Expected ’86 Shortfall Intensifies Soul-Searching at L.A. United Way

Mariachis will serenade 400 United Way volunteers at a luncheon today marking the end of the annual fund-raising campaign in the downtown area. But while there will be plenty to celebrate, the Mexican band will not be playing for a victory party.

The downtown campaign--which provides one-third of the Los Angeles area United Way’s revenues--collected more pledges than last year, but not enough to meet this year’s goal, officials say.

Confidential Reports

Overall, the Los Angeles area United Way, the nation’s largest, expects to fall short of its ambitious 1986 goal of $86 million when the campaign officially ends April 28. Two United Way executives said that weeks ago confidential internal reports indicated the shortfall would be in the range of $2 million to $4 million.

Walter F. Beran, a vice chairman at the accounting firm of Ernst & Whinney who is the volunteer campaign chairman, said the shortfall would not exceed $1.5 million.

The failure to meet its goal comes at a time the Los Angeles area United Way is seeking to cope with internal problems while searching for better ways to reach out to a growing and changing community.

A $1.5-million shortfall still would mean that United Way has attained $84.5 million in pledges, a 6.1% increase over last year’s pledges in Los Angeles County plus western San Bernardino County, which was annexed to United Way Inc. last year.

Other major Southern California United Ways fared much better this year. The Orange County United Way met its $18.4-million goal, a 12% increase over 1985. The San Diego United Way/Combined Health Agencies Drive reached its $22-million goal, a 10% increase over last year. The Ventura County United Way surpassed its goal, so far raising $5.3 million, an 18% increase over last year.

Major Changes Sought

The expected shortfall at the Los Angeles area United Way, which would be the sixth in seven years, comes as growing numbers of high-level United Way volunteers are pressing for major changes in the organization to broaden its appeal and significantly increase its revenues to meet growing demands for services.

United Way Inc. recently has responded to that pressure in several ways, including adopting a policy aimed at adding more minority-controlled charities to its membership. In addition it has created specialized task forces to recruit Latino and Asian leaders.

It also comes as the United Way staff is racked by what more than two dozen professional employees say is growing turmoil. They note that in the Planning and Resource Development Division, with a staff of 15 professionals, there have been 22 resignations in the past three years.

Beran, who undertook the arduous yearlong volunteer job of campaign chairman on just one day’s notice, said the expected shortfall illustrates the need for United Way Inc. to begin a thorough self-examination to assess its role, how to serve contemporary needs and how to broaden public support.

What could be the first step toward such a review began last November when Francis X. McNamara Jr., the United Way Inc. president, told his board of directors that a consultant would study United Way’s public affairs and marketing operations.

McNamara, who commissioned the $20,000 study, sent a memo to United Way staff and volunteers last fall asking them to cooperate in the study, urging them to speak freely and promising them confidentiality.

Nearly 100 leading volunteers and professional employees were interviewed by Lawrence F. Mihlon, an international business consultant who has run public affairs operations for three Fortune 500 companies.

Mihlon’s 25-page report, titled “Back to the Future,” was submitted in February. McNamara has not made the report public and said he does not plan to present it to his 85-member board of directors, but he recently had Mihlon discuss some of his findings with a board subcommittee.

Interviews with about one-fifth of those questioned by Mihlon suggest that the consultant discovered widespread dissatisfaction with McNamara’s leadership.

Many of the volunteers and nearly all of the professional employees who talked about what they told Mihlon said McNamara delegates little power either to his staff or to volunteers and that when volunteers do not fulfill his wishes he often countermands their actions, often by taking matters to the United Way executive committee, whose meetings are secret. (The executive committee at the United Way in Orange County meets in open session, while the Ventura County United Way executive committee generally meets in closed session, their executive directors said.)

‘Time for New Blood’

“Frank has worn out his welcome and a lot of executives think it is time for new blood,” one former United Way campaign chairman said he told Mihlon. His remarks were the strongest and most direct of those top volunteers interviewed.

Noting that he spoke to the consultant with McNamara’s promise of confidentiality, the former chairman, who is chief executive officer of a major corporation, insisted on the same confidentiality in repeating his remarks to The Times.

“One of the problems we have is the same people have been pressed year after year after year (for contributions) to the point where they feel they have given their all,” the executive said he told Mihlon, emphasizing the need to broaden the campaign even if it means hiring more staff and experiencing an increase for a few years in the share of revenues that go to fund-raising expenses.

Another leading Los Angeles executive and top United Way volunteer said that “most of us are aware of the (management) problems, but none of us has seen any reason to act.”

Leadership Praised

Some corporate executives said they do not share these views. Richard M. Ferry, president of Korn/Ferry International, the executive recruitment firm, praised McNamara’s leadership and noted that it was McNamara who sought the Mihlon study on how to improve United Way’s marketing and public affairs activities.

