Strangeness with United Way

John Heizer · September 2015

I'd posted this several days ago as part of another thread but it really does belong as a discussion of its own.

I've been struggling with a small, regional United Way. For several years in a row we've had to write off part of almost every pledge from them. It was totally baffling and made me seriously question their record keeping. We recently got an answer about why this was happening.

When UW gets a payment from the participating company it is just a lump sum of all donations via payroll deduction with no detail about how much from which donors. When UW reports on our designated funds they split that aggregate payment out per organization per donor based on percentages pledged per organization per donor. If an employee has left and is no longer contributing those "missing funds" get deducted proportionally across all orgs and donors pledges.

Consiter this scenario; John Doe and Jane Smith work for Megacorp. John makes a $4,000 pledge to AnotherCharity, Jane makes a $1,000 pledge to OurCharity. John leaves Megacorp before any funds are withheld and therefore will never pay anything on his $4,000 pledge. Each quarter UW will receive $250 from Megacorp (the amount that has been withheld from Jane’s paycheck for 1/4th of the year). UW takes that $250 and splits it proportionally between AnotherCharity and OurCharity based on the amounts of the original pledges (80% to 20%) which gives OurCharity $50 minus the fees. AnotherCharity still gets their 80%; $200 (minus fees) even though no funds were collected designated to them. So even factoring in fees as a cost of doing business, Jane will be left with an $800 balance on her pledge after all payments have been received, despite having had a full $1,000 withdrawn from her paycheck and given to UW.

It's crazy. We have no way of knowing how much from Megacorp has been pledged to other organizations which could dramatically affect our risk. What is to keep someone like John Doe from making a large pledge they never intend to pay just to ensure that their favored organization gets to skim money intended for other groups??

Our major metropolitan UW does a great job of correctly tracking donors. It's just this smaller UW that gives us this problem.

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Have others run into this? How do you handle it?

Jennifer Donlevie · September 2015

Very interesting John. I thank the donors for their pledge, but only record in our database what we actually receive. Also some united way's seemm years behind in distributing funds, so I'm not sure how people account for that either. I had a donor request her funds back from UW because she wasn't aware of the fees that were deducted. In the end, we thank for the entire pledge, but only record what we receive.

Daniel Noga 2 · September 2015

This is a problem I'd be willing to touch with a ten-foot pole--but nothing shorter.

It's a pickle, because it sounds like that UW branch is doing things in a pretty zany way that you have no control over. I can offer sympathy and say that I've had problems even with our major metropolitan United Way, with things just being way more confusing than I felt they should have to be, and on a fairly consistent basis. I always just chalked it up to the size and complexity of their operation, though I honestly don't know if that has a solid basis in reality. To hear the process you describe, though, makes me cringe. I can understand the desire for expedience, but from the very beginning--neglecting to itemize the donations coming from the employees--the process sounds fishy. We are Raiser's Edge users and to us, the impulse to sort everything out and keep good records is second nature. It's what we do, it's what this is all for. To read about a process such as the one you describe is a bit of an affront to me. Boo and hiss.

Can you set up some kind of coding to distinguish these UW gifts from others, so you at least know to expect that gifts and pledges from this UW branch won't necessarily reconcile? We do something similar to this to track certain planned giving like Legacy Society (a bequest program); for legal reasons, we can't consider a commitment like this, involving estates, to be a bona fide, solid pledge because the winds may change before the person passes away, or even in the estate settlement process. We still use the Pledge Gift Type in RE: to record these, but we have a "placeholder" Appeal called "Conditional" that tells us at a glance that we're dealing with a potentially mutable pledge. Once we actually see the money, we then re-code the gift as necessary. We treat these pledges differently in all of our accounting processes.

It would be a shame to have to go through all that because one organization is wonky, but could you establish something similar?

Jen Claudy · September 2015

This sounds illegal, or at least unethical, to me. If I made a pledge to that UW and 100% of my payments (less the fees) did not go to the charity that I designated, I would be very upset. We don't have this situation; we are a UW Agency Partner, so we get a UW grant every year. Those that choose to designate to our organization likely have no idea that we get nothing extra. The only way we would get additional funding because of designated donations is if the amount of those donations exceeds the total of our grant. Extremely unlikely. However, when our Payroll office sends in the contributions from our staff every pay period, they include a list of names and amounts so that UW knows how to apply those payments. I would think that it would be a completely reasonable request from UW to all companies to include such a list. And I assume our UW does this when they do their data entry.

Lisa Wheeler · September 2015

I too have had this issue with the United Way branches I deal with. Fortunately for us, we deal with very few gifts like this and even fewer large contributions (most of ours are under $1000). I receive the Payee Report each month and have to do some interesting calculations to even figure out how much was supposedly received per donor for the month. It seems to me with all the other third party companies that work with large corporations (Benevity - although that's another beast, YourCause, etc) for employee giving, that United Way could very easily keep track of each employee's contributions to report to us. Any time someone asks me about donating through United Way, I encourage them to donate directly to their charity of choice. The charity gets more of the money and less of the hassle!

