Shaking Up Tradition

Joseph Haggerty, president of the United Way of Greater Los Angeles, is a member of a rare breed: a pragmatic idealist. Not for him the lyric opining over what should be nor the fiery condemnations of an imperfect economic system. The fact that he’s also Irish, second-generation Boston no less, makes this all the more surprising. Or maybe not. Along with their yearnings toward the muse, the Irish have a long-standing tradition of service--if the priesthood doesn’t appeal, social work will do.

And after more than 25 years with an organization that in some communities defines social work, Haggerty has learned that when it comes to setbacks, navigational miscalculations and the vagaries of human nature, you either get over it or you get out.

“When I was in graduate school, I worked with a mental health center that had a tough time getting money,” he says. “I worked with a psychiatrist there who said, ‘In this business, you’ll see a lot of ups and downs.’ And that’s what happened. I’m used to seeing it.”

Ups and downs is a generous way to describe the changes in the United Way, especially in Los Angeles. During the last decade, the United Way, along with other umbrella organizations such as the Jewish Federation, have found themselves fighting for local dollars with an increasing number of competitors, including a growing number of private and community foundations. No longer the biggest games in town, they have had to modify their mandates and models of giving to ensure their survival.

“We have to be very strategic,” federation President John Fishel says. “We raise money through business groupings, and things, particularly among young people, are being done differently.”

For the United Way especially, change has come at a fundamental level. In 1991, the national organization was at an all-time high, sending more than $3 billion to 46,000 charities; $91 million of those funds came to, and were distributed through, the Los Angeles chapter. A year later, the president of the United Way’s national organization was fired and later convicted of fraud and the misuse of funds. Donor confidence, and their dollars, began to evaporate.

The scandal could not have come at a worse time, particularly in Los Angeles, which was experiencing the beginning of a decade of corporate downsizing, mergers and the loss of the aerospace industry. The United Way, which traditionally receives nearly three-fourths of its contributions through payroll deductions, seemed beset by the plagues of Egypt. By 1995, pledges stood at $57 million.

Into this enervating atmosphere came Haggerty, hired from the organization’s Phoenix office in 1995. During the next four years, he halved the staff to its current 120, cut costs and shook some of the dust off the old ways of campaigning, all in the hopes that he could put the L.A. chapter in turn-around.

To a certain extent, he has. Last year, the L.A. chapter raised $60 million, which it distributed to 250 charities in Los Angeles County; this year the number may top $62 million--90% of it from payroll deductions. But the increase is not exactly miraculous given the city’s now-booming economy, and that has less to do with scandal than it does with the shifting landscape of charity.

“In the ‘70s and ‘80s, the United Way had a relationship with every business in town,” Haggerty says. “Now, with the growth of nonprofits, we can’t do that. There’s too much competition. We need to be more focused.”

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In any discussion about trends in philanthropy, the United Way repeatedly is named as the organization dealt the most blows. Not that this is evident in the group’s Olive Street offices in downtown Los Angeles. Here people move about with smiles so ready and spectacular one expects them to burst into song. But the framed ad campaigns for the last few years reveal an organization struggling to re-create itself.

Distancing itself from the traditional warm-fuzzy logo of the open hand and the rainbow, the United Way’s 1997-98 advertising campaign was an L.A.-specific series of semi-stinging admonishments.

“Forget your triceps,” read one, “Give your conscience a good workout.”

“One nonfat double latte could buy a toddler milk for a month,” observed another.

“Show the world L.A.’s made of more than silicone and collagen,” challenged a third.

Needless to say, these less-than-gentle reminders generated plenty of criticism, but, says Haggerty, they got everyone talking. The 1999-2000 campaign focuses on “A Tale of Two Cities,” a report that describes the widening gap between the city’s rich and impoverished and the creation of a growing class of working poor. The accompanying ads mimic certain popular magazine ads: “If only we cared as much about the GAP between the have and have-nots,” “If only we had an OBSESSION for helping the needy”--in a way that is pointed, and just this side of litigious.

But Haggerty says they accomplish his overriding goal: to make the public aware that this is not your father’s United Way.

Like every nonprofit institution in the country, the United Way is tailoring itself to attract the eye of the younger generations--people in their 30s, 40s and 50s who are coming into money either by inheritance or successful business dealings. These new philanthropists come with a set of marketplace-influenced demands, including a need for measurable outcomes and bottom-line efficiency. And while others in the philanthropic community debate the merits of measuring charity in terms of business, Haggerty shrugs and moves the conversation forward.

“I don’t think it’s going to go away,” he says of the trend. “Saying you can’t measure it isn’t going to help. The business model is what is driving this. So we need to work with our organizations to come up with these measurements.”

At a broader level, the United Way has to repackage itself to address these expectations and to make giving to the United Way a part of people’s personal business plans. So, Haggerty says, they have honed their focus to three easily explained, hot-button program goals: self-sufficiency, building community and learning for life.

“The United Way is too unfocused for us,” he says. “We want people to be able to understand easily what we are about, not just see us in vague terms.”

