expenses, officials said.
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Non-profits that receive United Way grants operate homeless shelters, run children’s programs, assist people who have disabilities and provide free medical care to working families unable to afford health insurance.
United Way of Central Carolinas, however, has relied on its fund balance for the last decade to “bridge the gap” between what its annual campaign raises and what it gives its non-profit partners, Laura Clark, the United Way’s president and chief executive officer, said in a letter to the agencies on Monday.
“That’s not a sustainable practice,” Clark wrote.
While “still an incredible amount,” the United Way’s $26 million in revenues last fiscal year fell 8 percent from the previous year, Clark told the Observer. The agency projects another 8 percent drop in revenues this year.
United Way officials met individually Monday with officials from each non-profit to deliver the news, Clark told the Observer in an interview. The 25 percent “across-the-board” cut will occur over 18 months, she said. The cut totals about $4.5 million, she said. The United Way will still distribute $13.5 million to area nonprofits this year.
The Unite Charlotte and United Neighborhoods initiatives will continue to receive a combined total of $1.5 million over the 18 months, officials said.
Launched in 2017, United Neighborhoods helps families in economically disadvantaged Charlotte neighborhoods become more financially stable and their children better prepared for school, among other initiatives. Started in response to Charlotte’s civic unrest in late 2016, Unite Charlotte funds social justice initiatives that address racial equity, poverty, civil rights and access and inclusion, according to Unite Charlotte’s website page.
‘Competing for donors’
Among the nonprofits that will feel the cuts is the Salvation Army, which expects to lose $250,000 from the Center of Hope shelter for women and children and the Boys & Girls Clubs.
Deronda Metz, director of the Center of Hope, says nonprofits will face tough choices if the money can’t be found from other sources.
“I worry we (nonprofits) could end up competing for donors, which is why I think the United Way campaign is still the best approach for the community,” Metz said.
“One thing I will say is that we are not going to turn people away (at the shelter) due to lost funding. We are going to try and do everything but that, which means the level of service we offer might be less. We could lose staff.”
Another charity taking a cut is Crisis Assistance Ministry, which offers emergency help to people facing evictions or disconnection of their utilities.
Carol Hardison of Crisis Assistance Ministry says her nonprofit will lose about $108,000 over 18 months from the United Way cuts.
“We see 100 families a day and they are the face of Charlotte’s affordable housing crisis,” said Hardison.
“More than 90 percent of the dollars we get goes to programs, not staffing, so this will directly impact basic needs of people. This is a time in our community of skyrocketing rents. When people get their leases renewed, they are seeing $200 and $300 increases. Add into that the loss of a paycheck, like we saw during the (partial) government shutdown, and they end up evicted.”
Decline since the recession
Giving has fallen since the 2008 recession, officials said. Besides the changes in corporate giving, people have had a wider array of donation options since then, including Go Fund Me and other online sites, United Way officials told the Observer. “Health and human services giving is down across the country,” Clark told the Observer.
Clark, a Charlotte native, became president and CEO of United Way of Central Carolinas in September. “Five short months later, I am more energized than ever about the future we are creating,” she wrote to the nonprofits on Monday.
In 2018, after consulting the community, the United Way shifted its funding focus to address “the lack of economic mobility” in Charlotte and the region, Clark wrote.
Now, the agency is moving toward a more sustainable business model, where the money it gives to its non-profits reflects “actual funds raised — instead of relying on reserve funding and revenue projections,” Clark wrote.
“Our decision to make these changes was extremely difficult,” Clark wrote. “We are doing so now while we are still in a healthy financial position, so we can focus on our community’s future.”
“I don’t want people to think the United Way is going out of business, because it’s not,” Clark told the Observer. “Once we get through this transition, our future is healthy and bright. But we’ve got to get through this transition.”