United Way — Live United
Frequently asked questions about United Way of Lane County’s Charity Navigator Rating
Why did the United Way of Lane County Charity Navigator rating drop from three stars to two?
United Way of Lane County is considered by Charity Navigator to be solely a fund raising organization in spite of the many community programs United Way directly leads. Because of this narrow categorization, our score is most heavily weighted to evaluate our revenue growth (as opposed to the weighting applied to a human service organization, or an educational institution). When our revenue trend or program expenses decline our rating will drop.
United Way of Lane County’s revenue and expenses can swing significantly from year to year. If a large grant is booked, it gives UWLC’s revenue a boost for that reporting year only. If that grant is then paid out to partner organizations over the next two to three years, the 990 reports will appear as if we are engaged in deficit spending. We anticipate an upward swing due to increased revenue from grants in the upcoming reporting cycle.
As Charity Navigator reports, United Way of Lane County receives a score of 100% for accountability and transparency making the financial weight on revenue being the factor that adjusts the Charity Navigator score down.
It was the revenue decline along with our reserve reductions that most strongly influenced our recent Charity Navigator rating. (NOTE: While our undesignated reserves have been utilized, our Board-established Emergency Reserve Fund remains untapped.)
Wouldn’t one solution be to distribute less to the community and keep more in reserves?
UWLC has a reserve fund for a reason – to enable us to continue our work and meet our commitments during tough times. As a stable organization, our reserves are ample to meet the need. After several years of campaign revenue decline during the recent recession, however, it was clear that we had more difficult decisions to make.
In 2015, United Way of Lane County had to pass along a funding reduction to our partner agencies, amounting in the absence of a December payment to agency partners. This decision was made with insights from our partners in the nonprofit industry and across the community. By timing the funding reduction for the last month of the current investment cycle and at a time when most partners were in the process of their campaigns, we attempted to pass along the most minimal disruption possible to partner programs.
Our volunteer leaders are sensitive to outside ratings such as Charity Navigator but don’t make decisions to incur high scores. Their decisions are mission-based and aimed at creating opportunities for a better life for all of Lane County, not just United Way.
Some other charities kept their higher rating. What’s different for United Way?
Charity Navigator uses a single measuring tool to evaluate over 5,000 charities, IRS Form 990. According to Charity Navigator, this is because, “…it is the only financial statement that charities are required by law to make publicly available.”
The IRS designed Form 990 to “capture the activity” of the organization and thereby provide the IRS with information that helps them to enforce current tax law; it was not designed to provide the basis for “standardized growth measurements.”
Charity Navigator itself reports, “...we do not recommend using our ratings as the only factor in deciding whether to support a particular organization.”
Why aren’t there Charity Navigator points for all of United Way’s community work?
Because United Way’s value to the community does not show up in a simple formula nor can it be reported on IRS Form 990.
For example, in 2014 along with our partners, we organized tax sites that brought $7 million into the pockets of the working poor using hundreds of volunteer hours. That $7 million immediately went to work in this community by allowing low-wage families to pay rent, buy clothes and food, and more. But it won’t show up in our IRS 990.
The same can be said about the 2,100 children in Lane County under the age of three who have received a developmental screening, an increase of 265% over previous counts. This effort was spearheaded by our Early Learning Alliance, a group of community partners making an impact for children and families in Lane County. Our financial outlay for this work is mostly funded through state and federal grant funds but the community impact is significant.
Does Form 990 measure a charity’s effectiveness?
Charity Navigator admits that using IRS Form 990 as the sole way to determine its one-to-four star ratings leaves out one of the most important measures; that of an organization’s effectiveness. Per www.charitynavigator.org“…, evaluating the effectiveness of a charity's programs is out of our scope. We hope over time to expand the information we provide donors, and that includes developing a methodology for measuring an organization's results.”
Is United Way of Lane County stable and strong?
Yes. Thanks to our highly-regarded volunteer leadership teams and professional staff, your United Way is a healthy organization. We have stayed true to our values of integrity, impact, volunteerism, equity and inclusion, compassion and innovation. Yes, our reserves are modest but adequate to the times. We have adequate cash flow to meet our obligations and have protected our board established emergency reserve.