Which means, he says candidly, some organizations are going to lose their United Way funding. “We think there’s going to be a bit of a shakeout. The really small organizations will have a challenge to exist unless they find partners.”

The mandate to focus is not completely self-imposed. About eight years ago, the United Way began offering a donor-designated option on its contribution forms, allowing folks to direct their money to a specific organization. To some extent this runs in complete opposition to the nature of an organization such as the United Way, which used to market itself as a way of giving to the whole community rather than one particular organization. At the end of each year’s campaign, a volunteer committee would review the budgets and reports from the agencies they had funded, and decide whether to continue funding and by how much. Some agencies would be dropped, others added, and the money would be allocated from a general pool.

And that is how it is still done with about half of the United Way’s intake, less its 21% operating costs. The other half now goes to charities specified by the donors, some of which are United Way agencies, some of which are not. As a result, the United Way’s general fund has shrunk, and, says Haggerty, some of the less well-known and less-popular organizations have suffered.

“People outside the organizations said you need to designate money to help small, struggling agencies,” he says. “But what’s happened is that big names are benefiting. The designation trends have not gone the way some people supposed.”

A bit of anger creeps into his voice, anger and Boston, dragging his o’s into ah’s, revealing the passion behind the pragmatism. Then the professional smiles it away. “But the trend is there, so you have to work with it. We are a service organization, we have to work with what the donors want.”

Haggerty is not the only pragmatist in town. The Jewish Federation, the city’s other large umbrella organization, faces some of the same shifts the United Way is negotiating, as well as a few more specific to the Jewish community. Although the majority of its supporters continue to believe in the federation’s tradition of communal distribution, says president Fishel, an increasing number want more control over their donations.

“In a community as large as the one we serve,” he says, “there are people whose desires are an expansion of services in their own neighborhood. The Valley, in particular, is an area of great growth. So we have to maintain a balance between providing new services and maintaining our commitment to those in urban areas.”

Founded in 1912 to aid Jewish immigrants, the federation has seen the nature of its constituents change radically; while the organization continues to aid the 1,500 to 2,000 newcomers who arrive in Los Angeles every year, many of its services now are directed at preserving Jewish identity among second- and third-generation immigrants.

This group, raised in a world in which Jewish schools and hospitals are the norm, has different expectations for charitable dollars than its parents had. The federation also has an international mandate, funding relief efforts and ongoing programs in Israel, and reevaluating the monetary balance between these programs and local services has occupied much of the staff’s time recently.

“Younger people feel the priority is local. They didn’t live through the war, through the Holocaust or its aftermath; they didn’t live through the birth of Israel,” Fishel says. “They are more hands-on. They want to see the impact of their contributions.”

Cultural and religious concerns aside, the federation is dealing with the same shift toward efficiency and business practices that every charitable institution is facing.

“I had lunch the other day with a young guy,” Fishel says, “who wants to be assured that things are done in a businesslike fashion while recognizing the bottom line is not profits, but people.”

The foundation’s new chairman of the board, he adds, is “a very different guy than his predecessors. He’s 52, whereas the others were in their 60s or 70s; he’s a product of his times, a very successful businessman who thinks differently but cares very deeply about helping people.”

The federation’s continuing effort to appeal to younger people very much mirrors the United Way’s. But although the federation always has pursued large individual donations and helped with estate planning, the United Way is just now turning its attention to such things.

“We’re trying to focus a bit more on high-end givers,” Haggerty says. “They’re about 7% or 8% now, and that could be higher. There’s a lot of new wealth here, and we want to have a relationship with them, see what they’re thinking, take them out so they can see what we’re doing.”

Haggerty, however, is not worked up by the furor over an anticipated $10-trillion transfer of wealth to the next generation that has everyone else in the philanthropic community buzzing.

“People think trillions of dollars are going to change hands and they’re going to get a percentage of it, and that’s it,” he says. “That’s not going to happen. People have to have money for a while before they start giving it away.”

Haggerty says he’s more concerned about things such as the Internet, which he believes will change the nature of giving in ways no one can yet dream of and, most important, educating people about the importance of community giving. The United Way’s new Web site, https://www.unitedwayla.org, is one way of doing this; circulating in the community is another.

“People keep telling us they know more about giving, and we don’t test them,” he says. “But by focusing our efforts, we’re hoping to get some more flexible money. But,” he adds quickly, “people who really want to designate, if that’s what they want, that’s what we work with.

“It’s a tough market, charity,” says the pragmatist whose ideals have kept him at it for 25 years. “You really have to make an effort.”

Tomorrow

Today’s new breed of venture philanthropist donates with well-defined mandates and a bottom-line approach to giving.

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Mary McNamara can be reached by e-mail at mary.mcnamara@latimes.com.

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The Change in Giving Patterns

In recent years philanthropic giving by foundations and corporations has grown more robustly than individual giving. Figures below, adjusted for inflation, show changes from 1977 to 1997.

(in billions)

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1977 1997 % of change Individuals 78.3 109 49 Foundations 5.3 13 153 Corporations 4.1 8.2 100 Bequests 5.6 13 125 TOTAL 93.3 144 54

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