Ferry said McNamara had Mihlon outline some of his ideas last week to a United Way board subcommittee. Ferry indicated that he expects McNamara to press ahead with at least some of Mihlon’s proposals, adding that he regards it as McNamara’s “prerogative as a manager” not to distribute Mihlon’s report to the United Way board.

Even McNamara’s harshest critics hold him in high regard for his devotion to community betterment and say that his diligence is a major reason that in the past decade the annual United Way campaign has grown from $33 million to this year’s goal of $86 million, a 21% increase in real terms. Most of his critics carefully couched their complaints in terms of his management style not fitting changing community needs and many said that they believe he has attempted to change to meet those needs.

One United Way vice president expressed admiration for McNamara’s dedication, noting he has worked six or seven days a week since 1967, with only brief vacations, to build a better community.

“No one cares more about the community than Frank,” the vice president said. “This is Frank’s life, his baby, but good-hearted a man as he is, he can’t separate himself from United Way.

“You have got to understand that this is Frank’s United Way. . . . Much as he wants the best for the community and as much as he cares, he simply cannot accept any criticism of it because that is criticism of himself.”

Advised of these comments, McNamara noted that his board of directors has given him annual pay raises and favorable performance reviews.

“Anyone who sits in one place for more than 10 years is going to have a certain buildup of critics,” he said. “Those people (directors) come together once a year to evaluate me and never has this been stated, which I think is a pretty good indication” of his standing with the board.

As for the suggestion that he does not delegate authority and does not respond to criticism, McNamara said, “I’m the most sensitive person around here.”

Employees’ Complaints

Complaints from professional employees center on a lack of freedom to carry out their duties, inadequate pay and excessive workloads, interviews with more than two dozen current and former staffers indicate.

Seven current or recent United Way professionals, not all of whom spoke to Mihlon, said that they were prohibited from sending letters on United Way stationery unless they were personally approved by McNamara or other high executives.

“Not a piece of paper comes out of Virgil Avenue without Frank seeing it,” one high level United Way executive said, referring to the agency’s headquarters building in the mid-Wilshire area.

“That is an absolute falsehood,” McNamara said. “What I suggest is that when they put sensitive things in writing they review with another person--not necessarily with me.”

One United Way mid-level professional said that he quit because his superiors would not act on his ideas to increase donations unless McNamara personally adopted them. The professional said that when he resigned, McNamara called him in for a meeting, heard his grievances and then promised to personally look into the ideas that had been proposed.

‘Precisely the Problem’

“He just didn’t understand that that is precisely the problem--that he has all this talent around and that he can’t personally handle every detail,” the professional said.

“There is no strategic planning, absolutely none,” the professional added. “Everything is run out of Frank’s office and he can do just so much and he won’t give any authority to anyone.”

McNamara said he commissioned the Mihlon study in part because of his concern about the need for long-range planning and to improve marketing. “I did not accept the report because it did not answer the seven questions” that Mihlon was supposed to answer, McNamara said.

In interviews, 26 present and former United Way professionals said they had to carry excessive workloads while earning low pay, often less than what was paid for the same jobs at charities funded by United Way. Some professionals earned less than $20,000, examination of their pay records shows.

McNamara, 61, was paid $170,753 last year plus $19,479 in benefits, a telephone-equipped Cadillac Sedan de Ville and a membership in the California Club.

“There may be one or two who are unhappy or feel they are underpaid, but that is all I am aware of,” McNamara said of his staff. “In any organization there is always the opportunity for somebody to be unhappy.

Personal Review

“What I do is review people in terms of equity among positions and responsibility. . . . I personally review their pay and everybody is in the ranges and in accordance with our pay scale,” he said.

McNamara acknowledged that he has heard complaints of fatigue from both staff and volunteers. He blamed this on problems left over from the 1979 merger of United Way with a competing group, Associated In-Group Donors or AID. United Way ran its campaigns in the fall while AID campaigns at various major employers began in every month of the year.

“The fact (is) that the campaign never ends,” McNamara said. “We close with a finale and we have to get the projections in and then start all over immediately.”

Four United Way volunteers who said they spoke to Mihlon and 13 other United Way volunteers told The Times that McNamara’s control of United Way is so firm that when volunteers take actions that displease them he countermands their actions.

One prominently cited example involved United Way’s Rent Assistance Task Force, which last July 25 terminated a contract with the Catholic Welfare Bureau, charging mismanagement. In its first 90 days of operation, United Way documents indicate, the Catholic Welfare Bureau overspent its $25,000 allocation by more than $16,000, with most of the money going to people who were ineligible for the rent assistance program. Catholic Welfare Bureau officials did not respond to a request for an interview by press time.

The Task Force asked that the $25,000 be returned, but got no response.

McNamara, however, acknowledged that he talked directly with Catholic Welfare Bureau officials. In February, he asked the United Way executive committee, whose meetings are closed to other United Way volunteers and the public, to make a $16,000 grant to Catholic Welfare Bureau.