Ryan Hyde · September 2015

I don't know if our Uway does this specifically, but we definitely have issues related to people leaving their job for whatever reason, which affects our payouts.

When we get the yearly pledge spreadsheet, we add each of these "pledges" as gifts, with a gift type of "other," gift subtype of "uway pledge," and several other markers that make it A.) really easy for our gift officers to know what the gift was for, and B.) impossible to post into Financial Edge. We do not treat them as pledges at all, knowing full well that even in the best case scenario we will never see the pledge fulfilled due to fees (8% in our area). We keep the gifts on the donor's record to register the donor's intent to give. I do use them in certain analytics, like our year coverage ratio (which is kind of a bigger, more encompasing LYBUT/SYBUNT report), but they don't get put into yearly tax letters or anything like that.

Also, we're a pretty big org dealing with a metro area Uway with lots and lots of donors sending money our way, so just dealing with the logistics of pledge payments based on our monthly disbursement report from Uway would be more work than I'm willing to do, since there would be very little payoff in the end.

Again, this doesn't address your question directly, as I don't know if we have a similar problem, but if we did have a similar problem with our UWay, we simply wouldn't notice it because we would have no pledge balances to write off.

Barb Kunkel · September 2015

Ryan,

We also receive donations from at least 7 different United Way Agencies. Each agency reports information differently. I have also seen from our local agency where a donor will pledge an amount but may not pay the full pledge payment. Our local United Way agency will make quarterly payments May, August, November, and February. For example John Smith pledges $400 in 2015, designated organization will not see full payment of the pledge until Feb 2016. All of this is between United Way and their donor. We do not record pledges for either United Way agency or for the donor because of this reason. We will record a gift typ of "Other" with an Appeal "United Way Designation" to thank the donor, either quarterly or yearly. That is for the agencies that provide a list of donors. The United Way donations are added as normal Cash gifts when we receive them.

Debra Holcomb · September 2015

A similar situation exists for us with the Combined Federal Campaign (CFC), the entity through which state, federal and municipal employees can give through payroll deduction. I met with CFC leadership a few years back to discuss challenges very similiar to what John describes. The CFC made it clear that these employees are giving to the CFC and not to our organization. The CFC is receiving the money and issuing the tax receipt. So now, based on that discussion, we send the CFC individuals (if we have their contact info and we often don't) a letter/email thanking them for choosing our organization to support through the CFC and we share the benefits of giving directly to our organization. We do not list their pledge amount, we do not provide them with any benefits or any donor recognition. When we've had questions from donors, we've directed them to the CFC. It might not be the best experience for these donors, but if they are not giving directly to us, we cannot communicate, cultivate or steward them in the manner we feel is appropriate.

The only thing I really can do about this situation is to educate the donors when I can -- this applies to any 3rd party/workplace donation. Most of the time the donros do not realize the fees taken out or the delay in receiving the funds and they are not pleased when I explain how the process works. I have been able to convert several to monthly EFT donors.

It sounds like we are in the minority for managing gifts this way but if these donors wanted to give directly to any of us, they could.

Christine Cooke 2 · September 2015

Oh yay UW, my favorite! feel the sarcasm ooze.

What everyone else is saying here is true. Every branch has their own, rules, systems, calendar, schedule, % of fees, reporting or lack of reporting system.

I learned a hard and messy lesson to never ever put UW pledges into RE as pledges. Not just because of the write offs and/or balances you have to carry for up to 2 years until you are absolutely sure that UW is finished with distribution on that commitment. Or because of the whacky way some branches, all branches, do math. I worked for an org that had distributions from several UWs across the country, some small, some very large. Our local major metro branch was the culpril that took months and then trying to negotiate a solution with our finance department. I had inherited the mess to figure out.

It is related to distribution. I started getting distribution reports that had negative amounts next to each donor name! What? After multiple phone calls to get through -- they admitted that they had received funding/grant and distributed it, and then discovered they distributed to the wrong charities. There was never a letter, phone call or any communication explaining the negative amounts. But that was their way of fixing the distribution that should have never happened. They planned to continue with the negative amount reports until all these charities were flush with what they should have really received. In the meantime, there were all of these pledged entered in RE that had some actual payments on them, and then all of these negative amounts -- you cannot enter negative amounts into RE!

The finance department and I came up with a strategy, after much discussion about fallout, to flag those pledges and enter the negative amounts as positive amounts against the pledge in order to make the pledge go away, writing them off was not an option, since we had no idea how much to write off for each donor. Once the pledge was "paid" we could ignore the negative amounts on the UW reports until they became positive numbers again.

Also during this whole debacle it was discovered that every UW has a different payout schedule. Not only quarterly, monthly, sem-annual etc. but also length of time. This particular branch had an 18th month payout schedule and it did not necessarily begin right away, it could be a year after the donor made the gift.

So yes, thank the donor for the pledge and record the incoming funds as gifts with a flag that it's UW funds. That is what my gunshy self suggests.

Heather MacKenzie · May 2021

#GNinja

Strangeness with United Way

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