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United Way ends fee for donor-designated gifts

The United Way of Buffalo & Erie County will end a decades-long practice of deducting an administrative fee from the workplace campaign gifts that donors designate for use by specific charities.

The United Way's board of directors recently voted to stop withholding a 13 percent "processing fee" on what are known as donor-designated contributions.

United Way officials estimate the move will cost the organization $220,000 funds that will end up with area human services agencies as unrestricted gifts.

"Ultimately, this decision will help us attract more donors and get even more resources to not-for-profit community agencies," said United Way Board Chairman Bob Zak, president of Merchants Insurance Group.

The fee covered the United Way's overhead costs for passing donations onto other nonprofit charities, per donors' requests.

But charities objected because it cut into their potential revenue. Donors also resented the fee, which had been in place since 1984, when the United Way began allowing donor-designated contributions through its workplace giving campaign.

"We were hearing from donors in the community that they see the fee as as an impediment to giving," said Michael Weiner, United Way president. "We feel like people were walking away from us."

The Agency Executives Association, a network of area nonprofit directors, already has written to the United Way board applauding the change in policy.

United Way's overhead costs for donor-designated gifts aren't going away, but agency officials said they expect the good will generated from the dramatic policy shift will spur more contributions to the United Way's community care fund.

"There's some risk," Weiner said. "We're confident we're going to mitigate most, if not all, of that risk."