The United Way of Central Carolinas is warning partner agencies it plans to reduce grants by more than half next year and eliminate most grants altogether in 2023 because of a continuing decline in contributions.
The warning came in an email this week to the 70 current recipients of United Way "Impact Grants" who are getting a combined $8.8 million this year. Those annual grants help pay operating expenses for groups that provide emergency housing and financial assistance, child care, youth development, mental health, legal aid and other services.
The United Way makes grants to agencies in Mecklenburg, Cabarrus, Anson, Iredell and Union counties.
United Way revenues have fallen nationwide in recent years as workplace giving campaigns have fallen out of favor. CEO Laura Yates Clark expects another 20-25% decline this year. That's well above the 10% Clark expected as recently as December.
"The pandemic seems to have really impacted our campaign," Clark said Wednesday. "And we are anticipating that when the numbers are final, because everything is still preliminary right now, that the campaign could be down by up to $3 million."
To make up the difference, Clark said they'll reduce grants by 54-68% beginning in January 2022 and eliminate grants in 2023. That's on top of a 25% cut in grants two years ago.
The move will affect organizations like the Salvation Army, which got $839,000 last year, and Crisis Assistance Ministry, which got $283,000. Others include legal aid, YWCA and YMCA, and the Boy Scouts and Girl Scouts.
The cuts will affect agencies in different ways depending on how much they have relied on United Way. Clark said many have already diversified their funding sources and begun to develop their own in-house fundraising expertise.
For the past few years, the United Way has dipped into its reserves to preserve grants. But its board decided to stop the practice as reserves decline. The organization also cut its own expenses by $1 million over the past couple of years, including by eliminating positions and selling its uptown headquarters on Brevard Street.
United Way of Central Carolinas now has 34 employees, down from about 50 when Clark took over as CEO a few years ago. Its reserves stand at about $10 million. But Clark said that's only because it sold the headquarters for $9.7 million.
"If we had not sold the Brevard Street building, the reserve fund would essentially be at zero," she said.
The question is what the United Way will look like in the future.
Clark said the United Way is in the midst of studying how to reinvent itself. She says that likely will mean a "more targeted initiative" that would fund fewer agencies at lower levels. And they'll focus on the United Way's own neighborhood programs to improve economic mobility and racial equity.
It's also likely to remain an organizer in times of crisis, as it has in recent years. The United Way played a crucial role last year in organizing the Charlotte-Mecklenburg COVID-19 Response Fund. The fund raised and gave out more than $25 million to organizations affected by the pandemic.
And it helped raise $270,000 in 2019 to provide financial support and find housing for residents evicted from Lake Arbor apartments after the owners announced plans to shut down the West Charlotte low-income housing complex.
Clark said Charlotte will continue to need an organization of some kind to lead the way.
"If we want to have a world-class city, then that means making sure that the least among us are taken care of," Clark said. "And that's going to require us to have a long-term vision for how we're going to do it together. It can't be piecemeal. It can't be scattershot. And if it's not United Way, OK, but how are we going to fund it? And what is the mechanism for that going to be?"
Read The United Way email
Here's the text of the United Way email to stakeholders Monday, March 16, 2021:
"Dear United Way of Central Carolinas Family:
Our United Way traces its roots back to the Great Depression, when community leaders realized the wisdom of a single fundraising appeal to efficiently allocate resources to nonprofits during a time of extraordinary need. As the COVID-19 pandemic hit our community nearly 100 years later, we were once again reminded of the importance of this role. In partnership with Foundation For The Carolinas, we launched the COVID-19 Response Fund to efficiently raise and allocate nearly $25 million to our nonprofit partners as they faced ever-growing demand for critical services.
When I stepped into the role of president and chief executive officer two and a half years ago, I knew we faced significant challenges. The United Way of Central Carolinas Board of Directors and I worked quickly to restructure our internal operations and community investment strategy, and to increase efficiency and strengthen our impact. We have made great strides since that work began and the work continues this year through the Reinvention planning we have launched to ensure a sustainable business and revenue model for the future.
Despite these efforts, the pandemic has profoundly impacted our organization, as it has so many others. As we have shared since 2018, our United Way has for years faced significant challenges related to declining workplace-giving revenue. This trend has now accelerated due to the pandemic – we currently estimate campaign revenue may be down by as much as $3 million compared to last year.
Since the 2009 economic recession, we have used our financial reserves to bridge the gap between funds raised and dollars granted to ensure our partners have the resources they need. But this is not sustainable, and in 2018 our board announced its commitment to ending our reliance on reserves. Last year, faced with the uncertain impact of the pandemic on our partners, the board voted to use up to $3 million of reserve funds one final time to maintain our overall funding level, enabling us to invest $10.7 million in 119 agencies at a time when our community needed help the most. That funding will support our partner agencies’ work throughout 2021.
The continued decline in workplace giving, coupled with a commitment not to tap into financial reserves, means funding to our partners inevitably will be impacted in 2022. With fewer resources available, now more than ever it is vital to put all our energy behind our impact strategy focused on improving economic mobility and racial equity. We will continue to invest in neighborhood-based strategies through United Neighborhoods and Black- and Brown-led grassroots nonprofits through Unite Charlotte. Funding to both initiatives will remain consistent from the prior year.
To compensate for the decline in revenue, in 2022 we will reduce funding to our Impact Grant partners. The reduction could be between 54% and 68% based on current revenue estimates. In 2023, Impact Grants will be eliminated and likely replaced with a more targeted initiative. Smaller grants will likely be awarded to fewer nonprofits.
This decision was not made easily. However, we are committed to achieving the greatest impact with our increasingly limited resources.
Thousands of donors trust United Way of Central Carolinas each year with their investment because we are uniquely positioned to achieve impact through a network of collaborative partners. As you reflect on this message, I hope you will consider making a gift to United Way. If you are already a donor, I hope you will consider increasing your gift.
Our community still faces great needs as we recover from the pandemic. Our nonprofit partners rely on the general operating support they receive from United Way, so they can focus on meeting those needs. Please help us make that possible.
On behalf of the board of directors, thank you for all you do to support United Way of Central Carolinas and our community.
Sincerely,
Laura Yates Clark, President & CEO, United Way of Central Carolinas"
