A Better Way to Make a Difference?

The new CEO's vision for United Way riles some chapters

When Brian A. Gallagher took over as head of the United Way of Central Ohio in 1996, he quickly made waves at the Columbus-based charity. Instead of simply funding all the charities that provided beds for the homeless, he sat down with advocates to figure out a better plan to fight homelessness itself. He and the group came up with an idea called the Family Housing Collaborative, which helps homeless families get low-cost apartments and gives them day care and job training.

The new push helped drive down the number of families in Columbus homeless shelters by 39% from 1998 to 2000. But it also riled some shelters that lost funding when United Way gave money to the collaborative--and not to them. "They saw the United Way's job as being a fund-raiser for charities," recalls Gallagher, "and this sounded to them like social engineering."

Now, Gallagher is in a position to do some of that kind of social engineering on a national scale. He took over as CEO of the parent organization, United Way of America, based in Alexandria, Va., in January. And he's hoping to transform the nation's largest charitable group from an organization that just raises money and gives it away into a community collaborator that helps solve social problems.

Gallagher, 43, is part of a wave of young United Way leaders who want to deal with systemic issues such as homelessness and racism not only with money but also with leadership and activism. The goal in a period of proliferating charities and causes: to show corporations and the general public that their donations really do make a difference. "Unless we change, we are going to become obsolete," says Elinor J. Ferdon, chair of the United Way of America's board of governors.

But Gallagher won't get automatic fealty from his colleagues. In fact, many of United Way's 1,400 local chapters see no pressing need to change. Nor do they have to follow the new CEO's lead. The chapters, run by volunteers, decide on their own how to raise money as well as which charities to spend it on. They also don't like to take direction from Alexandria, as they made clear in 2000 when they rebelled against former CEO Betty S. Beene's unsuccessful bid to have the national office process donations from large companies. Some larger chapters even withheld part of their dues to the national organization--one of the reasons Beene resigned in 2000. The turmoil occurred just as the agency was recovering from a 1992 financial scandal involving former CEO William V. Aramony.

If chapters do go along, the new approach is likely to involve them even more closely with big corporate donors. Not all would be affected, says Gallagher, since individuals and companies can still earmark donations for specific charities if they wish. But chapters would need to work with local corporations and philanthropies to choose which social problems to tackle and how, just as Gallagher did in Ohio.

Some corporate donors think that could be a good thing. The downturn is squeezing pocketbooks, and September 11 fund-raising means the United Way may not match the $3.9 billion it raised in fiscal 2001, which ended last June 30. In fact, chapters in the big cities such as Atlanta and Chicago already have warned that current campaigns will fall short of goals. A more focused approach may help keep United Way relevant, says Evern D. Cooper, head of the UPS Foundation, the charitable arm of Atlanta-based United Parcel Service Inc., United Way's largest single donor last year. "These days, stakeholders are looking at the outcome of their donations," she says.

Gallagher hopes to use his status as a consummate insider to persuade local chapters to adopt his activist approach. The Hobart (Ind.) native, whose family occasionally took charitable aid to help pay the bills, has spent his 20-year career at United Way. After getting an undergraduate degree in social work from Ball State University in 1981, he worked at various United Ways across the country, spending almost six years in Atlanta before taking over in Ohio.

Following Gallagher's lead would require a new mind-set among local United Way presidents--and maybe even new skills. The group's traditional approach is to push companies and individuals for money, then hand it out to a wide array of worthy causes, from the Salvation Army to the American Cancer Society. Chapters make decisions about which group gets how much based on who submits requests, along with a general sense of which problems are most pressing in their communities. But many chapter leaders don't consider themselves equipped to tackle social problems more directly. "I don't think we have the knowledge to do that," says Mark S. Johnson, head of the United Way of Southwest Alabama. "We're funders."

Gallagher will also have to reassure charities concerned about being left out in the cold. Those that can't easily measure results may lose crucial funds even if they're effective, worries Anthony J. Braswell, executive director of AID Atlanta, an AIDS support group whose United Way funding request was rejected last year. Gallagher counters that he's interested in identifying critical issues and coming up with strategies to fix them, "not [making] sure that all agencies have financial support." Clearly, trying to nudge a philanthropy that has been around since 1887 will take all the leadership Gallagher can muster.

By Darnell Little in Columbus, Ohio

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