Being Too Charitable
The United Way exists to help others. Donors have a right to assume that the others are largely poor people, not United Way executives. Yet the charity’s president, Francis X. McNamara Jr., has allowed five executives to borrow close to $300,000 to defray relocation expenses and, in one case, extraordinary medical and death expenses. McNamara consulted with several key board members but did not inform the full board. Three loans have been repaid.
Repayment, however, does not close the matter. The charity collects from the paychecks of hundreds of thousands of employees and from more than 5,000 corporations, and donors are entitled to a public accounting. The charity’s 95-member board of directors also needs to pay closer attention to what the president is doing.
Relocation assistance and humanitarian loans are common at many corporations. But the loans generally meet commercial standards, and are often arranged through banks. The amounts are typically secured and repaid with interest.
But United Way is not a corporation. The charity--as its chairman, Roy Anderson, has said--should not make loans to employees.
Anderson, the retired chairman of Lockheed Corp., has responded decisively to this crisis. He has demanded repayment of the outstanding loans. He has also initiated discussions on a complete management study after reading a consultant’s report on the marketing and public-affairs operations. McNamara had previously refused to share that report, by Lawrence Mihlon, with the board of directors or the public.
To be fair, McNamara deserves credit for taking an anemic organization and turning it into a community force during his 19 years as president. The United Way raised $85.5 million this year to support 350 organizations--including the American Red Cross, the Girl Scouts and the Boy Scouts--in Los Angeles County and western San Bernardino County.
The United Way’s board of directors should rule against future loans and direct the agency to become more open about the business of giving in order to fully regain the public trust.