Stop using the United Way of the Bay Area to pass through donations to charities, losing 15% and hiding their true overhead ratio.

San Francisco

Social Issues

Problem

The United Way of the Bay Area partners with many businesses in the bay area to raise funds for both United Way of the Bay Area charitable activites as well as pass thorugh designated donations to charities of the givers choice.  For the priviledge of passing through these donations the United Way of the Bay Area takes 15% of the funds.

 

The United Way of the Bay Area says that this overhead expense is acceptable as they must pay for the infrastructure and fundraising operations to handle the givers pass-through donations.  However, this assumes that donations to the small charities that givers care about would cease if not for the ability of the United Way of the Bay Area to deduct payments automatically from the givers paycheck.

Therefore, if a giver really cares about the charity that they are giving to it would be better to directly write them a check to save your favorite charity the 15% loss that goes to the United Way of the Bay Area.

 

Also, the United Way of the Bay Area calculates their complete overhead expense rate against the pass-through donations to designated charities.  This means that expenses related to United Way of the Bay Area charitiable activites are calculated against the entire pool of donations raised, including pass-through donations.

 

This means that if the United Way of the Bay Area spends $3 million on employee wages to execute UWBA chariable activites it is considered against the entire $29 million of donations raised and does not remove the $18.7 million of donations that is passed thorugh to designated charites. 

 

The UWBA calculates their overhead expense as 17.21%.  This is distorted as the pass-through designations distorts the true overhead percentage which is closer to 40% without the pass-thorugh designations.

Comments

Solution

The United Way of the Bay Area must lower the overhead charge to pass-through donations to designated charities to a reasonable 2 to 3%.  This near the overhead fees that credit card processors charge to businesses to collect funds.

 

The United Way of the Bay Area should do a better job of removing pass-through donations when they calculate their overhead percentage to better show those that donate to the UWBA charitable activites what they are getting for their donations.

Comments

Facts

Charity Navigator gives the United Way of the Bay Area 2 out of 4 Stars for Financial Performance:

http://www.charitynavigator.org/index.cfm?bay=search.summary&orgid=4655#.UjCplD9uJk8

 

Look closely at page 10 of the Financial statements.  Any movement of expenses from the C or D columns to the B column lowers the UWBA overhead expenses:

http://www.uwba.org/wp/wp-content/uploads/2010/04/United-Way-of-the-Bay-Area-FY2012-IRS-Form-990.pdf

Line item 7; 11g; 16; 13 in column B is being calculated against the total amount of donations raised but these expenses should only be related to UWBA charitable activites not the pass-through charities donations.

 

 

Comments

Action

Stop using the United Way of the Bay Area e-pledge system to pass thorugh donations to charities of your choice.

 

If you truly care about the charity that you are giving money to, save them the 15% and write them a check directly!

 

Contact Susan A. Sutherland - Senior Vice President of the Federal Reserve Bank of San Francisco and Chairwoman of the Board for the United Way of the Bay Area, and ask if she supports the UWBA Financial reporting and the justificaiton for the 15% expense for pass thorugh deductions.

Comments

Posted by V3ritas

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