Capacity Building and Citizen Engagement

Community Capacity Building Through Strategic Philanthropy at the United Way

Yoel Camayd-Freixas, Gerald Karush, Melissa Nemon, and Richard Koenig

United Ways (UWs) have played an intermediary role among nonprofits, collecting donations through workplace campaigns and disbursing funds to local agencies. Faced with increased competition from single-issue philanthropies, decreasing donations, and diminishing relevance, the United Way of America (UWA) recognized the need to compete in this changing environment. Its guidance has driven local UWs to adopt a business model to show that programs impact communities they serve – a good strategy but difficult to implement and measure, and fraught with sensitivities and unexpected pitfalls. This chapter offers a case study of a research, planning, training, and organizational development program by Heritage United Way (Heritage) of Greater Manchester, New Hampshire, with the support of a local university. This case study serves as a model for other cities and explores implications for community and organizational capacity building, strategic philanthropy, public participation, and civil society in community development.


UWA has served as an intermediary, linking donors to local nonprofits through workplace campaigns. Historically, UWA chapters used a community chest model – the core annual funding came from local workplace campaigns – and their philanthropic approach consisted of disbursing campaign moneys to local nonprofits. Indeed, the forerunner organization to the UWA was called the American Community Chest. UWA, like its forerunner, is not a foundation; it lacks an endowment and relies on an annual fund-raising drive for its philanthropy and operations.

Businesses are UWA partners. Businesses and employees participate in workplace campaigns through payroll deductions, business donations, and the pro bono expertise of CEOs, COOs, and CFOs as “executives on loan" to nonprofits and as UWA board members. Designated “United Way Agencies" – affiliated nonprofit recipients of UWA – are also partners. Agencies participate in workplace campaigns and employee payroll deductions, staff organize workplace campaigns and special fund-raising activities, and senior nonprofit leaders serve on boards. Community volunteers – including business and nonprofit staff – are also UWA partners. UWA volunteers staff community investment activities in which volunteers review applications, attend site visits, and make recommendations to UWA boards to increase, decrease, begin, or end program funding. UWs are bound to community partners in a choreography of fund-raising, decision-making, policy, operational management, philanthropy, and community service; building civil society is an integrative principle.

A hallmark of the UWA, and an important strategic advantage, is the ability of local chapters to connect the community to its fund-raising and charitable decisions. Yet this civil society role and organizational strength can act to its detriment. Partnerships between agencies and local institutions (e.g., businesses, government, schools) influence funding allocations on the basis of the need of single organizations, which may not necessarily fit the host community's need. Political considerations play a role. Nonprofits define community needs in terms of what they do, believe they make a difference, and feel justified in competing for resources. Large nonprofits may be a force to contend with. Activist agencies attract media attention, mobilizing public opinion in their favor, and know the UWA network buttons to push. UWs often tread lightly and face difficulty changing allocations. But change does not come easy to an organization that relies on its donor network and philanthropic clients to raise its funds and manage its grant-making. Understandably, UWs became locked into funding select member agencies, linking revenue growth to annual cost of living increases, thus becoming unresponsive to emerging community needs and losing market share to more nimble single-issue philanthropies. Few UWs determined community needs and targeted philanthropy accordingly.

While UW chapters have operated successfully under a community chest model for over ninety years, they have faced increasing competition for two decades. National workplace campaign contributions fell from $4 billion in 2001 to $3.6 billion in 2003 (Talcott 2005). Moreover, UW is no longer the primary source for nonprofit contributions or distributions in many communities. Increased competition from other philanthropies and decreased donations thrust UWs into a more competitive and aggressive fund-raising environment. These conditions, shrinking revenues and shrinking importance, led UWA to rethink how its local chapters should operate.

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