Published in Nonprofits

Generational shifts, need for efficiencies drive consolidation for some United Ways

BY Sunday, March 17, 2019 09:01pm

Building the United Way brand and providing a consistent donor experience is imperative for the organization and its affiliates to remain relevant.

Those were among the factors that led to the announcement in January of the Van Buren County United Way’s decision to join forces with the United Way of Southwest Michigan for back office operations.

Anna Murphy and Dennis McMillian, United Way of Southwest Michigan

The consolidated organization, which is expected to be fully merged by July 1, “will increase efficiencies, reduce duplications and build on the collective thought and gives the two organizations a unique opportunity to strengthen the way United Way serves Southwest Michigan,” the organizations said at the time.

“Smaller United Ways sometimes struggle with capacity issues and therefore they may not be able to keep up with pace for change,” said Anna Murphy, CEO of United Way of Southwest Michigan. “I give a lot of credit to the (Van Buren County) director and board for recognizing this.”

Van Buren County United Way’s two employees have joined the 20-person staff at United Way of Southwest Michigan, which will serve Berrien, Cass and Van Buren counties when the merger takes effect.

The shrinkage of the United Way system is plainly evident, said Michael Montgomery, the owner and principal of Detroit-based Montgomery Consulting Inc.

“Every year, there are fewer independent United Way affiliates in the pool of Michigan nonprofits I invite to participate in my survey,” Montgomery said. “Many of the affiliate names also get longer as mergers add more counties and communities to the service areas of the declining number of independent United Ways.”

However, a veteran of the United Way system said these mergers are not new and they shouldn’t be viewed as a negative.

Dennis McMillian began working in the United Way system in 1979 in the development area before taking executive leadership roles. He left the United Way after 21 years and currently serves as a senior consultant with the Dorothy A. Johnson Center for Philanthropy at Grand Valley State University.

McMillian was involved in unifying United Way affiliates in Minneapolis and St. Paul, and said mergers within the organization have been ongoing for decades. He expects to see more of this metro area approach to the work that United Ways do as opposed to every county having its own separate organization.

“It used to be that people in St. Paul and Minneapolis literally did not go to each other’s communities very often,” McMillian said, adding that a regional airport and professional sports teams reinforced the area’s identity as the Twin Cities.

“If it’s one community, it needs to work together as one community,” he said. “It doesn’t make sense in my opinion to have multiple United Ways in one area that considers itself a metro area.”

Even though the three counties the United Way of Southwest Michigan will be serving are different from one another, they do share some similar needs, according to Murphy.

“Where we provide specific programming to two counties but the organization serves three counties, we might be able to expand those services to be more consistent across the tri-county region,” she said. “From a donor perspective, there are many that work in one county and live in another, (so) it will provide a more consistent message and experience.”

McMillian said these kinds of mergers are inevitable because communities have changed. He said without the consolidation, nonprofits lack opportunities to create efficiencies or strategies that save money and overhead.

Still, some amount of overhead is necessary, he said.

“You’re collectively working together to solve a problem and that takes infrastructure, which means you’ve got to have overhead and people,” McMillian said. “Volunteers need logistical help to do their job, but you’ve got to have paid staff to manage those volunteers, and too often people get focused on overhead and where the money goes.”

Murphy said the actual cost savings of her organization’s recent merger may be minimal, but the reduction of duplicative services will be great.

Finding sustainability

The ability of nonprofits to visibly demonstrate that they are being good stewards of donors’ money has become much more of an issue, particularly for younger donors who want to know where their money is going, in addition to seeing tangible results.

The emergence of this younger donor base leads Montgomery to question the sustainability of United Way’s workplace-focused fundraising efforts. He said that the changing U.S. economy has not been kind to United Way’s fundraising model, which works best at large companies with many loyal employees at each worksite. 

“Workers now move around more. Employee tenure is shorter and employee loyalty is much less intense and these things are not helpful to United Way,” Montgomery said. “Frankly, younger workers see little to gain in supporting United Way just because their older coworkers or company are asking them, as doing so is unlikely to get them promoted faster or protect them in a downsizing.”

He also cites the number of freelancers and workers in the growing “gig” economy who are structurally inaccessible to traditional United Way fundraising. 

“United Ways have had varying degrees of success in serving small to medium-size businesses. The smaller workplaces don’t get organized,” Montgomery said.

Given that Baby Boomers who have been loyal United Way supporters are retiring and increasingly will not be participating in workplace-based fundraising systems, Montgomery said United Way and its affiliates need to develop relationships with donors that will take them through retirements and beyond.

“Given how America has changed, the many United Ways need to find ways of creating the kind of giving relationships that survive job changes, stints in the gig economy and even retirement,” he said. “That really is the long-term solution.”

Adapting to shifts

McMillian said he thinks United Way and its affiliates recognize the need to work differently and are beginning to make the necessary shifts. Of greater concern to him is donors’ lesser focus on giving for the greater good of society, even while they have a strong affinity for one another.

“Factually, we see it going on in the fundraising and political world,” McMillian said. “It’s a lot easier to divide people than unite people. That trend has an impact on fundraising if United Ways are working to do it in a collective way instead. It used to be more acceptable for people to say they were more interested in the greater good of society, but also support other organizations because they believe in the greater good.

“If they’re not raised in a family that gives or are in a faith-based community, where else are they going to learn about it? You have to be with people who share a belief in the importance of giving. When United Way was in its heyday, one of the biggest impacts it had was teaching the next generation to share. When I started with United Way, I was in my 20s and all of my mentors were part of that Greatest Generation of people. They were scared to death that us Baby Boomers were going to be incredibly selfish and were not going to give.”

The reality, he said, is Baby Boomers turned out to be a very generous generation.

“We all learned how to give at the workplace,” McMillian said. “I stopped being a United Way CEO almost 17 years ago, but I continue to be a donor at a significant level because I believe so strongly that it is one of the best ways to give in a community.”

Read 4076 times Last modified on Wednesday, 11 September 2019 14:11