Greater Twin Cities United Way tries new fundraising tactics as revenue drops by $7 million

The Greater Twin Cities United Way announced Tuesday that it drew in nearly $69 million in revenue last year — a $7 million drop from 2017 and its lowest amount in recent history.

But the organization's leaders say they expected the decline and are in the middle of a plan launched last year to change United Way's mission and boost revenue in new and different ways.

"We're in the early stages of this. A transformation of this kind is going to take a while," said Tim Welsh, a vice chairman at U.S. Bank who heads United Way's board of directors. "We knew we'd be down from last year. … What we're hoping for is things start to stabilize or go up over the next little while."

He added that United Way anticipated its drop in revenue, so it didn't have to cut grants to nonprofits this year to plug shortfalls as it has done in past years.

Nonprofits have long relied on grants from the Greater Twin Cities United Way, which is one of the largest of 1,200 U.S. chapters in its total revenue. But like nonprofits and foundations across the state and country, United Way has taken a hit from changing donor demographics and a shift in donors looking to be more involved in philanthropy instead of just cutting a check.

As a result, United Way is working to rely less on its well-known workplace-giving campaigns and find new ways to bring in money. It is offering consulting services to companies for a fee and, for the first time, turning to social media and online fundraising, such as Give to the Max Day. The online efforts brought in about $500,000 last year.

So far, two companies have also paid for an online workplace giving tool that United Way started last year called Salesforce.org Philanthropy Cloud that lets employees research charities, target donations and sign up for volunteer roles.

"Revenue isn't going to come from the same place anymore," said John Wilgers, who started as the new CEO of United Way this summer. "We will see, in all likelihood … another decline in workplace giving but that decline will be offset by the work we're doing in revenue diversification."

In 2010, United Way's revenue was $89 million, which was a typical amount the past few years. It then peaked in 2014 at $102 million around the organization's centennial celebration. By 2017, revenue fell to about $76 million, prompting United Way to cut grants and lay off nine employees.

Welsh said that United Way, which hasn't been known to be innovative in the past, is now "trying a whole bunch of things."

"Some of those things are going to go incredibly well; some of those things are going to go less well," he said. "We do know the one monolithic approach is not the model we can go forward with."

As United Way chapters across the country face similar changing demographics and changes in giving, the Twin Cities chapter — one of 36 in Minnesota — is leading the way, Wilgers said.

"It feels like we're connecting with our community in a way different way," said Wilgers, who replaced Sarah Caruso, who retired in 2017 after nearly a decade in the role. Wilgers was named CEO after retiring from a 35-year-career at Ernst & Young; he's had a long history with United Way as a board chairman, donor and fundraiser.

As donors look to get more involved in philanthropy, more United Way donors are directing their money to specific nonprofits, he said. And for the first time, donors are working directly with the organization to develop new initiatives such as Propel SEL, which trains professionals in after-school and youth mentorship programs.

"The historical model was we were your grandfather's community chest. You gave to us, typically through a workplace, and we decided what the needs were. That worked pretty well for a long time," Welsh said. "But what we're seeing … now that we're building longer relationships with individual donors, many of them have specific interests."

United Way is also changing where it gives its money.

Last year, the organization narrowed its focus of grants to programs that address education success, household stability, and employment and income gaps. That meant eliminating categories for legal services and independent living, which often help seniors and people with disabilities.

This year, United Way awarded $14 million in grants to nearly 100 organizations ranging from Minneapolis-based Loaves & Fishes, which provides meals to people in need, to the Science Museum of Minnesota.

Instead of just doling out grants, United Way is also becoming more involved with influencing the nonprofit sector. Last year, it connected 61,000 volunteers to service projects and advocated for $91 million in state funding for housing, workforce training and other priority areas. It also operates a statewide hotline (211) that connects people to housing and other resources, making 270,000 referrals last year.

As United Way is evolving, the changes are forcing some nonprofits that have lost United Way funding to search for new ways to raise money.

"It's been an anchor for many organizations. It is a loss to the community," said Jon Pratt, executive director of the Minnesota Council of Nonprofits.

"I think they're doing what they can," Pratt added about United Way. "Certainly there's a place for United Way. … It will inevitably be smaller."

Kelly Smith • 612-673-4141