Nearly a year after the Salvation Army in Orange County sent more than $1 million for Hurricane Katrina relief, the organization and several other large nonprofits have learned they will no longer be funded by United Way.
"This has come as a complete shock," said Maj. Lee Lescano, coordinator for the Salvation Army. "We will lose $300,000 that we will have to find a way to make up this year."
The Salvation Army, the Red Cross, the Boy Scouts and other groups blame a new "zero-based" funding format that Orange County United Way introduced this year emphasizing specific programs rather than agencies.
This year, charities that wanted money from United Way were required to submit applications that were evaluated on targeting a specific need, measurable results, community impact and the organization's ability to provide services.
The new funding format only affects Orange County.
The nonprofits were notified this week of United Way's decision not to fund their agencies for the next three years. However, they will continue to receive contributions designated to them that pass through United Way.
The Salvation Army budgets $9 million each year for its homeless, educational and other social programs that help the county's poor. It marks the first time in nearly three decades that the nonprofit won't receive program funds from United Way.
"With a $9-million program, to some the $300,000 may seem insignificant," Lescano said. "But that translates to a lot of services that we provide, like beds for homeless, transitional housing services and food for low-income families."
The Boy Scouts were aware of the funding changes but did not expect to have all United Way funds cut for the next three years, said Lara Fisher, a spokeswoman for the Orange County council. The Scouts will lose $400,000 overall, she said. "This is hard-earned money and we believe we put the money to good use supporting the Scouts," Fisher said.
The new policy comes a year after United Way reported an increase in donations countywide. The organization's annual fundraising campaign year ended June 30 with $26 million, up $500,000 from the previous year, said Colleen Sandrin, United Way's chief operating officer.
Agencies that receive United Way funds were informed of the new policy in October, Sandrin said. Sandrin said the Salvation Army and other nonprofits will still receive funds from donors who designate them. In addition, funding opportunities -- such as partnering with other nonprofits -- are available, she said.
This year, charities submitting applications were ranked according to scores based on their safety-net programs that provide for essential needs. Of the 168 programs that submitted applications, about half received a score of at least 80 points out of 100. Those programs were notified they would share from a pool of $5.4 million, Sandrin said.
Those that did not meet the minimum score were notified this week.
It's part of United Way's decision not to fund local agencies but instead target programs that offer basic needs such as food, housing, transportation, health care, employment, child care and crisis support, said Kristin Bush, a United Way spokeswoman. "We wanted to address specific social problems," she said. "These programs have proven to have the greatest impact on the lives of those in need."
Bush said the new policy should not shed a bad light on nonprofits that did not receive United Way funding. "The Salvation Army and the other nonprofits are wonderful programs, but they were given prior warnings about the change so this shouldn't come as a surprise."
David Threshie, who heads the Salvation Army's 35-member advisory board, didn't argue with United Way's change of emphasis. But he took exception with a paragraph in a letter from United Way President Maria Chavez Wilcox explaining the decision.
"Essentially, it said their ultimate goal is to help people move from crisis to self-sufficiency and legitimacy," with jobs, education and other services, he said. "Well, that describes what the Salvation Army is doing.
"This decision," he said, "will have quite a significant impact on the community."