WESTSIDE / COVER STORY : Way Down : Charity: Drop in donations to United Way--caused by corporate downsizing and the agency's internal problems--hurts programs throughout the Southland.

By SCOTT COLLINS

July 27, 1995 12 AM PT

SPECIAL TO THE TIMES

Carrie Gray has enough worries without taking on the problems of the United Way. But the 41-year-old mother of three has found out that the charity’s problems are sometimes her own.

Three summers ago, a letter arrived at Gray’s Venice home, informing her and other parents that the Boys and Girls Club of Venice was cutting services one day a week because of a funding reduction from the United Way of Greater Los Angeles.

The cutback was a blow to Gray, who had just started a new job after a stint on unemployment and was depending on the club to provide after-school activities and counseling for sons Tony, then 12, and Matthew, 8, both of whom have learning disabilities.

“Paid child care was definitely not an alternative,” said Gray. “You always think, ‘Are [my children] going to be OK?’ ”

Gray, who has since moved her family to Palms, scrambled to find a school program for her younger son and left her older boy at home alone. But hard times have lingered for the local United Way and about 25 Westside social agencies it helps support.

Organizations providing everything from mental health counseling to senior housing to free HIV testing have dropped programs, trimmed staff and scrounged for other funding sources. As a result, low-income people facing steep cuts in welfare and other government programs will have fewer privately supported programs to turn to.

The Venice club is by no means alone. The local United Way, beset by recession and a much-publicized scandal at its national organization, slashed its funding to various Westside social agencies from $5.3 million in 1990 to $2.7 million in 1992. The sum has since fallen to $2.4 million in 1995.

Nancy Tallerino is among those feeling the heat. The executive director of Family Service of Santa Monica, which provides low-cost family counseling, has watched her agency’s annual United Way grant plummet from $48,000 to just over $20,000 in the space of a few years. That has forced Tallerino to close the gap in a $500,000 annual budget by pleading for money from private foundations and individual donors.

She said $48,000 could support 1 1/2 or two staff positions. “Obviously, if you cut out staff positions, your services are reduced.”

So far she has been able to keep her 12 staff members, though she worries that budget pressures may force a hike in counseling fees, which run $15 to $20 per session. Many families, she says, can’t afford even those rates.

“It’s a very scary time for small nonprofits right now,” Tallerino said.

United Way officials blame corporate downsizing for much of their current plight. Because the philanthropy depends heavily on gifts from large companies and their employees, its local fund-raising efforts have been hindered by massive layoffs, particularly among banks and aerospace companies in the Westside and South Bay. A current wave of mergers among large banks will probably make matters even worse.

“The business community for the last five years has been completely immersed in downsizing and right-sizing,” explained United Way Regional Vice President Dan Griffin.

The charity has also sustained lasting damage from the scandal surrounding former United Way of America President William Aramony, 67, who was convicted earlier this year of fraud, conspiracy and money laundering after prosecutors accused him of diverting charity funds to pay for limousines, personal vacations and expensive gifts for his teen-age girlfriend.

The scandal has left many longtime supporters with lingering questions about the organization’s credibility. Critics say the charity is slow to adapt to economic change and pays too much for staff salaries and other administrative expenses.

The Los Angeles United Way last week announced a sweeping reorganization that will trim 40 positions from its 200-member work force. New President Joseph V. Haggerty said the charity will also redouble its efforts to reach small- and medium-sized businesses.

United Way officials will visit chief executive officers of the 300 largest corporate donors in Los Angeles in a continuing quest for more money, Griffin said.

Despite its current troubles, the United Way is among the largest charities in the United States, with nationwide annual revenue topping $3 billion, according to the Washington-based watchdog group National Committee for Responsive Philanthropy.

Over the years, the organization’s familiar rainbow logo became a fixture in company corridors and on television commercials, along with the slogan “Thanks to you, it works.” With 9,000 participating businesses in Los Angeles County alone, United Way officials had developed a seemingly solid base of support.

Large companies typically assign an executive or department head--often from human resources--to manage the in-house fund-raising campaign. Employees receive letters urging them to donate to the United Way through a weekly or biweekly payroll deduction (the amount is usually left to the employee’s discretion) or a lump-sum contribution before the campaign ends. Some companies also sponsor question-and-answer sessions and other promotions.

