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A positive step; Discontinuing administrative fee will help United Way in the long run

Changes being implemented by the United Way of Buffalo & Erie County will hopefully lead the way to increased donors. It's worth a try.

During difficult economic times when donor dollars have been on the downswing, the United Way has chosen to take a step back and end a decades-long practice of deducting an administrative fee from the workplace campaign gifts that donors designate for use for specific charities.

There is a cost borne by the agency to shepherd those designations. But, in the end, it may be well worth it and serve as a way to increase contributions.

Last year, the United Way saw $13.3 million in contributions, reversing a negative trend from the prior year of $12.97 million. And $3.5 million of that money was donor designated.

Both the United Way board and executive leadership deserve credit for instituting this bold initiative, along with others, to save money and move the agency forward.

There isn't a charity without an administrative or overhead cost associated with designating donations, and the percentage varies. But in the past, people in the community and in workplace campaigns have seen the fee as an impediment and there are those who chose not to give through United Way because of that fee.

Led by President Michael Weiner, staff developed a business case, studied the ramifications for eliminating the fee, researched the issue with other United Way agencies, conducted several meetings with the executive committee and made a formal presentation to the board. At the end, they saw that eliminating the fee could benefit the community.

Community agencies would see 100 percent of those donor-designated contributions, instead of 87 percent. Donors would feel more comfortable making those contributions through the United Way since all the funding would be passed on to charities of their choice.

Given the economy and the fact that not-for-profits are struggling financially because government is reducing funding support, there are fewer grant opportunities, and charities are less able to provide the kind of support those organizations need. And this comes at a time when more people are demanding services in challenging times of income, education, health and wellness issues.

In many ways, as officials said, now is a good time to introduce the fee waiver.

True, the United Way is walking away from approximately $220,000 in fee revenue. Officials say they have some ideas how to mitigate those losses, starting by looking at a multiyear level. They have created a Six Sigma project and looked at the application process for designations and payment to those agencies during the year and uncovered a couple of activities and practice changes that could be made that would allow pledge processing payments to be managed in a more efficient manner.

It won't save a million dollars, but it will save money by reducing the number of man hours needed for the pledge processing practice. And by the third year, the United Way is hopeful it can save more than $30,000 just in terms of changing some business practices.

The United Way is trying to build good will within the community by demonstrating that it is a reliable steward of the donations it receives. That should help to produce new donors and encourage existing donors to give even more.

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