When you contribute to the United Way, you are actually giving money to an umbrella organization consisting of around 1,800 local United Way agencies in over 40 countries all over the world. Most of your donation stays in your local community, supporting charities you designate, while a portion is used for administrative expenses and fundraising. Since each local United Way has its own unique expenses, you have to look to your local organization to determine just where your donation goes.
The primary work of United Way is performed by thousands of local agencies, in cities, towns, and countries all over the world. Each has its own cost structure, but thanks to a set of global standards developed by Worldwide United Way, local organizations have strong guidance when it comes to dealing with donated funds.
Breaking Costs Down: How Much Goes to Charity?
Per their Annual Report for 2018, United Way Worldwide claimed combined administrative, non-operating and fundraising expenses of 5%, meaning that they spend approximately 5 cents for every dollar donated on organizational costs, and the other 95 cents go directly towards community projects. This is well below Better Business Bureau Wise Giving Alliance Standards for Charity Accountability that allow up to 35%in overhead costs. Each local United Way agency, however, is different, so the first thing you need to do is find your local agency's information about its overhead costs.
Using United Way Resources
To obtain the figures for your local United Way, you can start by referring to the local agency website. As with the list of approved charities, it may require a little searching to locate the information. Typically, it can be found under "Annual Report" or "Report to the Community."
Charity Navigator Figures
Another option is to go to the home page of the Charity Navigator website, and type into the search bar the full name of your local United Way. There you will see a full financial accounting, including administrative expenses, fundraising expenses, and program expenses.
- Administrative expenses are defined by Charity Navigator (a charity watchdog organization) as the percent of its total budget a charity spends on overhead, administrative staff, and organizational meetings.
- Fundraising expenses, as you might guess, refers to the percent a charity spends to raise money.
- What is left are program expenses, which reflects the percentage of an organization's total budget spent on programs and services - in other words, the work of that charity.
The United Way of Metropolitan Chicago page on Charity Navigator lists administrative expenses of 6.8%, and fundraising expenses of 9.4%. This leaves a little more than 83.6% for program expenses. This means that for every dollar donated to this United Way agency, the agency takes out just under seven cents for administrative costs and just over nine cents for fundraising. Nearly 84 cents of each dollar go directly to community projects.
More Detail on Administrative Costs
If you want more information, you can always contact your local United Way agency, and ask questions via the contact information provided on the website about anything you do not understand.
In addition, you can find the local agency's most recent Internal Revenue Service Form 990 (a non-profit's tax return) on its website. An organization's IRS 990 breaks down income and expenses in minute detail. Understanding this document can be a daunting task. Fortunately, the Nonprofit Coordinating Committee of New York has put together an easy to follow guide to help you understand the most important sections of IRS 990.
Kinds of Projects United Way Supports
While some money goes towards administrative overhead, the majority of your donated dollars go to the three focus areas that United Way supports. Since every local agency seeks to make the maximum impact in their community, each locale has different specific projects. However, you can be assured that your money is going towards one of three focus areas to help your community.
- Education - The organization has a variety of initiatives that help children succeed in school. This can vary from working with early childhood education to graduating seniors.
- Financial stability - United Way's commitment to helping people find stability financially produces projects like financial wellness classes and job training.
- Health - The focus on health works with local areas to promote healthy eating, physical fitness, and expanding access to quality health care.
Giving to United Way
United Way Worldwide and local agency websites provide a wealth of information and are remarkably transparent about where the money goes, according to the Better Business Bureau. In addition, overhead costs are reasonably low. By using the sources outlined here, you can determine just how your United Way contribution is distributed and how much of it actually goes to the charities you support.