County’s United Way Says It Makes No Loans : Official Stresses Local Autonomous Organization Is Not Connected to L.A. Fund-Raising Group

Times Staff Writer

The ripples from a scandal brewing within the Los Angeles area-United Way reached Orange County Monday, where local United Way officials began fielding calls from large corporate donors.

“They just wanted to know whether our United Way is involved,” said Merritt Johnson, president of the United Way of Orange County.

“It’s difficult for the general public to differentiate that all United Ways are autonomous. We in Orange County have never engaged in loans. We aren’t about to engage in loans.”

Johnson was referring to the reported $300,000 in cash loans made since 1980 to five top employees of the Los Angeles area-United Way. The loan money--much of it unsecured, most of it without interest--came from United Way donations. Three of the five loan recipients made no payments or only token payments until last week.


Raised $18.4 Million

Last year, the United Way of Orange County raised $18.4 million, exceeding its fund-raising goal by about $7,000, officials said. But Patrick Mariano, the campaign director, said Monday that “we’re very concerned” about the Los Angeles revelation tarnishing the Orange County image and affecting future fund raising.

“I think it’s too early to tell” how much impact there will be, Mariano said. “We’re concerned that the donors to the Orange County United Way recognize that their money is being wisely spent here in Orange County on human care services.” Mariano said that his campaign workers received queries Monday from several organizations that make yearly donations to the United Way along with their employees, including Kraft Inc., the City of Fountain Valley, Cal State Fullerton, Pepsi-Cola Bottling Co. and Infotek Systems.

Southern California Edison Co., the second largest donor to the Orange County United Way last year, also telephoned, but a company spokeswoman said the firm is not worried. “As far as we’re concerned, they’re good guys,” the spokeswoman said.


Confidence in Organization

Thomas H. Nielsen, general chairman of the Orange County United Way’s fund-raising campaign and president of the Irvine Co., a large-donor corporation, expressed confidence that the Orange County United Way would suffer no significant image problems.

“I think we can demonstrate that the United Way has functioned here very effectively, Nielsen said. “I’m sure there will be some questions raised, but in response we have a very positive story to tell.”

Meanwhile, in Los Angeles, United Way Chairman Roy Anderson met privately with key directors and executives of the Los Angeles area-United Way Inc. In addition to the disclosures of the loans, an internal study uncovered serious management problems within the charitable group.


Anderson, who earlier ordered two of the loans repaid immediately, said he expects to spend the next few days looking into the issues. President Francis X. McNamara Jr., who arranged the loans and was the focus of the critical management study, did not take part in the talks because he is vacationing in Boston.

Elsewhere, “a smattering” of donors telephoned United Way Inc., which serves Los Angeles and western San Bernardino counties, saying they will cancel their contributions, a spokesman said.