A woman, a priest, two ministers and a rabbi  ……

It sounds like the beginning of a bad joke, but actually they didn't walk into a bar.

Instead, in Denver 1887, Frances Wisebart Jacobs, the Rev. Myron W. Reed, Msgr. William J.O’Ryan, Dean H. Martyn Hart and Rabbi William S. Friedman created the nation's first united campaign, and established an organization to collect the funds for local charities, to coordinate relief services, to counsel and refer clients to cooperating agencies, and to make emergency assistance grants for cases that could not be referred. That year, Denver raised $21,700 for this greater good, and created a movement that would become United Way.

That was 128 years ago. In the years since, the United Way has changed dramatically, particularly in the last 10-15 years.  You may be surprised to learn that:
•    United Way is growing in 41 countries, including Brazil, China, India, France and Eastern Europe; 
•    United Way builds opportunity and fights poverty, rather than serve as a community chest and clearinghouse for funds; or
•    While they share vision, values and brand across continents, each of the 1800 United Ways around the world is independent and tailors their work to local needs.

Prof. Aprill – Ellen – asked me to share with you what the 21st century United Way is and does, and I hope doing so will also provide spur some thinking about current trends and challenges for philanthropy more broadly. [These remarks were given November 19, 2015 to the Western Conference on Tax-Exempt Organizations, an annual conference of lawyers, accountants and others specializing in representing nonprofits and foundations.]

I lead United Ways of California, the state network of California’s 34 United Ways. That is my vantage point. Our state network is voluntary; our member United Ways choose whether or not to pay dues and participate with us. Our three primary purposes are to lead their state and federal policy advocacy, promote shared learning and cooperation, and lead collaborative projects, such as the health enrollment work some of our members do.

The Shrinking Middle Class

1 in every 3 California households struggles to meet the cost of basic needs as we demonstrate in our recent report on financial stability, Struggling to Get By: The Real Cost Measure in California 2015.  This is over twice the official federal poverty rate.

And it isn’t for lack of trying. 9 in 10 of these families include working adults, many of them working multiple jobs, and making difficult tradeoffs between nurturing, safe care for their children, needed health care, food or education and training to boost their earning power.

In the last three decades, California’s GDP has increased 123%, while median household income has been flat, increasing a mere 7%. A similar trend holds at the national level, it’s even a little bit worse. If the median household income had kept pace with economic growth since 1970, it would be nearly $92,000, not $50,000. 40% of today’s workers make less than the value of the 1968 minimum wage (inflation adjusted $16.50).  Two generations of women entering the workforce haven’t solved this squeeze – the average 2-worker family today has less discretionary income than the 1-worker family of the 1970s.

This hollowing out of the middle class is perhaps the biggest social fact for United Way and its approach to philanthropy – at least in the U.S.  The people affected by this trend have historically been our core donors, but increasingly they need our services.

The Building Blocks of a Good Life and a Strong Community

Mary Wollstonecraft famously wrote: “It is justice, not charity, that is wanting in this world.” For all the growth in philanthropy over the past 50 years, this is as true as it ever was.

At its best, the United Way, and philanthropy more generally, offers us an opportunity pursue justice.

Our mission is to “improve lives by mobilizing the caring power of communities around the world to advance the common good.”

The United Way brand is very well known and highly regarded, but in our surveys most people say they don’t know what we do, and most of those who do think they know what we do think we are still only raise money to support nonprofit agencies. That is the old model.

The new model is focused and goal-driven – striving for justice, not just charity. We pursue declared goals for community change in health, education or financial stability, and take responsibility for driving results.

United Ways believe everyone deserves a chance to build a good life.  Simply put, people must have access to health care to ensure good health and in order to learn, people at all ages must have opportunities to learn in order to prepare to sustain themselves and their families, and people must have pathways for earning a decent living and building financial stability for their families.

So United Ways build opportunities for people to lead successful lives by focusing on the three key building blocks of a good life: education, income and health.

While every United Way chooses how best to address local health, financial stability and education goals, two examples of work broadly shared across the country – our income tax assistance and 2-1-1 – demonstrate how local solutions can go to scale.

