Trouble in River City

Top Executive Jumps Leaking Ship:

What’s Ahead for the United Way?

What’s Next for Agencies It Funds?

                                     By Edward Shanahan

 Whether he was pushed or jumped, United Way President Lewis Stess is gone, but the turmoil swirling around the agency is not likely to abate.

 As the organization responsible for raising funds for 27 social service agencies in Hampshire County anticipates launching its annual appeal next month, the United Way finds itself mired in chaos and disarray.

 Based on interviews by downstreet.net over the last several weeks, it is clear that there is not only anger, but hostility, at the operating agencies that were stung by deep 11th-hour cuts in this fiscal year’s allocations.

 And there is reason to believe that those individuals who contribute money to the United Way are equally upset with the way the umbrella organization has performed in recent years.

 Some even say they won’t make good on their pledges, but send the money directly to their preferred agencies and bypass the United Way completely as a way of sending a message.

 “I hope that isn’t a problem,” said Ronald Speakes, executive director of the American Red Cross of Hampshire County.

  Should that happen, some agencies might find they will get even less United Way support this year than they had been promised, which would make a bad financial situation even worse for the agency.

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 Asked to respond to that scenario, Julie Pokela, incoming chair of the United Way Board, said: There is the “potential for that to happen … that’s a danger,” which is why the United Way has to “regain the trust of the community and the partner agencies.”

 If agencies go off on their own to raise money, and give up on the United Way, she said, that would be damaging.  She readily admits that there is widespread anger directed at her organization as a result of the unexpected cuts in financial allocations to member community agencies. The United Way, she said, “can’t succeed without the trust of the community and the trust of the agencies … what has been going on is damaging to the United Way.”

 In answering the question as to how the organization plans to turn matters around, she said “the board hasn’t made a final decision, but what we can do is show the community and the agencies that we are taking action, and give them more confidence in us.”

 The Sept. 6 announcement that Stess, president of the United Way since 2003, is leaving for unspecified reasons, apparently is an element in the board’s overall plan to restore public confidence, but that might not salve all community hurt and bitterness directed at the United Way.

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  Digging the United Way out of the hole it finds itself in will not be easy or, perhaps, even possible, according to those who talked to downstreet.net about the United Way and its impact on the social service agencies it funds.

  Jane Banks, executive director of Jessie’s House in  Amherst,  said it was not the United Way’s decisions alone that will resolve the organization’s problems and address community fears.

 The agencies themselves have to become more active in the process, she said. “We all need to be involved, we all have to be at the table” and to have what she termed a “role in the recovery.”  Most importantly, the United Way board members and executives “need to listen,” she said.

 Member agencies received a total of some $200,000 less, depending on whose figures you trust, for the new fiscal year, which began in July, and most local agency directors are scrambling to figure out how they are going to make up for the surprise funding shortfall, which they learned about only three weeks before the start of their fiscal year.

 “We are devastated,” says Paula Cykowski, long-time director of the Easthampton Community Center, which had its allocation cut by 41 percent from $14,000 to $8,000.

 Renee Moss, director for 21 years at Big Brothers Big Sisters in Amherst, reacted similarly. “It’s devastating …  we budget mindfully, carefully and responsibly.” The cut of $10,000 in allocation returns the agency to the level of funding it received from the United Way back in 1996,” she said.

 Speakes, of the local Red Cross chapter, has seen its funding from the United Way reduced from $56,000 in 2000 to its current figure of $16,000, and now makes up only 8 percent of the Red Cross budget. Last year the chapter received $26,000 and in the past had gotten as much as 30 percent of its funds from the United Way.

 “A number of executives are very frustrated and angry,”  he said. “It’s widespread, they’ve been very vocal about it in meeting with the United Way; this isn’t a Red Cross issue, all of us want the United Way to help us work this out…”

 However, downstreet.net found that directors and board members at some agencies did not want to speak on the record, fearful of inviting retaliation from the United Way.

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Yet, taking a forceful position, Kay Sheehan, whose work on behalf of countless community organizations is legendary, says simply: “it’s all a mess.”

 Sheehan became so frustrated with her inability to obtain accurate and timely information about United Way spending that she resigned as a member of the board more than a year ago. She directs much of her criticism at Stess, who she accuses of spending too much money on unproductive fund-raising events, adding staff to the United Way while agencies have to cut back on personnel, and not being forthcoming about United Way finances.

 Attempts by downstreet.net to interview Stess prior to his sudden departure were unsuccessful despite three telephone calls to his office, a personal letter and a visit to the United Way headquarters on King Street to set up a meeting Appointments were scheduled on two occasions only to be canceled by Stess at the last minute. A subsequent e-mail message went unanswered as did another phone call.

 It seemed to be a case of avoidance, and an official unwillingness to discuss United Way problems, even as agency heads were outspoken in their criticism. Stess preferred to let others talk for him.

 Thus, it was left to Pokela who takes over as board chair on Oct. 5  to respond to the mounting discontent among contributors to the United Way and among agencies that depend so heavily on the umbrella organization.

 She acknowledged that what the United Way faces is “an actual” problem, and not merely a public relations stumble in its failure to adequately prepare the agencies for the bad news about funding reductions. She said the United Way would not be able “to spin” itself out of this fix, although it has hired a new vice president for communications.

