Greater Twin Cities United Way confronts shift in giving

Greater Twin Cities United Way laid off nine staff members this week and will leave two vacant positions unfilled after missing its 2016 fundraising goals, President and CEO Sarah Caruso said Friday.

Caruso declined to disclose United Way's 2016 revenue or by how much it fell short, nor would she discuss the eliminated positions. She described the process as involving "very difficult decisions."

Twin Cities United Way, the largest among 1,200 United Way chapters in the country, reported $98.6 million in total revenue in 2015, the most recent year for which figures were available. That was down from $101.9 million in 2014, a drop of 3 percent.

"Giving patterns and economic uncertainty with many of our donors are causing revenue to be slightly more variable," Caruso said.

She added, "I can't go into all those specifics right now because our final report for the year has not been completed and shared with the board." The board of directors next meets in May.

The trend seems to reflect a national shift in how people choose to give, with donors seeking more customization and control of their dollars.

United Way is best known for its workplace campaigns, where it partners with companies to urge their employees to give and then distributes much of that money in the form of grants to more than 300 programs at 180 nonprofits.

Tim Welsh, who took over as United Way board chairman three months ago, said that they were "very much in the midst of digging into" the drop in revenue that resulted in layoffs.

"I don't yet have a good sense of all the factors," he said.

According to recent 990 tax forms, which are publicly filed, Twin Cities United Way's expenses have climbed as revenue dropped.

Staff salaries and benefits rose by 10 percent, or $1.6 million, from 2014 to 2015. That included a $54,000 raise for Caruso in 2015, bringing her total compensation package to $415,000.

The charity also reported that fundraising expenses increased by nearly 6 percent in a year's time, to $9.1 million.

Caruso said 2015 was not a typical year, as the United Way hosted several special events and activities for its centennial celebration.

"I would define it as a record year for engagement, for public awareness and for sharing our message," Caruso said.

Twin Cities United Way spends about 12 percent of its budget on marketing and administration, according to its website.

Caruso said the 990 forms don't reflect United Way's campaign to increase planned giving, in which individuals leave a portion of their estate to the charity.

"It does not necessarily tell the whole story," she said. "Everything you raise is not in cash. It's future compensation and it does not go on your balance sheet."

In 2015, Twin Cities United Way gave $430,000 to the Amherst Wilder Foundation, $362,000 to ARC Greater Twin Cities, $516,000 to Big Brothers Big Sisters of the Greater Twin Cities, and $540,000 to Bloomington public schools, among other organizations.

United Way Worldwide fell to second place on the Chronicle of Philanthropy's annual ranking of 400 U.S. nonprofits that raised the most from private sources in 2015. It was pushed out of the top spot by Fidelity Charitable Gift Fund, part of Fidelity Management; that fund rose by 20 percent to $4.6 billion nationally, while the network of United Ways dropped 4 percent to $3.7 billion.

Fidelity offers donor-advised funds and its online platform makes giving easier, Fidelity President Pamela Norley told the Chronicle of Philanthropy.

Nationally, Goodwill Industries, the Red Cross and Catholic Charities USA all reported declines in annual giving in 2015, according to the list. Others, including Girl Scouts of the USA and the Boys and Girls Clubs of America, reported double-digit increases.

The big difference between the United Way and other charities, Welsh said, is that donations from the former are immediately spent on good causes in the community while donor-advised funds can sit in accounts.

"That is the benefit of the United Way," he said. "You give to the United Way and it goes right out to the community."

Shannon Prather • 612-673-4804