Key Principles and Financial Practices
We want you to know that:
There are approximately 1,400 community-based United Way organizations in the United States. Each is a separate, independent and autonomous non-profit organization governed by a local volunteer board of directors.
In this day for increased competition for charitable gifts, donors’ standards and expectations have never been higher. Rightfully so, United Way of the Capital Area understands the importance of ongoing organizational excellence and accountability.
For key principles and financial practices of United Way of the Capital Area, please click any of the following:
Financial reporting and auditing
The financial statements of UWCA are fairly presented, in all material respects, in conformity with accounting principles generally accepted in the United States of America. Our fiscal year end is June 30.
To help explain the relationship of our organization’s ongoing major operation (fund-raising), our statement of activities (income and expense statement), in compliance with FASB Statement No. 117, reports the gross amounts of revenues and expenses.
UWCA looks to its volunteer Board of Directors, a diverse panel of business and community leaders, to help make certain that its assets are managed wisely. The Treasurer (of the Board) interacts with management, ensuring the financial results from operations are accurate and communicated to the volunteers in a timely manner. [Note: financial results are compiled and made available monthly.]
UWCA also benefits from the expertise of its Finance Committee. This group of volunteers reviews and supports the administrative and fiduciary duties of this organization as they relate to our mission and strategic objectives. Additional financial oversight and support is provided by the Investment Committee (a sub-committee of the Finance Committee).
Each year, an independent audit of UWCA’s finances is conducted by an outside accounting firm. For 2004, the Finance Committee voted to publicly seek proposals from national and regional accounting firms, with an established presence in our 40-town community, for the performance of its independent audit and related accounting and tax services. The firm approved through this selection process, as conducted by the volunteers of this committee, was Haggett Longobardi LLC (Glastonbury, Connecticut).
As a result of their audit, Haggett Longobardi LLC issued an unqualified opinion (“highest” statement a firm can issue) on the organization’s financial statements for the year ended June 30, 2004. Also, there were no changes in significant accounting policies or new standards identified and reported as a result of this most recent audit.
Campaign results are generally calculated on gross amounts raised for all campaign efforts within a specific geographic area. UWCA counts all funds generated where it manages the campaign and incurs the costs to do so.
UWCA is the Principal Combined Fund Organization (“PCFO”) for the Combined Federal Campaign (“CFC”). This campaign is the employee charitable effort of federal employees within the 40-town area UWCA serves. As an annually approved PCFO, UWCA administers this campaign and records the results in our consolidated financial statements. As required, the activities and functions required by being a PCFO, including banking, are kept separate from any non-CFC operations of this organization. In addition, our auditors perform the procedures included in the CFC Audit Guide, which was agreed to by the Office of Personnel Management, Local federal Coordinating Committee and Combined Federal Campaign of Greater Hartford.
UWCA does not manage the cash remittances for the State of Connecticut employee’s campaign; however, the local results of that campaign have been reflected in our campaign amounts raised.
The majority of pledges received by UWCA are honored via payroll deductions. Authorized amounts are deducted from individuals’ paychecks each pay period by their employer and remitted to UWCA throughout the year.
Uncollectible campaign pledges
Uncollectible reserves are determined based on historical pledge loss factors adjusted by management estimates of current economic and local business factors, applied to overall campaign activity (including the Combined Federal Campaign and the State Employees’ campaign). Initial reserve amounts are calculated (and recorded) on gross campaign amounts raised. Specific pledge amounts are written off only when management has ascertained the amounts will not be collected. Otherwise, the overall campaign is reconciled and closed at a later date in time.
Should the actual loss be less than the amount set aside, the excess is returned to reserves designated for operations. Should the actual amount of uncollectible pledges exceed the amount set aside for such pledge loss, the difference is made up from unrestricted reserves through charges to operations.
An initial reserve of 6% was recorded for the 2000 campaign. Actual pledge loss was only 4.2% for this campaign, resulting in a reduction to the cumulative pledge expense for fiscal 2003.
The initial reserve for pledge loss from the 2001 campaign was 4%. The actual loss from this campaign was 5.7%, creating an additional operational expense in fiscal 2004.
Initial reserves for 5% and 5.75% were set aside for both the 2002 and 2003 campaigns, respectively. For the 1999 through 2001 campaigns, the average rate of pledge loss was 5.5%.
Community Campaign partnership
In 1983, UWCA signed an agreement with Community Health Charities of Connecticut (“CHC”). Under the terms of this agreement, the United Way Community Campaign would be conducted as a joint solicitation effort, with the intention of providing the donor community with a single campaign through which contributions can be made to the region’s major social and health service providers.
This agreement establishes a schedule for the sharing of campaign receipts between the two organizations, which calls for 20% of the adjusted gross campaign receipts (as defined) due to CHC. UWCA is solely responsible for operating and managing the campaign, including the collection of all related pledges. Funds are distributed to CHC on a scheduled basis (as defined). In addition and per this agreement, CHC is responsible for a portion of campaign expenditures incurred by UWCA.
