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Past divides United Ways

Jan 6, 2003  •  Post A Comment

Negotiators working to forge an alliance of the Chicago area’s two major United Way chapters must overcome a history of animosity between the rival fund-raising organizations.

The 2-month-old discussions, spurred by pressure from corporate donors and national United Way officials, figure to culminate in a shotgun marriage of back-office functions that is expected to take effect by this spring.

While the United Way in Chicago and the United Way of Suburban Chicago now say the combination will save millions of dollars, the groups have resisted joining operations for years. But with fund raising declining and competition rising, they’re left with little choice.

The reluctance to pursue a full-fledged merger reflects the simmering resentments and differing cultures and structures dividing the two groups. While no one disputes the logic of consolidating back-office operations-and few question the benefits of merging the two chapters altogether-crafting a deal that defuses tensions and reconciles the groups’ organizational differences will be difficult.

“It’s a great idea, but the question is whether the two cultures can mesh,” says Walter Ousley, director of operations at Catholic Charities and a member of the joint fund-raising campaign board for the two United Way chapters.

The Chicago group has emerged as the heftier fund-raiser. Its donors include most of the area’s major corporations, which also provide much of its personnel. As a result, its business practices reflect the efficiency big companies demand.

The suburban group’s practices, by contrast, reflect its disparate pieces. The group-whose staff is heavy on longtime volunteers-serves as an umbrella for 52 separate United Ways that deal primarily with small and medium-sized businesses and with individuals.

Unlike the Chicago group, which answers to corporate donors who demand to know exactly how their contributions are used, the suburban organization tends to run more like a traditional United Way, using its collected funds as it sees fit.

“Chicago is run like a corporation, and suburban is like a community chest,” says Laurence Msall, who worked on an audit of the local United Way in the 1990s, when he was vice-president of the Commercial Club of Chicago.

Over time, the Chicago chapter has earned the resentment of its suburban counterpart by scooping up most of the area’s major corporations as donors, and, more recently, casting eyes on the suburban group’s stable of smaller companies and individuals.

“In the past, there’s probably been some sense that Chicago downtown has all the answers,” a spokesman for the city group acknowledges. “At one point, we probably did feel that way. Now, we’re coming into this with a sense of humility.”

Outside pressures are forcing the groups to try to overcome their differences. Beating the drums for a merger are large corporate donors and the national United Way organization, which has engineered similar combinations in Minneapolis/St. Paul and northwest Connecticut and is actively brokering the talks here.

The corporations want greater efficiency, saying they are tired of dealing with multiple chapters and want their employees to be able to designate how their donations are used.

“I’m positive there’s significant duplication of costs,” says Mary Ann Mallahan, community relations manager at Glenview-based Illinois Tool Works Inc. “But we want them to be lean and mean. So, that’s what they’re working to be.”

Fund-raising falls

At its highest rungs, United Way understands it can no longer afford inefficiencies it has tolerated until now.

“From a foundational standpoint, the way we (process pledges) makes no sense,” says R. R. Donnelley & Sons Co. CEO William L. Davis, chairman of the joint fund-raising campaign and a proponent of the back-office merger.

Barbara Stankus, president of the suburban chapter, acknowledges that “our costs are increasing as our giving is declining.”

The economic downturn has taken a significant toll, cutting the groups’ combined fund-raising total by more than $6 million, to $88.8 million for the 2001 campaign, well below the groups’ all-time high of $105.4 million in 1991. United Way officials say that when campaign totals are tallied in February, they expect to fall short of their $86 million goal for 2002.

Adding to the suburban group’s woes are some embarrassing public squabbles. The umbrella organization recently lost a fight with a United Way in Lake County over which group gets to count more than $350,000 donated by Deerfield-based Baxter International Inc.

That dispute comes less than a year after charities unaffiliated with United Way accused the suburban group of withholding more than $105,000 in donations designated for them by DuPage County employees over a three-year period. After county officials intervened, the suburban chapter paid up.

New competition

Also, a rival workplace-donation group, the Public Interest Fund of Illinois, has filed a lawsuit accusing the suburban group of libeling it in pamphlets. United Way of Suburban Chicago declined to comment.

The Public Interest Fund is one of a number of small philanthropies fighting successfully for shares of the payroll-deduction market that United Way has dominated for decades. United Way is hoping that a merger will give corporations one less reason to consider the new competition.