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Potential, pitfalls of United Way merger

Will United Way merger help or hurt?

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By Ed Richter, Staff Writer Updated 8:16 AM Monday, February 1, 2010

MIDDLETOWN — Opponents of Warren County United Way merging with Butler County say there has not been enough discussion or planning to make an informed vote after a meeting on Thursday, Jan. 28.

After three years of talks fell through last summer to create a regional United Way for Southwest Ohio, board members from Warren and Butler counties started the discussion on the possible merger.

Not all members of the Warren County United Way were involved in this discussion. And that lack of communication concerns them.

One thing remains clear throughout the discussions: Both United Ways are seeing a stagnation in contributions and an increase in expenses that has been felt in similar organizations across the country.

Since August 2005, there have been 35 United Way mergers in the United States, according to Jenny Palazio, membership accountability director for United Way Worldwide based in Alexandria, Va. If the Butler/Warren merger is approved, it would be the eighth merger of United Ways in Ohio since 2004.

Palazio said United Way Worldwide does not push for mergers, but the organization is supportive “when the right circumstances exist in the community.”

The two organizations provided funding to more than 100 programs last year and have 59 partner agencies, with contribution campaigns of $2.45 million in Butler County and $2.4 million in Warren County.

The IRS 990 filings available for both organizations show each has had to dip into their cash reserves from 2005-2008 to continue the same level of allocations and services for their agencies. Revenues have slightly increased each year, but the contribution campaigns have stayed nearly level in the past five years.

In 2005, the Butler County United Way had revenues of $2.34 million and expenses, which include allocations and services, of $2.35 million, leaving a deficit of $12,619. In 2008, revenues were $2.36 million and total expenses were $2.56 million, leaving a deficit of $199,448.

Warren’s total revenues in 2005 were $1.89 million and expenses were $2.3 million, leaving a deficit of $454,019, according to their IRS report. Things improved in 2008 as it reported $2.18 million in revenues and $2.3 million in expenses, leaving a deficit of $146,648.

According to merger information documents, Warren has a reserve balance of $296,000 or about two months of allocations. Butler has $365,000, or about two months of allocations as well as an additional board-designated reserve of $414,000.

Steve Hathaway, another Warren board and merger team member, said there “is such a great potential that is tapped and untapped and not to do this would be to maintain the status quo.”

And exploratory committee resulted in the development of a merger proposal that had a quick timeline to be completed before Jan. 1.

But some Warren County board members, such as Dan Engen and Bill Johnson, questioned the proposal, the lack of a business plan, the speed of the proposed merger and the lack of communications with the organization’s stakeholders: key volunteers, campaign volunteers and agency partners.

Between 40 and 50 voting members attended an information meeting Thursday to hear the presentation by members of the board of directors. The two-step process of the informational meeting and the voting meeting is required by Ohio law.

“I think the meeting went well and was very productive,” Hathaway said. “I’m hoping for a positive vote (on Feb. 4).”

Business plans, other concerns

Clark said the main reason why no business plan was prepared was because of the difficulty of forecasting future revenues of the organization.

Clark said their vision was that the merged organization could grow its volunteer base and do the things the current organization couldn’t do already.

“We need to do more than raise and distribute money,” Clark said. “We have to solve problems.... We believe a new United Way would have a real impact in Butler and Warren counties.”

Over the past two months, Bruce Jewett, Butler County’s board chairman, said issues such as staffing would have to be decided later, but maintains the merger would be a win-win.

“Both organizations have seen their campaigns challenged in recent years,” he said. “It’s been a tough environment and we think there’s some synergy from this merger that would lead to a stronger organization and more possibilities, not less.”

Franklin City Manager James Lukas said he still questions the process and feels there needs to be more public input, better representation of northern Warren County and review of a business plan.

“The most frustrating thing was that they wouldn’t let the merger document out to take home to review,” he said.

Lukas said he suggested that the vote be delayed 90 days in order to facilitate more public input and review the information. Clark said that would not be possible because the official notice had already been sent out.

Bob Alexander, a longtime Warren United Way supporter and organizer of the Franklin Food Pantry, is concerned about what effect a merger would have on small agencies like his.

“The United Way should be tool or implement to provide for people who need it. I think we’d be better off thinking of a way to bring in more contributions than all this talk about merger,” Alexander said.

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Proposed provisions in United Way merger:

Preservation of Warren County’s identity.
Equal board representation from both counties to Jan. 1, 2016, with seven members from each county.
The first board chairman will come from Warren County. That will be Doug Magoto.
The other board members for the new organization would include: Karen Mueller, Robert Sommers, A. Christian Worrell III, Shelly Wallpe, Eric Slaton, Andrew Nastoff and Jewett, all from Butler County; Lisa Marek, Chris Breitenbach, Kalonji Martin, Allen Schussheim, Steve Hathaway, Clark and Doug Magoto, all from Warren County.
Maureen Noe would serve as interim president/interim CEO of the new organization.
Donations raised through each of the organizations’ 2009 campaigns are not subject to the merger.
The proposed merger contract and new bylaws will require a two-thirds supermajority for any major corporate actions, such as a future merger.
The certificate of merger has to be filed with the Ohio Secretary of State’s office by Feb. 15. The merger agreement will terminate automatically if the filing deadline is not met.

Source: United Way officials

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