United Way Reduces Its Goal in This Year’s Campaign for Funds

The Los Angeles Area United Way announced Monday that its fund-raising goal for 1987-88 will be $85 million--$5 million less than last year. It is first time in 13 years that the charity has reduced its annual goal from the previous year.

Coming on heels of its worst campaign shortfall in more than a decade, the scaled-back goal was necessary, officials acknowledged, because last year’s fund raising was hurt by a 1986 loan scandal.

While officials say they are optimistic that they will raise the money, they say they will be challenged to rebuild the credibility of the organization.

“It is our most crucial fund-raising campaign ever. We have a lot of work to do,” said Leo P. Cornelius, who was hired in July to turn around the fortunes of the beleaguered agency. “We are going to be spending a lot of time talking to people about operational precautions we have taken to turn the corner.”

Even the organization’s campaign theme this year--”Change for Your Dollars”--is geared to that message.

Last year, the charity raised $80.2 million--the second highest amount ever, but it was still almost $10 million short of its $90-million goal, and $4.3 million short of the amount raised in the previous year. The losses came at a time when campaigns in other large cities nationwide were up about 3%.

“Unless this campaign succeeds, we’re in for a rude awakening worse than any temblors so far, and I live in Whittier,” said George F. Moody, president and chief executive officer of Pacific Security Corp. and one of four volunteer campaign chairmen.

“This is an achievable goal designed to prevent a crisis,” he added, noting that it was reached after weighing such factors as the local economic outlook and last year’s donor support.

Moody estimated that going into this campaign the amount of money available from regular corporate and employee contributors is $77 million, down about $5 million from the year before. That means the charity will have to raise almost $8 million from new sources, besides retaining those who gave in the past.

United Way’s fund-raising problems began in the summer of 1986 after revelation of a series of questionable financial decisions, including lending donated money to agency executives.

The Los Angeles County counsel’s office and a citizens’ independent study committee found that top officials of the charity had used poor judgment in authorizing the loans to five agency executives, but concluded that there had been no dishonesty.

Since then, United Way officials say they have instituted measures suggested by the two groups to ensure proper accountability at the agency.

Frank J. MacNamara, who had headed the organization for 20 years, retired. A 12-member search committee made up of community volunteers chose Cornelius as his replacement. Cornelius, 53, is a 28-year veteran of charity work, including most recently six years as chief of United Way of Philadelphia. While he was at the Philadelphia United Way, that organization raised $52 million from a population base of three million last year, and increased contributions by 10%. Other changes:

- The charity’s new policy regarding employee loans is “not to make any loans period,” Cornelius said. The controversial loans were removed from United Way’s books. In four cases, the employees who were given the loans refinanced them through lending institutions. In the fifth case, a $188,000 loan was paid off by about 20 large donors, according to United Way officials. However, United Way officials have refused to reveal the identity of the donors, referring to them only as “friends of United Way.”

- A newly created audit committee made up of volunteers now reviews all major financial actions of United Way, including the handling of contributors’ funds, allocations to agencies and management of funds for which United Way is responsible.

- Cornelius is being paid a $170,000-a-year salary, which is about $20,000 less than that of his predecessor. The new United Way chief has also refused membership in any clubs. MacNamara was criticized for his membership in the exclusive California Club and his company car, a Cadillac, both paid for by United Way. Cornelius has been loaned the use of a Buick. Special “perks” of other United Way staff have also been trimmed, officials say.

- A volunteer committee now oversees personnel development and compensation, reporting directly to the board.

- United Way’s management practices are being updated. An outside firm of management consultants has volunteered to examine the agency’s marketing, operations and management policies and will help set goals and objectives for the charity.

- A subcommittee of board members is now studying the charity’s reserve funds and will report back to the board within the next several months on how much donated money should be held in such an account.

By using $3 million of the then-$10-million reserve fund, United Way was able to provide agencies with the same level of funding as in the previous year--$40 million. However, this year the board has not yet given that guarantee.