(In Orange County meetings of the United Way executive committees are open.)

According to two people who were present, McNamara did not fully disclose the nature of the Rent Assistance Task Force’s concerns about mismanagement.

“I told them everything,” McNamara said. He added that the United Way board approved the $16,000 grant when it passed without comment the chairman’s report at the March United Way board meeting, which included reference to the grant.

All but two of the professionals interviewed complained about secrecy at United Way, especially with regard to its finances. The Los Angeles area United Way is one of the few large public charities which does not include financial information in its annual report.

Money: The Big Secret

“Money is the big, big secret here,” one United Way professional said. “And if you start asking questions they start asking you why you want to know.”

Last year, The Times reported some United Way financial details, including how its year-end cash balances have nearly doubled in three years and would likely grow by $6 million to more than $30 million if this year’s goal were met. Putting money in reserve is the third largest allocation of United Way funds, after the Red Cross and running United Way itself.

Despite the expected shortfall in this year’s campaign, the 349 charitable social service agencies and 15 partners which depend on United Way Inc. for part of their budgets will not have their allocations cut because the campaign is expected to produce significantly more money than last year’s $76.4 million in pledges.

In addition, United Way Inc. has more than $25 million in reserves that could be used to cushion any shortfall. It also maintains as much as $55 million at a time in funds that are earmarked for its agencies, but have not been disbursed, according to internal financial reports that McNamara maintained in confidence until they were obtained by The Times from other sources.

Low Per-Capita Ranking

United Way Inc. is the largest of the 2,200 local United Ways in the nation, but it ranks a distant 24th among the 25 largest in money raised per capita, falling far behind such other Sunbelt cities as San Jose and Dallas. If the Los Angeles area United Way raised money at the average rate of the 25 largest United Ways, the Los Angeles goal this year would have been $152 million.

Significantly increasing United Way’s income will require developing more volunteers, McNamara said. “Involvement, that’s the key,” he said, pointing to United Way’s efforts to attract Asians and Hispanics in order to broaden the sense of community ownership of United Way.

Maury Rosas, vice chair of the United Way regional board for the San Fernando Valley, said that, “In the past two years United Way has opened its arms (to Latinos) and overall they have done a very, very admirable job.”

Executives Credited

Rosas credits the change to executives on the United Way corporate board, notably George Moody of Security Pacific Bank, Lodwrick M. Cook of Atlantic Richfield and Gerald Foster of Pacific Bell, who is Rosas’ boss.

But Rosas said, as did others, that “we have a long way still to go.”

One indication of how far is in literature distributed by United Way Inc.

The United Ways in Ventura and Orange counties print service directories in English and Spanish using paper stock of equal quality and containing identical details on what member agencies do, their telephone numbers and addresses.

“All the materials we produce need to be the same quality because it says everyone is of the same quality and in a democracy that is where the action is,” said Tom Ruppanner, who was the Ventura County United Way executive director until he moved to the Honolulu United Way recently.

The Los Angeles area United Way, however, does not follow such a policy.

Language Versions

The English language version of its directory of services is a booklet listing each agency, describing its services and giving its telephone number and address. But the Spanish language version is printed on a single sheet of paper that folds up like a highway map and, in small type, gives only the names and telephone numbers of agencies.

Analysis of Census Bureau data by the Southern California Assn. of Governments indicates that Los Angeles County has nearly as many Korean-speaking residents today as Ventura County has Spanish-speaking residents. But the Los Angeles area United Way does not print its service directory in Korean, a spokesman said.

“Not providing materials of equal quality is an issue with me and with others,” said Larry Gonzalez, a Los Angeles Unified School District trustee and member of the regional United Way board for the downtown area. He said Latinos cannot be expected to give more money to United Way until it stops such practices.

McNamara said this year’s United Way campaign has been troubled by massive cuts in staffing at Atlantic Richfield and other major corporations which have been strong United Way supporters.

Direct Solicitation

But five high-level campaign volunteers and four United Way professionals said the shortfall also reflects United Way’s focus on the 100 largest corporations and government agencies where it can solicit workers directly.

“The entire focus is on the top 100 accounts,” one United Way fund-raising executive explained. “The strategy is to keep getting those accounts to produce 10% more year after year. The next tier of accounts and all the places that have no campaign or a token one get far too little attention.”

A breakfast meeting last week hosted by Security Pacific Corp. illustrates how many firms United Way has not recruited. Invitations were sent to 300 downtown employers who do not have United Way campaigns.

McNamara said he is aware of the problem and is trying to cope with it. He said getting more accounts does not require any additional staff, but does require recruiting more volunteers. He said some companies are also very resistant to United Way, citing a firm with 4,000 employees that he said he and top volunteers have been trying to recruit for a decade.