•    United Way’s free volunteer income tax assistance, called VITA, uses volunteers and increasingly, free online tax filing to help low and moderate income families save filing fees and, vital for many, access the Earned Income Tax Credit. Since 2009, this free tax preparation assistance has put more than $10 Billion back into the hands of working families.

2-1-1 is a free assessment and referral service that use the three-digit dialing code 2-1-1 to connect people to essential community services, 24 hours a day, seven days a week, in multiple languages. There are 243 2-1-1 providers in the United States, and half of those are operated by United Way.  Another quarter are funded by United Way as their largest private supporter.  2-1-1 programs respond to 16 million callers and two to three times as many web queries annually.  United Way is leading efforts to move 2-1-1 into the information age, to use technology to respond to changing information-seeking behaviors – people of all ages increasingly use the web and text, and even expect information to be pushed to them

Beyond these examples, though, United Way’s core way of operating is not just to deliver or fund programs, but to convene community members and leaders, donors, businesses, nonprofits and the public sector together to work on large-scale problems.

Some examples:
•    United Way of Greater Salt Lake in Utah organized a community-wide initiative to provide preschool for at-risk children, including passing state legislation and securing one of the first pay-for-performance “social impact bonds”
•    United Way of Greater Boston is housing the homeless, using another pay-for-performance social impact bond (coincidentally, 2 of first 3 uses of social impact bonds in US were with United Way)

•    Closer to home:
o    United Way of Northern Santa Barbara County’s “Power of Reading” program brings the school district, principals, teachers and local business leaders together to produce 2- and 3- grade level improvements in reading for 3rd graders, using an innovative online tool and rigorous measurement. As you may know, reading at grade level in 3rd grade is a key indicator for likelihood a student will graduate high school. One student wrote “Before I started Reading Plus I didn’t like reading because everyone would laugh at me. But now my reading is better and it makes me feel good, so I don’t care if people laugh anymore.”
o    United Way of Greater LA is tilting at two large-scale problems, ending homelessness and making LAUSD work better for low-income students, and anchors collaboratives of funders and community organizations dedicated to each challenge. (They are hosting their annual Homewalk for homelessness this Saturday at Exposition Park if you’d like to see the great work they do)
o    I could give an example of community initiatives lead by each of our California members, but I’ll stop here.

Advocacy for Impact: Changing the Odds of Success for Our Clients

We know, though, that we cannot rely solely on providing and funding programs – we cannot social-service our way to a thriving society. To take our community impact to scale, we need to catalyze changes in attitudes, behavior and policies that will be more supportive of the people we serve.

In fact, creating large-scale change in policy or cultural environment is the highest level of strategic impact United Way or any philanthropy could hope to achieve.

You don’t need to take my word for it, of course – the four levels of philanthropic impact were put forth by Michael Porter, the international expert on strategy from Harvard Business School, and Mark Kramer, who pioneered the study of collective impact in philanthropy. In their article that kicked off the strategic philanthropy movement, Porter and Kramer identified changing the rules of the game – changing the systems and environment affecting outcomes at scale - as the highest level of impact for philanthropy.

So advocating for such change, therefore, is central to achieving our mission at United Way.  In fact, “Give – Advocate – Volunteer” is our tagline, and advocacy is a core strategy for achieving our goals. 

As a public charity, of course, United Ways (along with community foundations and other public charities) have much more latitude than private foundations to get directly involved in policy change. And I’m proud that we get in the mix, actively support or oppose legislation and administrative and regulatory changes.

We see our role as bringing diverse and unlikely stakeholders together to solve problems. All United Ways are nonpartisan and we believe strongly that the involvement of all sectors – business, nonprofits, philanthropy, government, and interested citizens – is required to make progress on vital challenges affecting the health, education and income prospects of low income children and families. We work closely with local United Ways to help them involve their board members, volunteers and supporters in these important causes. These local volunteer leaders are the most credible and effective advocates.

Often, we are able to meet with legislators who resist meeting with other groups supporting our issues. In many cases, our ability to work with those who disagree with us, to tamp down opposition, is as valuable to success as our work with those who support our issues.