Another group of 15 health partners, including Los Angeles Red Cross, American Lung Assn., Crippled Children’s Society and City of Hope Medical Center, received $1.5 million less than in 1985-86.

One-Two Punch

Officials at those organizations are concerned that if this campaign is not successful, the one-two punch will send many of their programs reeling.

United Way estimates that one in three area residents, or about 3 million people, use these agencies for a myriad of social and health programs.

“We are facing an urgent situation--the agencies are suffering,” said Moody, adding that the Red Cross, Salvation Army, Catholic Charities and Family Services of Los Angeles were especially hit by costs related to serving earthquake victims.

“We’re going to knock on the doors of a lot of people,” he added. Under the restructured campaign strategy, the fund-raisers will tap not only the traditional funding sources, the big companies, but will begin soliciting more of the smaller businesses that have not been approached.

Shifted Assignments

As a first step, Cornelius has shifted assignments of the 52 paid staff members so that there will be an increase of 42% in the amount of time spent on actual fund raising. Also soliciting funds for the charity will be 90 local executives who are loaned by area businesses and 50,000 volunteers.

Also this year, the heavy workload job of campaign chairman has been divided among four volunteers: Moody; Timm F. Crull, president and chief executive officer of Carnation Co.; Louis W. Foster, chairman of 20th Century Insurance, and William D. Schulte, regional vice chairman of Peat Marwick Main & Co.

Officials also hope to increase individual donations. At $8.82 per capita, Los Angeles ranks last among the 20 largest United Way regions in giving, far behind Rochester, N.Y., which leads with $31. This compares with Seattle, which raised $31 million and ranked fifth with $23.46 per capita. San Francisco, which raised $42 million, ranked 17th with $12.16. The New York City area raised $160 million last year, and had per capita giving of $8.85.

$85-Million Goal

To meet the $85-million goal, Los Angeles officials say they must retain support from last year’s bright spots, including corporate gifts, which were up 9%, and private gifts of more than $10,000, which were up 28%.

All this comes when the 2,300 United Ways nationally are being challenged by United Way of America to double their efforts in the next five years. In Los Angeles, that would mean a nearly $200-million campaign goal.

The local campaign is just getting under way in about 70 local businesses. One of the largest is the Los Angeles County government employee campaign, which raised $1.68 million, down 15% from the year before.

The county’s charity coordinator, Annie Stevenson, said: “It looks like some of the employees are more at ease with United Way. But others are still rather adamant about not giving, and we’re not going to beg those to come back. Instead, we are going to approach a lot of people who haven’t given in the past. In the end, we don’t expect to have overwhelming results, but we want to get back where we were.”

Faring Better

Officials at other Southland United Ways say their new campaigns are faring better than last year, which they say was marred by the Los Angeles controversy.

“We are seeing a rate of increase we haven’t seen before,” said Susan Cadham, Ventura United Way’s associate executive director. Some companies are showing a 250% increase in giving over last year, when the charity fell $500,000 short of a $5-million goal, she said. Since September, the Ventura United Way has raised $1 million. While Ventura United Way officials decided not to set a goal this year, they expect to raise about $5 million.

Orange County’s United Way is having a better year, Executive Director Merritt Johnson said. “It’s looking good with the business climate better and the Los Angeles controversy not hanging over our head,” he said. Last year the Orange County charity raised $16.5 million--$2.5 million short of its goal. Officials said they hope to raise $17.4 million this year.

‘Thank You, Thank You’

At Monday’s kickoff, Moody introduced Jasmine Pope, 3-year-old daughter of Mr. and Mrs. Regi Pope of Hawthorne, who was born with a birth defect that left her with no control over her lower extremities. A week after she was born, an attack of spinal meningitis left her deaf. Since then, she has learned to walk at Orthopaedic Hospital, a United Way agency.

Jasmine, who uses sign language and is now learning to talk, placed her hand on her throat and with much effort said, “Thank you. Thank you. Thank you.”

Moody, with misty eyes and a catch in his voice, said, “Now you know why we are involved.”