LOUISVILLE, Ky. (WDRB) – Metro United Way has told the more-than 100 Louisville-area nonprofit agencies that it has traditionally funded for years or even decades to brace for more cuts in the next two years and not to count on any funding starting in 2022, as United Way moves to a competitive process to allocate its dollars.
The changes, which nonprofit executives called “painful” and “devastating,” come as the agencies are already absorbing cuts of 30% to 50% to their annual United Way allocations in the current fiscal year ending June 30.
Many of those same agencies were also hit with cuts from Louisville Metro government as the city dealt with its budget crunch last year.
“It’s really devastating,” said Diane Nelson, executive director of Visually Impaired Preschool Services, which helps educate about 150 blind children in the metro area. “… We have great concerns that one, secure pool of dollars that we have relied on since 1985 is now gone.”
Metro United Way, which has for decades raised funds primarily through worker paycheck deductions and corporate donations, is looking to “shift our resources into alignment of the areas with the most need” in Louisville, CEO Theresa Reno-Weber said in an interview Wednesday.
United Way told its “partner” agencies earlier this month that, starting this summer, it will begin moving to a “new investment process” in which agencies would submit request for proposals, or RFPs, for funding rather than receiving relatively stable — albeit declining — allocations from United Way’s annual fundraising bounty.
United Way has been grappling with a national trend whereby employee payroll deductions to charity are declining and big donors such as corporations and foundations want to fund specific projects instead of giving dollars that can be spread across agencies with no strings attached.
“The days of unrestricted dollars — ‘here is a huge check’ — are slowly starting to fade,” said Elizabeth Wessels-Martin, president of the Center for Women & Families, a United Way partner agency.
United Way plans to cut traditional partner agency contributions by 20% in the fiscal year that starts July 1, but the savings will be set aside into a pool. Traditional partners and other nonprofits that haven’t been funded by United Way will be eligible to win those dollars through the new, competitive process.
Another 20 percent cut will follow in 2021 – with the competitive pool growing a corresponding amount – until all dollars are awarded through the RFP process starting in 2022.
The changes affect Jefferson County nonprofits, to which United Way committed about $4.7 million in all during the current fiscal year, down from $7.6 million the previous year.
Reno-Weber said it’s too soon to say whether the change will result in fewer local nonprofits receiving United Way funding, though she acknowledged that some agencies may not get money starting in 2022.
“We are still going to have a collection of partners that we are investing in to do important work in our community,” Reno-Weber said.
Reno-Weber said the new process is aimed at funding agencies that can accelerate Louisville’s progress in key areas -- education, wealth and income, housing and racial inequity.
She said United Way encourages partner agencies to “think differently” and “help us co-create new ways to getting to the results that we want to see as a community.”
“When we look at the data, we say, we are just not making impact fast enough. How do we take the things that are working and scale them?” she said.
Some charity executives say they’re worried about the uncertainty of United Way funding in the new process.
“It’s a really hard adjustment when one wants to have a reliable, sustainable source income,” said Jeri Swinton, who runs Big Brothers Big Sisters of Kentuckiana, which gets about 9% of its budget from United Way.
Big Brothers’ United Way funding declined from $264,608 last year to $179,735 this year, according to the agency.
“It is heavy lifting to replace historic funding that you have always had,” said Paul Robinson, who runs Louisville’s Home of the Innocents, which got about $162,000 from United Way this year.
Nelson, whose agency serves visually impaired children under the age of 5, said she fears that niche won’t fit with United Ways’ priorities.
“We are pretty much sure we are out of the game,” she said.
VIPS once received about $120,000 a year from United Way, and it’s now about $42,000. The agency has about a $2.8 million budget, she said.
Robinson, of Home of Innocents, said he assumes United Way will not fund his agency at its current level in three years, but it’s hard to predict.
“They (United Way) have made no commitment and provided no concrete details as to what they will fund” beyond 2021, he said.
Wessels-Martin, of the Center for Women & Families, which provides shelter and services for victims of domestic violence, said she’s optimistic about winning funding in future years based on United Way’s priorities, particularly affordable housing.
“Is it scary? Yeah, because it’s change and it affecting the dollars that we all need,” Wessels-Martin said. “I am hoping this will be positive.”