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No one would deny the good work done by the United Way, particularly in how it focuses on local needs. But the charitable organization's accounting practices have been questioned and it would be wise for United Way officials to clear the air as quickly as possible.
United Way of America guidelines allow the association's 1,400 local offices (which operate independently) to count contributions they raise for other organizations as their own, the New York Times reported. For example, the United Way of Tucson, Ariz., credited itself with about $1-million it had collected on behalf of California charities, even though the money would not be used in Tucson. That practice has occurred throughout the county and with large amounts of money.
While some United Way officials have argued there is no harm done by such financial reporting, it could make the organizations appear to be more efficient than they actually are. United Way of America reports that on average only 12.7 percent of contributions go to administrative costs, but if that percentage is based on an inflated revenue figure, it would not be accurate. And that would be a breach of public trust.
A similar practice has showed up locally. The United Way of Pinellas County took credit for $1.6-million contributed by Eckerd employees around the country because the money was sent to the drugstore's corporate headquarters in Largo. Yet that money was distributed back to local agencies where the contributions originated, and therefore didn't benefit local charities. Another $400,000 was counted twice by both the Pinellas and Hillsborough organizations because the contributing companies do business in both counties. Now that the two groups have merged into United Way of Tampa Bay, such contributions will not be reported twice, said CEO Doug Weber.
There is no suggestion that the accounting practices led to any misuse of funds. To the contrary, the United Way continues to support needed services in our local communities.
But a reform effort under way at the national level is welcomed. Weber is a member of the United Way's National Professional Council, which has approved new standards for financial reporting that could become a requirement for membership for the local offices. "I think there needs to be some standards that we all comply with," Weber said.
He is right. In the current climate of mistrust of corporate accounting practices, the United Way cannot afford to raise doubts about its honesty. The sooner United Way organizations can put such questions behind them, the sooner they can put their full energies into their important charitable work.