In addition to employee donations, corporations sometimes give money from their philanthropic foundations.

Such broad-based corporate support can yield impressive figures. For instance, City National Bank, which is based in Beverly Hills and employs 1,200, gathered $148,000 in worker contributions during this year’s United Way campaign. That figure represented a 9% increase from 1994, according to a company spokesman.

The bank also kicked in an extra $150,000 in each of the past three years, bringing the 1995 tally to just under $300,000. City National is among United Way’s largest contributors on the Westside, along with UCLA, United Airlines and Santa Monica-based Tenet Health Care Corp., a hospital management firm.

But layoffs have taken a toll.

Through attrition and layoffs, Occidental Petroleum Corp. shaved the number of employees in its Los Angeles headquarters from 360 several years ago to just over 300 today. The amount raised during its United Way fund-raising drives have fallen during that period as well, from $42,000 in 1992 to $22,000 this year. That’s partly because the company can’t afford to promote the program the way it once did.

“We’ve cut back on many corporate expenses,” said Richard W. Hallock, an Occidental executive vice president who coordinates the United Way campaign for his company.

Even during hard times, corporations can reap good public relations--and sizable tax benefits--from their largess. Karime Aguilar, an 18-year-old senior at Hollywood High School, benefits from United Way, as does her 3-year-old daughter, Bianca.

Overwhelmed with child-rearing duties and schoolwork, Aguilar turned to a school counseling program operated by Home SAFE Child Care, a Hollywood agency providing education and other services to young families. The Hollywood High program receives about 90% of its funding through a $25,000 annual United Way grant.

Every Tuesday morning, Aguilar and about 10 other teen-age mothers and mothers-to-be duck into a basement conference room at the high school, where social worker Maria Casas leads group discussions. “I never thought [parenting] was going to be so hard,” Aguilar said with a rueful smile.

Aguilar plans to graduate in December and pursue a career in computers. The Hollywood High program may be long gone by then, though. The United Way approved funding for only two years, ending this September, and isn’t likely to extend the grant, according to Home SAFE Executive Director Paula Kaplan.

Many programs may face similar problems. And some critics wonder whether the United Way will successfully adapt to enormous changes rocking the U.S. economy.

While large corporations have been shrinking, “there has been lots of growth in small businesses” in recent years, said Robert Bothwell, executive director of the National Committee for Responsive Philanthropy. “But United Way’s forte is not in getting access to small- and medium-sized businesses; it’s in getting access to big corporations. . . . I think the various United Ways have been slow to adapt to the realities of where new businesses are.”

But Bothwell added that it might be far more time-consuming and inefficient to target companies with 10 employees than those with 1,000. That might, in turn, drive up United Way’s overhead. And the Los Angeles charity’s annual expenses--$13.4 million, or 22% of total 1994 revenue of $60.8 million--are already 7 to 12 percentage points higher than those at average United Ways around the nation, he said.

Haggerty, the new United Way president, said he agrees with critics that the charity’s overhead is too high and is working to cut costs.

Such statistics may dim the luster of United Way for workers considering donations. Just ask Carrie Gray.

She was anxious after United Way cutbacks kept her from placing her sons in the after-school program at Venice Boys and Girls Club, because she couldn’t afford day care. Since then, she has worked her way up from receptionist to technician at USC. Along the way, her employer asked her to contribute to the United Way. Having heard of United Way’s scandal and recession woes, she almost balked.

She wrote a check anyway, mostly out of loyalty to the charity.

“In the beginning, I wondered if it wouldn’t be better if I wrote a check myself to the Boys and Girls Club,” she said. “I was wondering where my money was going.”

(BEGIN TEXT OF INFOBOX / INFOGRAPHIC)

United Way Reductions Since 1990 the United Way of Greater Los Angeles has sharply reduced the amounts of grants it makes to local social service organizations. A look at the local charity: Distribution of funds:

90-91: $76.4 million

91-92: $69.6 million

92-93: $46.2 million

93-94: $43.9 million

94-95: $43.9 million

95-96: $44.9 million (projected)

How Each Fund-Raising Dollar Was Spent in 1994:

Health / Human Service Agencies: 28%

Expenses: 22%

American Red Cross: 11%

Donor Designations: 11%

Health Partners*: 7%