Firms Report Rise in Cancellations of United Way Pledges
Some major Los Angeles employers reported an increase this week in workers seeking to cancel their pledges to the Los Angeles-area United Way after disclosures that its president loaned more than $300,000 in donated money to five executives.
The numbers of cancellation requests are small--89 among county workers when normally 12 would cancel in the same period--but the increase aroused concern among charities that many more people may not renew their pledges in the coming year or may reduce their level of giving.
Interviews with more than a score of charity executives and prominent volunteers Thursday indicated a widespread belief that United Way, which reported $85.5 million in pledges this year, will lose at least several million dollars in donations because of the loans.
Leaders of the charity community, in numerous meetings small and large across Los Angeles County, discussed how a drop in giving would force cuts in services, especially in the newest human care programs, many of which serve minorities. Many of these programs are funded by the large increases in donations to United Way in recent years.
United Way’s 95-member board of directors will meet behind closed doors at 8 a.m. today at the charity’s mid-Wilshire headquarters.
Three board members said they were told that the meeting was called to discuss what actions to take regarding the management of President Francis X. McNamara Jr., who loaned more than $300,000 of donations without informing the board or its executive committee.
A press conference is tentatively scheduled to follow at 10 a.m. several miles away at the Greater Los Angeles Press Club.
Initially, only executive committee members and a few prominent civic leaders were summoned to the private 8 a.m. meeting, which was to be followed by a press conference to announce what action, if any, will be taken. A meeting of the United Way board was to follow the press conference.
However, the morning’s schedule was changed to have the entire board meet before any public announcement after at least one board member’s complaint that the full board was being excluded from the decision-making process, three United Way sources indicated.
United Way Chairman Roy A. Anderson spent Thursday in meetings with community leaders and others discussing McNamara’s loaning more than $300,000 of donations to five United Way executives during 1980-82.
Most of the loans were unsecured and interest-free, and two of them, totaling more than $200,000, were assumed from First Interstate Bank when two charity executives could not repay them because they lost money on houses they owned in Ohio.
Disclosure of the loans has prompted both the state attorney general, who is the guardian of charitable trusts, and the county Business License Commission, which issues solicitation permits for unincorporated areas, to order investigations.
Meanwhile, worried leaders of some of the 350 human care agencies partially funded by United Way and some of the 19,000 other charities in the county discussed the potential fallout from disclosure of the loans.
A deputy personnel director for Los Angeles County, Martin Golds, said 89 county employes requested forms to cancel their United Way pledges in the first four days of this week and that many of those canceling indicated it was because of the loans, but no tally was kept. Golds said that normally about 15 pledges are canceled each week.
There were 63 cancellations at Southern California Gas Co. A company official said that while no record was kept of reasons stated for cancellations, the number was high enough that it was immediately brought to the attention of senior mangement.
At City Hall, 61 municipal workers, nearly 1% of those who give to United Way through payroll deductions, canceled their pledges, City Controller Rick Tuttle’s office said. A Tuttle aide, Barbara Friedman, said no tally was kept on how many specified that the loans prompted the cancellations.
Other firms said they experienced cancellations by a fraction of 1% of their United Way donors. No pledge cancellations were reported by Atlantic Richfield and only one at Unocal. Many other companies would not discuss United Way pledges.
These numbers are small, contrasted with the nearly 1 million people who donate through payroll deductions. But four experienced fund-raisers who have worked for United Way said the numbers suggest that a much larger group may not renew pledges in the fall or may reduce the size of their gifts because of anger over the loans.
As word of pledge cancellations spread, leaders of the local nonprofit community met to discuss ways to limit the losses and restore confidence in United Way Inc. The American Red Cross, the largest beneficiary of the United Way campaign, and 12 of 14 health agencies that share in the proceeds, issued a statement urging donors to maintain their pledges.
“The volunteer leadership of United Way will resolve the present situation expeditiously,” the joint statement said.
Business consultant Stephen D. Gavin, an influential adviser to the city’s civic leaders and others familiar with charity issues, urged donors to maintain their pledges until the United Way board has had an opportunity to act.
He said that if any gifts are canceled it “would be most unfortunate because the burden would fall on the already under-funded community, social service and health agencies. I hope the community will withhold any such action until Roy Anderson and the board have had the opportunity to get the facts and take appropriate action.”
“I’m very much concerned about all the people I hear are canceling their pledges,” said entrepreneur Lilly Lee, an ex-officio member of the United Way board and chair of its Asian-Pacific Research and Development Council.
“As I talk to various people, my gravest concern--and hopefully the board will understand that--is that we have to protect the public confidence in the institution,” Lee said.
Karen Laviola of the View staff contributed to this story.