 She explained that it was “never the intention” to cut allocations to agencies, but the 2006 United Way fund drive came up $100,000  short of its goal, raising $1,522,521. Another $100,000 was earmarked from three in-house programs, First Call for Help, Success by Six, the new Volunteer Center and the federally-funded Retired Senior Volunteer Program.

 Thus, total allocations had to be cut by to $527,636, she said.

 The numbers thrown around by the United Way this year in defending its decisions are constantly changing, as are the reasons for the cuts, as well as how decisions were made about how much less individual agencies would get.

 Like many agency officials, Banks at Jessie’s House finds many of the explanations for the funding shortfall less than credible.  Calling the United Way financial reports “smoke and mirrors usage,” she says what the agencies are look ing for is more “accountability” and a clearer picture of whose responsible for “steering the ship.” The hasty departure of Stess did not provide answers to these questions, she suggested.

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But clearly there is a good deal less money in gross dollars available for the individual agencies than has been the case in the past, and a larger percent of the money raised stays at the United Way rather than being disbursed for agency services and activities.

 For example, according to financial reports filed with the IRS on Form 990, the United Way of Hampshire County in 2002 had revenue of $1,331,341 and grants or allocations of $892,928; in 2003 revenue was $1,113,211 and allocations  of $841,828; in 2004 revenue was $1,516,172 and allocations to agencies amounted to $800,082.

  Reports for 2005 have not yet been filed, but for 2006-2007, nearly $1 million of the total $1.5 million raised, or almost two-thirds of the revenue was earmarked for the United Way, with only $527,656 going to the so-called “partner” agencies in the community.  In other words, allocations have gone from a consistent level of more than $800,000 a year for the past several years plunged to $527,000 this year, a huge decrease, even as revenue remained virtually stable.

 A major increase in expenses, it appears, is for fund-raising, which averaged about  $150,000 for the years 2002 and 2003, and rose to $234,507 in 2004, and increased again to $259,448 in 2006, even though the additional spending resulted in a decrease in the actual money raised by the campaign.

   Pokela said the United Way is attempting to move in the direction urged by the United Way of America of working with community agencies “to target some issues,” and ”address problems more permanently.”

 “Instead of raising money and giving away money and giving money to the same agencies and having the same problems continue,” she said, the new approach is described as a “community impact model.”

  The “community impact” approach sounds “like it is right on target, “ says Heidi Nortonsmith, executive director of the Northampton Survival Center, but what is the United Way?  “Am I the United Way, are the agencies and donors and beneficiaries and clients it serves the United Way?”

 Agency directors with long experience in the community and in social services, are puzzled about the meaning of “community impact model.”

 So were those who received a form letter from Stess dated Aug. 14, apologizing for failing to “adequately communicate the decline in our annual campaign and the resulting decrease this had upon the funding to our community partner agencies.”

 In the letter, Stess wrote the following: “Simply put, we are in the  position of transitioning United Way of Hampshire County from an organization that focuses on fundraising, to an organization that acts as a catalyst and a resource for a better community, thus making a bigger impact.”

 Agency directors and personnel who talked to downsteet.net remain perplexed by what this means – they need funds from the community to operate and most feel they already make a strong impact.

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 Some also question whether it is a proper function of the United Way to be running its own programs, such as the Howe’s Volunteer program and an early education program (Success at Six), which siphons money from existing agencies.

 Speakes said “in my memory,” the United Way staff consisted of four or five people four years ago. It now “numbers 13, a big difference,” he said. At the Red Cross, he said, he’s had to reduce staff by having people do multiple jobs.

 Pokela said that the “core” staff at the United Way remains “about 5”  but there is an increase for such programs as First Call, RSVP and other new United Way initiatives.

  In trying to explain the new approach, Pokela said: “We are looking at issues in Hampshire County” to attempt to “change underlying conditions in your community permanently.”

   The agencies knew the United Way was moving in that direction for the last few years, “but they did not have an expectation that allocations would be cut,” she explained.  Such cuts “were not a conscious decision” on the part of the United Way board, she said.

 Conscious decision, new philosophical directions, just bad management, or even more sinister explanations for the sudden decline in funding—agencies are now having to going back directly to the community for help.

 The Red Cross chapter got the ball rolling with an Aug. 4 letter of solicitation to potential donors, citing its reduced support from the United Way.

 Similarly, the Northampton Survival Center has - launched its own fund-raising effort. In a Sept. 8 letter, Nortonsmith wrote: “Ordinarily our request for mail donations for the fiscal year begins in November, but this year we can’t wait that long …”

  In the past, the months of October and November were reserved for the United Way campaign with a “blackout” of individual fund-raising for member organizations. But then the United Way campaign turned into a year-long effort, and now it is every organization for itself, it seems.

 For Paula Cykowski, who has been director of the Easthampton Community Center for 26 years, “we’ve always gotten a gold star,” when its programs were evaluated in the past. . “We do so much with so little.”

   Viewing from a distance the turmoil at the United Way, Cykowski says: “I heard that they have vastly increased their staff. I hear they get good salaries … when I leave I have no pension, no 401K. I just happen to like what I do.”

 As for the future of her agency: “We’re just a little community center. We take it day by day. In the end we could close; I’ll close when the bills come and there’s no money, that’s it.”