United Way expects to cut grants despite record fundraising

United Way of Central Indiana likely will reduce allocations to nearly 100 area not-for-profits despite a record-breaking fundraising campaign.

The Indianapolis-based organization on Tuesday projected a 2012 campaign total of $41 million, exceeding the previous year’s record by almost $250,000. But as more donors earmark their gifts for specific purposes, United Way has less available for the operational grants they award to address community needs.

The group has warned member agencies to plan for funding cuts later this year.

A final tally likely is months away, longtime CEO Ellen Annala told IBJ. The fundraising estimate is based on totals provided by companies with employee-giving campaigns, but UWCI officials don’t know details of individual donations yet.

Still, Annala said so-called designated gifts have increased every year as donors look to have more control over how their money is spent. Last year, such donations represented more than 20 percent of the funds raised.

The practice "challenges United Way's need for unrestricted funds to invest throughout the region,” Annala said in a prepared statement.

Annala, who retired this week after 23 years with the organization and was greeted with a standing ovation at its annual meeting Tuesday afternoon, has been tracking the trend for years. She said the local group still is better off than its counterparts on the coasts, where restricted gifts make up as much as 80 percent of donations.

Designated gifts are held separately from UWCI’s unrestricted Community Impact Fund, used to support member agencies in Indianapolis and five surrounding counties. In central Indiana, the earmarked donations represent additional funding for the intended recipients—over and above their United Way grants.

Some organizations could get more than expected, but UWCI nevertheless has warned its nearly 100 member agencies to plan for funding cuts later this year.

“I start warning agencies months in advance,” Annala said, “but I think we can still do most of what we want to get done.”

That’s a much better outlook than a few months ago, when she wasn’t sure the organization would meet its $40.8 million campaign goal, let alone surpass it.

UWCI is working to address the problem over the long term, Annala said, including shifting its marketing strategy appeal to individuals, rather than businesses.

“We need to do a better job of connecting people with our mission,” she said.

That task now falls to President and CEO Ann Murtlow, the former Indianapolis Power & Light chief who started work Monday. Annala will work part time for a couple months to ease her transition.