A couple recent examples of success include establishing a new California refundable earned income tax credit, and a law expanding Medi-Cal coverage to undocumented children.  Now, we are working hard on the next step, “winning the implementation” of those policy changes - the VITA programs I mentioned earlier will play a key role in both cases.

United Way's Role in Philanthropy

We're engaged in nearly 1,800 communities across more than 40 countries and territories.  In many communities, we're the only nonprofit building up the cornerstones of education, financial stability and health—and the only nonprofit bringing people together from all walks of life to be a part of local solutions. 

Not “Feral Cats”

California’s United Ways are 34 independent public charities that share the same mission, brand, focus areas and approach.  Their shared mission and brand enable them to work together across geographic boundaries – county, region, state and national – while also being responsive to the characteristics and needs of their local communities. The same holds true in other states and internationally.

But there is no command and control; our California United Ways act as a network, but this requires persuasion and constant communication. I remember talking with a potential board member, a very successful businessman from the franchising field, and he couldn’t get over it. He kept asking, “So, you don’t have a stick to make locals do what you want, and you don’t have money to buy their cooperation, a carrot to incentivize them?” And I responded that’s correct, in most cases we don’t, though in some cases we can provide financial incentives for more cooperation. We have to rely on persuasion, but there is an expectation that United Ways will help each other, there is a lot of good will, and once they have become persuaded to commit, local United Ways will do things no central management would think of or be able to compel.

Philanthropy by and for the Middle Class – and Squeezed

United Way raised a total of $5.18 billion this past (2014-15) year. Of that total, $3.89 billion was raised in the U.S. and $1.29 billion outside the U.S. Approximately ¾ of these funds are invested in United Way’s impact goals, and ¼ are designated to other charities by donors (but donor designation is somewhat more prevalent on the West Coast).

United Ways are not endowed organizations, which brings both advantages and disadvantages. United Ways put their funds to work within 12-18 months of raising them, so the time-value of money means contributions to United Ways can have greater impact than if they were held and spent from an endowment.  An endowed foundation would need $80 Billion in assets to make a similar scale of philanthropic investment as United Way every year. Here in California, it would take an endowment of $4 Billion to support the investment our local United Ways make every year. Without endowments, though, the year-to-year prospects of United Ways are much more uncertain, and they certainly are more vulnerable to economic fluctuations.

In many ways, United Way is “Philanthropy for the Middle Class.” In the US, we have approximately 8.5 Million donors, and the average gift is around $350 a year. We reach most of those 8.5 Million donors through workplace giving.

In the 1950s, 60s and 70s, the heyday of large employers, workplace giving was the perfect revenue model.  Things are very different today, though. Every year large companies employ fewer people – AT&T had over 750,000 employees in 1964, when it was the nation's most valuable company; today Google has roughly the same market capitalization as AT&T had in 1964, yet has only 55,000 employees. Today the four largest U.S. companies have twice the value of their 1964 counterparts but only a quarter of the employees.  

The compact between businesses, individuals and communities has changed drastically, and United Ways face significant challenges in adapting and thriving. United Way still receives support from millions of moderate-budget donors, made possible by historically strong relationships with business and major corporations, but the reliance on corporate campaigns has meant weaker direct ties to individual workers. United Way has been fortunate to maintain moderate growth in revenue by raising more money from a smaller number of donors. Workplace giving may not disappear entirely, but it is imperative that United Ways transition to direct engagement of millions of individual donors outside the workplace.

We think a key to doing that is engaging and mobilizing people to volunteer and advocate, not just to give money. Millennials and younger folks especially want to be actively involved in deciding what gets done and in making it happen.

Philanthropy Must Be More Than Just Donors' Intentions

The Chronicle of Philanthropy’s annual review of the largest charities, the Philanthropy 400, just came out a couple weeks ago. United Way’s fundraising tops the list of US charities, still, but perhaps for the last year. For the last two years, Chronicle of Philanthropy has predicted that Fidelity/Vanguard, one of the commercial donor-advised fund vehicles, will pass United Way as the largest US charity.

