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Parting ways

With latest United Way scandal, cracks in century-old cooperative become gaps

Taken all together, the United Way is the largest charity in the United States. The organization's 1,300 local chapters raised more than $4 billion last year.

So it is perhaps natural that an organization of this size has had its share of controversy. In many major cities, a seat on the local United Way board is the most important business networking opportunity in town, creating a "pay to play" mentality, with business leaders pressuring employees to give.

In addition, some local United Way chapters withhold funds from conservative groups like the Boy Scouts, while funding groups like Planned Parenthood. And from time to time, financial scandals bubble up: In 1992, William Aramony, United Way CEO, was convicted of misuse of donations. In May 2004, Oral Seur, CEO of the influential Washington, D.C., chapter, was convicted of fraud and sentenced to 27 months in jail.

But few scandals have focused the attention of United Way leadership like the one that has come to Charlotte, N.C. United Way of the Central Carolinas raised a record $44 million last year, making it one of the largest chapters in the country. Chapter President Gloria Pace King was a United Way superstar, traveling the country to encourage other chapters. She also received superstar compensation. Her salary of $365,000 per year put her behind only the presidents of the New York, Detroit, and Miami chapters. But what led to her downfall was the disclosure of an $822,507 payment to her retirement plan. She and the local United Way board said she was just getting "caught up" after years of underfunding the plan. But when a local TV station revealed that the plan would allow her to receive over $200,000 a year for life, the public-and even the board that had approved the payment-balked, and King was fired last month.

But what is capturing the attention of United Way leaders around the nation is the fact that King is not alone. The president of the Atlanta chapter, Mark O'Connell, recently received a $1.6 million payment to his retirement plan. "The executives and the boards resort to these one-time payments in part because it makes them look efficient-at least until the year in which the payment hits," said philanthropy expert Arthur C. Brooks. "Often, though, the executive receiving the payment is either gone, or preparing to go." Indeed, nonprofit watchdog Charity Navigator had given United Way of the Central Carolinas high marks for financial efficiency. And King, according to insiders at the United Way, had been talking about retirement.

Former Charlotte City Councilman Don Reid has been a vocal critic of the United Way for years. "The way they raise money from employees amounts to extortion," he said. "The executives look good in the community if their companies are big contributors. They get invited to all the right parties. So they make involvement in the United Way campaign a subtle but real condition for career advancement." He called the Gloria Pace King scandal "typical of the way they do business. It's a payoff. She may have lost her job, but she was going to retire soon anyway, and she rides off into the sunset with $200,000 a year for life."

But Brooks said that way of doing business might be coming to an end. "Philanthropy in America is becoming more democratic," he said. "The individual giver, not corporate giving, is becoming more important. The internet has the ability to aggregate small giving into a big impact. We saw this following 9/11, following Katrina, following the Indonesian tsunami."

In other words, in the world of the future, donors will still look for opportunities to give in a united way, but it will likely not be through the United Way.

Lucrative at the top

Here are the highest-paid local United Way agency presidents:

New York City: Lawrence Mandell, $429,419

Detroit: Michael J. Brennan, $372,484

Miami-Dade: Harve Mogul, $369,356

Charlotte: Gloria Pace King, $365,000

Atlanta: Mark O'Connell, $352,611

SOURCE: IRS, The Charlotte Observer

Rusty Leonard

Rusty Leonard

Rusty is a former WORLD contributor.

Rusty Leonard

Warren Cole Smith

Warren is the host of WORLD Radio’s Listening In. He previously served as WORLD's vice president and associate publisher. He currently serves as president of MinistryWatch and has written or co-written several books, including Restoring All Things: God's Audacious Plan to Change the World Through Everyday People. Warren resides in Charlotte, N.C. Follow him on Twitter @WarrenColeSmith.