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December 5, 2019; Houston Chronicle

There is no doubt that handling the decline of a business model can be hard. At some point, though, someone will usually spell it out in a clearer way than the United Way has done to date. This article in the Houston Chronicle addresses a local decline in the context of the national trend, but it fails—still—to call the question.

Erin Douglas at the Chronicle writes,

United Way Worldwide, the parent organization headquartered in Alexandria, Va., had a $12.7 million deficit last year…

Houston’s United Way is projecting a $60.1 million budget to spend on grants for the fiscal year 2019, [CEO Anna] Babin said, down 23 percent from fiscal 2018, when it spent $77.9 million in the aftermath of Hurricane Harvey. Approximately $9.7 million of spending on grants in 2019, or 16 percent, is allocated to signature services: the 211 Texas/United Way 24/7 helpline; area service centers; NonProfit Connection, which supports the organizational capacity of area non-profits; and the United Way Community Resource Center, which provides meeting spaces for area nonprofits.

That leaves $50.4 million in grants undergoing the strategic review.

All of those signature services probably can be counted as add-ons to what most nonprofits really want out of the United way—money. But the United Way of Greater Houston has been on a five-year decline, except for 2017, when it handled donations in the aftermath of Hurricane Harvey. In 2018, it had a $30 million deficit.

The language the United Way of Greater Houston uses sidesteps the central issue, insisting that its current “reorganization” is not flowing out of a “cost-cutting” mindset, but a “second century vision” that will narrow the focus of its giving to “working, low-income families;” this evidently will require a comprehensive, two-year review of its grantees/affiliates.

There are any number of ways to deny reality.

“Let’s face it, some programs may not fit as part of our new direction,” said Babin, who announced her intent to resign this March last spring. “It’s going to be a difficult thing. But we will work on a transition plan on how to taper down investments.”

“Philanthropy is a competitive arena,” said Steve Stephens, founder and CEO of Amegy Bank and a board member of the United Way of Greater Houston. “Donors now have higher expectations about the best use of their resources.”

But for affiliate organizations, the stakes are high, and they have been trying to get ahead of the United Way’s new and improved focus.

Douglas explains,

Many leaders of organizations that receive funding on an annual basis said the change has been rolled out to them slowly, so they weren’t taken by surprise, and some have adapted as a resultThe Montgomery County Women’s Center, for example, beefed up programs with financial literacy initiatives. Raleigh, the CEO, said the center, which typically receives a little more than $400,000 from United Way each year, added a financial case manager to their staff to counsel their clients.

This kind of turning oneself inside out for cash is familiar to many nonprofits, but it can be a losing proposition as they struggle to keep up with the prerogatives or “signature programs” of their traditional funders. The new United Way “theory of change” in play in Houston has to do with “ALICE” (asset limited, income constrained, and employed) families, in essence not only narrowing the focus but imposing a “work requirement” on the funding scheme.

“United Way is in a position to address that in a way that no one else is,” said John Gremp, former CEO of FMC Technologies and board member of the United Way of Greater Houston. “I would hate to go to a donor without a story. People like focus.”

Of course, people also like authenticity and humility.—Ruth McCambridge