Donor directed gifts
Through the United Way Community Campaign, donors can direct their gifts to any qualified 501(c)(3) organizations. While the majority of donor designations are passed on without any fee consideration, a 10% fee (including administration and fund-raising costs), capped at $100 per designated gift, is deducted from donor designations to UWCA partner agencies, designations to United Ways (and their local member agencies) in other states, as well as non-affiliated 501(c)(3) entities.
In some cases, companies have promised their employees that 100% of their gift goes to the designated agency. In those instances, the company in turn provides an additional gift equal to 10% of the employees’ designated gifts to cover the administration fee.
For all donor directed gifts, UWCA does not deduct any fees as consideration for uncollectible campaign pledges.
Contributions from other United Way campaigns
This revenue is recorded in our financial statements, net of any pass-through amounts directed to local community agencies. No fees are deducted (by UWCA) on any such donor-restricted gifts.
Gifts in kind/volunteer time
Contributed materials and equipment are recorded at their estimated fair values at date of receipt. Any such amounts are reflected as non-campaign contribution revenue and as assets or expenses.
While volunteers are the means of support for UWCA, the value of this contributed time does not meet the criteria for recognition of contributed services and accordingly, is not reflected as support in our audited financial statements. The hundreds of volunteers, including members of the Board of Directors and its committees, who donate their time during UWCA’s annual campaign and the rest of the year, constitute a significant factor in the successful operation of this organization.
Local volunteers determine how donor dollars designated to UWCA’s Community Investment Fund will be used to most effectively improve conditions for children and adults in our community. Final recommendations are grounded in United Way’s values and information about what children and adults need, as well as in the context of our geographic service area and economic climate.
More than 100 volunteers who live and work in our 40-town region, and are donors to the annual Community Campaign, are involved. These volunteers have varied backgrounds including banking, finance, health and human services, human resources, law, and public administration. They are trained to assess “what’s working” and “what’s needed” in order to determine the appropriate level of support awarded to programs and community initiatives that serve children, families and neighborhoods in this community.
The process of distributing Community Investment funds is as follows. First, an interested nonprofit organization applies to be considered a UWCA partner agency. These agencies must meet minimum requirements of eligibility. Those that meet the certification standards become UWCA partners and are listed in our Community Campaign materials. Agencies must be certified to be considered for an invitation to apply for Community Investment funding.
Agencies invited to apply for funding do so during the winter via an online application, providing information on past results, anticipated outcomes, demographics, staff qualifications and budget. Resource investment volunteers conduct site visits and ultimately make funding recommendations to the Board of Directors in June. Funding decisions are based on outcome evaluations of the programs, in addition to financial and budget review. Funding commences in July and runs through the following June. These “future”, unconditional agency investments are accrued in the financial statements. [note: It is this United Way’s policy that all distributed/”allocated” funds be expended by June 30th of the fiscal year for which they were awarded.]
Operating budget oversight
The annual spending plan and operating budget of the United Way of the Capital Area is developed by management, evaluated and reviewed by the Finance Committee before being approved by UWCA’s Board of Directors.
In June 1998, the Board of Directors of UWCA adopted an annual spending policy that was designed to free up funds for current operating needs while preserving the real value of the unrestricted reserves over time. Funds are not intended to be used for campaign shortfalls and this spending policy is not mandatory.
Management expense oversight
The UWCA Benefits and Compensation Committee comprised of board members and other volunteers review all benefits annually and establish the compensation of the President/CEO based on an annual performance review.
All expenses incurred by the President/CEO are reviewed regularly by the Chairperson of the Board. Internally, each manager reviews the expenses of his/her direct reports.
All members of the Board of Directors and its committees are volunteers and are not compensated for their time.
United Way of America membership
United Way of America (“UWA”) is a national leadership organization dedicated to the United Way movement in making a measurable impact in every community of America. As a member, United Way of the Capital Area provides financial support to UWA in accordance with the agreed upon membership formula. In return, UWA provides support services including training, consultation, mediation, conferencing, national research and assessment tools.
In 1999 members of UWA adopted membership criteria to ensure that all members meet basic legal, financial and ethical standards. In 2003, the criteria were enhanced with the adoption of additional membership standards to ensure consistent and transparent reporting among member United Ways. To become a member or remain a member in good standing, each organization or member certifies annually that they have met the basic criteria for membership to UWA.
Relationships with other United Way and not-for-profit organizations
There are six United Way organizations identified as affiliates of UWCA for fundraising (and administrative) efficiencies within our 40-town community. As recognized organizations described in Section 501(c) of the code and are not considered private foundations, donors of the single United Way Community Campaign can direct their gifts to these organizations. Fiscal results of these entities are recorded separately and are not included in the financial results from operations of UWCA.
UWCA has agreements with the United Way of Greater New Haven and other local not-for-profit organizations where administrative services (staffing, accounting, information technology, etc.) are provided by UWCA for a fee. This fee activity is recorded as non-campaign income on our financial records.
If you have further questions, please feel free to contact:
Anthony J. Mascaro, Jr.
Vice President, Finance & MIS
United Way of the Capital Area, Inc.
30 Laurel Street
Hartford, CT 06106