United Way Drive Falls $8.6 Million Short

Hit last summer by disclosures of financial improprieties, Los Angeles United Way has fallen $8.6 million short of its $90-million campaign goal this year, volunteer campaign Chairman David E. Anderson announced Tuesday.

While the $81.4 million raised is the second-highest amount ever collected by the local charity, it is still $3.2 million short of last year’s record $84.6 million and is the worst campaign shortfall in the last decade. The Los Angeles shortfall comes at a time when United Way campaigns in large cities across the country are up 3%.

United Way officials blamed the shortfall on changing conditions in the Southland economy, a slow start of the campaign and donor concern about the controversy, which centered on loans to United Way executives.

Anderson, who is president of General Telephone of California, acknowledged that some United Way officials debated whether the $90-million goal was too ambitious in light of the region’s changing economic outlook and the adverse publicity.

“The question we had to ask ourselves was not ‘What do we think we can raise?’ but ‘What does this community need?’ It was not ‘What kind of goal will make us look good?’ but ‘What will it take to make a difference in the lives of the people we serve--the homeless, the hungry, the young and the aged?’ The $90-million goal was a realistic assessment of the social and health needs of the community,” he said.

He added, “And while we are very proud of what the thousands of volunteers accomplished, we are at the same time concerned about the community reaction.”

Because the campaign fell short of the goal, most agencies will not get additional money from United Way in the coming year. But the Board of Directors recently took the unprecedented action of agreeing to use money from a $15-million reserve fund to ensure that the 350 member agencies get at least the same amount of money that they received from the last campaign, or about $40 million.

Some $2 million from that fund will be used to supplement the campaign contributions. But even with that, some agencies said recently that they will be strapped to provide services because of their increased costs and more clients. Another special group of 15 health charities that participate as partners in the annual fund-raising campaign will receive at least half a million dollars less than the group received last year, or a total of about $19.5 million.

These charities, such as the Red Cross, American Cancer Society and Crippled Children’s Society, are not eligible to receive money from the United Way’s reserve fund. The partners have been cutting staff and new programs in anticipation of the shortfall, they said. Anderson maintained that the United Way campaign was as much a victim of company mergers, consolidations and work-force cutbacks as it was of the controversy that erupted last summer and contributed to a rocky start to the fund raising.

At that time, a series of questionable financial decisions by United Way, including lending donated money to agency executives, was disclosed. The dealings were investigated by the Citizen’s Independent Study Committee and by the Los Angeles county counsel.

The committee found that top officials and volunteers had used poor judgment in authorizing almost $330,000 in loans to five agency executives, but concluded that there had been no dishonesty. The borrowed money has been repaid. The panel also criticized officials for using $260,000 in donated money to bail out the now-defunct United Way credit union and for lending $150,000 to an East Los Angeles human services agency. Panel members recommended that United Way make major changes in accounting and personnel practices.

‘Good Faith’

The investigation by the county counsel’s office concluded that while some of the United Way transactions may have been “improper,” the United Way officials had acted in “good faith.”

Donor concern over the matter carried over into the campaign, Anderson acknowledged. Employee donations usually account for two-thirds of contributions, and these donations were down 10% from last year.

However, Anderson said that because of mergers and corporate cutbacks, there are fewer employees at the large companies, which have been the donation mainstay.

While the controversy affected employee donations particularly in the early phase of the campaign, that concern lessened this spring as publicity about the loans subsided and United Way began implementing some of the suggestions of the committees.

The organization also announced that Leo P. Cornelius, a 27-year veteran of charity organizations, most recently with Philadelphia United Way, will take over as president today. He replaces retiring Francis X. McNamara Jr., who was chief operating officer of the Los Angeles organization for 20 years.

Nationally, $2.4 billion was raised by 2,300 local United Ways, officials said. Overall there was a 5.7% increase in donations over last year. Cities with goals of more than $25 million logged increases of 3%. The Tri-State campaign (36 United Ways in New York, New Jersey and Connecticut) set a $160-million goal and raised $161 million. Miami met its $19-million goal.

Large Western cities, such as Seattle, San Francisco and San Diego, increased 10.1 %, 0.5% and 5.9% respectively. Orange County United Way was $2.5 million short of its goal. Bright spots in the Los Angeles campaign this year, Anderson said, included contributions from major corporations, which were up 7%, and a 36% increase in individual gifts of more than $10,000 each.

Anderson said the nine-month campaign generated $8 million in new dollars, first-time gifts from corporations and individuals.

The United Way campaign has in the past placed most of its emphasis on obtaining contributions from the large corporations in the region, he noted. However, the 11th-hour effort this spring generated several new marketing techniques that will broaden the donor base of smaller companies.

For example, he noted one innovative program in which there was a door-to-door campaign in downtown high-rise buildings that contacted many smaller businesses, such as law firms, that had never been solicited by United Way before. Another program enticed first-time corporate contributors with promises of matching contributions from several large local foundations and companies.

4 Co-Chairmen

Traditionally, the fund-raising campaign has been headed by a single chairman. But because of the changing complexity of the job and the fact that the service area now encompasses more than 5,000 square miles and 196 cities, the board has decided to delegate the duties to not one but four co-chairman starting with the 1987-88 campaign.

The new campaign chairmen, who were introduced at the annual meeting Tuesday night at the Century Plaza Hotel, are Louis Foster, chairman of 20th Century Insurance Co.; George F. Moody, chief executive officer of Security Pacific National Bank; Timm F. Crull, president of Carnation Co., and William D. Schulte, managing partner, Peat, Marwick, Mitchell & Co.

Irwin S. Field, president of Liberty Vegetable Oil Co. of Santa Fe Springs, was named chairman of the corporate Board of Directors, replacing outgoing Chairman William Kieschnick.