These days, it does seem the commercial donor-advised funds have the perfect revenue model – they already hold and manage funds for millions of people, so they know who to approach about creating a donor-advised fund, and they often know a great deal about their interests already. And they are enjoying explosive growth. While contributions to community foundations have grown from $2.9 Billion in 2000 to $5.8 Billion in 2014, the commercial donor-advised funds – Vanguard, Fidelity, Schwab, Goldman Sachs – have grown from $1.5 Billion in 2000 to $11.8 Billion in 2014, over 800%!

But comparing United Way to the commercial donor-advised funds is not an apt comparison. I don’t mean to be critical, the commercial donor-advised fund firms do play a valuable role, but in my view, they are not charities with a mission, advancing a point of view about strategic goals, so much as they are financial firms providing services to their investment clients. Community foundations and other nonprofit foundations that also use donor-advised funds, like some United Ways, typically have a point of view, a set of charitable and philanthropic goals they prioritize, even if they also emphasize serving the views of donor-advisors.

United Ways aren’t trying to compete as providers of financial service to donors. Though we do seek and receive support from high net worth donors (for example, a donor recently pledged $10Million to United Way in Knoxville), our goal is to increase funds for identified community impact goals and to put the funds to work as quickly as possible. And if over time more of that funding comes from clients of the commercial donor-advised funds, so much the better.

An aside here about donor intent – there’s no denying that under both our free market values and our legal principles, donor intent is paramount. But certainly donor intent can’t be the only consideration – as a society, or as an enterprise like Vanguard, or a community foundation or a United Way, we need to hold ourselves accountable for what we produce, for what the aggregation of donors’ intentions accomplishes.

This brings us back to justice, to expanding opportunity, as the core of the work United Way and our partners do together.

I vividly remember the embarrassed silence that followed when a colleague, over a decade ago, stood up in a room full of foundation leaders at a Council on Foundations conference and asked “What if we all committed to one common goal – to end child poverty in the U.S. in ten years?”  People reacted as if she had made a rude noise; they avoided eye contact and sat in awkward silence.  It was painful, but beautiful too.  Her question evoked the possibility of collective progress to a vital goal, and at the same time, it indicted everyone in the room, it called our commitment and judgment into question.

The beauty of the philanthropic and nonprofit sector is that each of us can choose which causes to pursue. That can make it difficult to maximize the scale and impact of resources dedicated to a problem, but that freedom is more valuable than the inefficiency it allows.  It’s often said of private foundations, “if you’ve seen one foundation, you’ve seen one foundation.” Likewise, observers often criticize nonprofits for operating in silos or duplicating efforts.  The promise of the United Way model is that leaders from business and labor, civic and public officials and community leaders, school districts and teachers, can come together to work toward a shared goal, like eliminating child poverty, as my colleague so rudely demanded over a decade ago.

Engaging People's Aspirations

I will close by asking all of you to get involved in this work of creating opportunity, by becoming a United Way volunteer or donor. (Forgive me, but it would be “malpractice” of a kind for me not to take advantage of this opportunity.)

But there is something perhaps more important, something you could do in your everyday work (perhaps many of you already do), and it’s an idea I borrow from a friend I was talking with recently. She works for a firm that provides financial services to high net worth clients, and her role is to help clients get involved in philanthropy. As she described it, her work requires great patience; her clients often think of themselves as having come to the firm for financial services, at their direction, not for philanthropic advice, and looking through that lens, they don’t, at first, see her as providing expertise and counsel that they need.   She shared with me that what works best for her is to ask her clients about their aspirations. Though they have reached a point in life at which they feel very successful, she would ask them what they feel is missing in light of all their success, what they feel is unfinished or makes them concerned for the future. Only after they share their personal aspirations would they be ready to put her expertise to work. 

Most of you here today advise donors or those who work closely with them, in some way or another. When your clients come to you, they may present themselves as seeking answers to complex legal and accounting questions, and it may seem only responsive and professional to dive into those complex questions. But it may be most helpful to them, to our communities, and to your own relationship with them, if you help them explore their aspirations first. They and you may find what they most want is that opportunity to seek justice, to put their values into action.

And if so, I hope they will consider engaging with United Way.