CHARLOTTE, N.C. — Rising from the wreckage left by a scandal over compensation for its ousted CEO, and by a financial crisis that decimated last fall’s annual fundraising drive, United Way of Central Carolinas has rebuilt itself as a leaner, more open and more effective organization and is headed for recovery, its board chair says.
“We’ve accomplished an incredible amount in a very short period of time since the events of last summer and last fall,” says Carlos Evans, executive vice president and wholesale banking executive at Wachovia who has chaired United Way’s board since September.
And despite the battering Charlotte has taken because it is home to financially-ailing banking giants Bank of America and Wachovia, he says, United Way aims to raise $31 million in its annual drive this year, the same total it raised in 2008, when the drive fell $14 million short of the total raised the previous year.
“I’m incredibly optimistic about this campaign,” Evans says.
Conceding “mistakes were made” over compensation for Gloria Pace King, who was fired last year as CEO after disclosures about her compensation, Evans says United
Way has moved quickly and aggressively to apologize to the community and fix the problems that led to the scandal.
“As new chair, I have been very outspoken about putting things into place that would hopefully never allow those kinds of mistakes to occur again,” Evans says.
United Way also has made deep cuts in staff and spending, and recruited volunteer leaders to chair its board and its fundraising and giving efforts this year and next.
United Way is leaner, with only 60 employees, down from 100, and has cut spending by $3 million from $10 million and dipped into reserves for another $3 million.
In addition to King, United Way has lost senior staff in the areas of human resources, resource development, and community investment, and has replaced them with long-time employees who had been groomed for the senior jobs for five to 10 years, Evans says.
A search committee is looking for a new CEO and likely will fill the job in 30 to 45 days, he says.
Mac Everett, a former Wachovia executive who has been serving as interim CEO, declined to comment on the work he has done, the state of the organization or its future.
Critical to the organization’s recovery, Evans says, have been its efforts to be more open about its decision-making and to make other organizational changes recommended by a special panel that studied King’s compensation and the policies and decisions on which it was based.
“I have been very outspoken from the beginning that I intended to have a United Way that would be a lot more transparent than it had been in the past,” Evans says.
For over 20 years, when it should have been “discussed in a full and open board session,” he says, setting the CEO’s compensation had been “totally the purview of the executive committee” of United Way’s board, a process he says is similar to that at many other local United Ways and nonprofits.
“The CEO’s compensation is something that has to be totally transparent and discussed in full and open board session, and that was not done because the bylaws provided for it to be done in executive committee,” he says. “Had it been discussed, I think there would have been a different outcome.”
He also says the executive committee failed to conduct a “more thorough evaluation” of comparable compensation at other United Ways and nonprofits and in the for-profit sector.
So the road to recovery at United Way has included steps to create greater openness and to respond to recommendations of a governance review panel chaired by lawyer Robert Sink of law firm Robinson, Bradshaw & Hinson.
Efforts at United Way to reengineer itself have included:
* All board and committee meetings now are open to the public, and the minutes of those meetings are immediately published and posted on United Way’s website.
* Evans has spent a lot of time talking with local reporters and media talking about organizational changes and past events at United Way.
* United Way has put into effect all the recommendations of the Sink report, published a list of all those changes, and released details of King’s expenses.
* To comply with changes recommended in the Sink report, United Way has changed its bylaws to reduce the size of its board to between 18 and 23 members from between 58 and 60.
* United Way has formally adopted policies related to transparency.
* United Way has shifted nearly all decision-making to the board, with the executive committee empowered to act only in an emergency when the full board cannot meet.
* United Way has adopted policies for reviewing compensation for all employees and key officers, including steps required to determine competitive compensation in the marketplace before compensation changes are approved.
To reduce costs after the steep drop in funds raised in last fall’s drive, Evans says, United Way offered all employees a voluntary severance package, giving them about six weeks to decide whether to accept the package.
“And we were able to do that with a minimal amount of pain or hard feelings from employees,” he says.
Many employees who opted to accept the package had been in their jobs for 10 years and “were ready to do something else,” he says. “They left under very positive circumstances.” Evans also says that while the King controversy may have played a role in the sharp falloff in last year’s fund drive, the financial crisis played a far bigger
“Charlotte is a banking town,” he says. “The turmoil in the financial services industry is taking its toll on the philanthropy here.”
At Wachovia, which has been the biggest contributor to United Way, for example, giving last year fell to roughly $2.5 million from roughly $8 million, he says.
This year’s drive will be critical, Evans says, because the recession is squeezing the 91 agencies United Way supports.
“Clearly, the terrible thing about a recession is that right at the time when your ability to generate resources is most impaired, the reverse holds true of the demand for services,” he says. “The needs have never been greater.”
And in addition to reduced funding from United Way, which will decline by nearly 30 percent, reflecting the drop in fundraising last year, nonprofits also face funding cuts from the city of Charlotte and Mecklenburg County, Evans says.
“And a lot of them raise money themselves, and they’re having difficulties there,” he says.
Evans says he has worked hard to recruit volunteers to chair the United Way board, fund drives and “community building” grantmaking efforts each of the next two years.
Chairing the board starting in January will be Jeffrey Kane, retired senior vice president and Charlotte regional executive for the Federal Reserve Bank of Richmond, with his successor tentatively in place and awaiting board approval.
Chairing the fund drive in 2009 will be Gene Pridgen, administrative partner at K&L Gates law firm, with Curt Fochtmann, managing partner at Ernst & Young, set to chair the drive in 2010.
Chairing the community-building effort in 2009 will be Andy Elliott, a partner at PricewaterhouseCoopers, with Michael Smith, president of Charlotte Center City Partners, succeeding Elliott in 2010.
The idea on which United Way was founded, the concept of a single community campaign and “having those of use who can, to give money to those of us in need, has never been more relevant,” Evans says, “because of the economic circumstances we’re in.”
And contributors to United Way should not “use the mistakes that were made as a cop-out to help people in need,” he says.
“The ‘them’ who made the mistakes is ‘us’ because at the end of the day, the United Way is a totally volunteer agency,” he says. “That board is as representative of this community as anything you’d ever want to see. ‘Them’ is us.”