Strengthening Families and Reducing Poverty: Can We Achieve Both?

Alexander SanchezSenior Vice PresidentCommunity Impact Leadership United Way of America

September 19, 2007

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United Way System

• United Way has 100 year history of improving lives

• 1,297 local United Ways in the United States

• Thousands of affiliates worldwide

• United Way volunteers and partners work in 46 countries

• United Way in the U.S. raises $3.8 billion from 14 million donors annually

• Around the world an additional $830 million is raised annually

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U.S. United Way System1,297 Local United Ways

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Community Impact Model What is it we must do to be successful?

Only 19% of Americans said charitable organizations do a very good job running their programs and services, while just 11% said the same about spending money wisely. In addition, 66% of Americans said charitable organizations waste a great deal or a fair amount of money, while almost half said the leaders of charitable organizations are paid too much.

Paul C. Light, Rebuilding Confidence in Charitable OrganizationsNYU Robert F. Wagner Graduate School of Public Service, Public service brief, October, 2005

The survey also suggests that rebuilding confidence must involve sustained investment in strengthening the capacity of charitable organizations to achieve measurable impact toward their missions.

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Community Impact Model What is it we must do to be successful?

Showing the impact involves more than pictures of need. Such pictures do little to reassure Americans that their contributions are being used wisely.

Paul C. Light, Rebuilding Confidence in Charitable OrganizationsNYU Robert F. Wagner Graduate School of Public Service, Public service brief, October, 2005

Charitable organizations must do a better job of producing measurable results, whether in lives saved and enriched, disease averted, housing rebuilt, pride restored, education enhanced, great art produced, and/or economies strengthened.

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Community Impact Model What is it we must do to be successful?

Charitable organizations must do a better job of producing measurable results, whether in lives saved and enriched, disease averted, housing rebuilt, pride restored, education enhanced, great art produced, and/or economies strengthened.

Paul C. Light, Rebuilding Confidence in Charitable OrganizationsNYU Robert F. Wagner Graduate School of Public Service, Public service brief, October, 2005

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To improve lives by mobilizing

the caring power of communities

Mission of the United Way System

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United Way’s Traditional Approach to Improving Lives

Mobilizing communities

support services for individuals and families

to

that

improve lives

DIRECT IMPACT

financial resources of businesses and

employees

of program clients

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New Model for Improving Lives

Uses Two Approaches

create lasting changes in community conditions

Mobilizing communities

support services for individuals and families

to

improve livesthat

DIRECT IMPACT

COMMUNITY IMPACTpeople, time, talent,

relationships, expertise, technology, money, etc.

financial resources of businesses and

employees

of program clients

of community populations

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Most Direct Service Programs Address Only One or Two Factors

Community Issue

Personal choices

Family characteristics

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Addressing Those Pressing Issues Requires New Approaches and Additional Partners

Economic conditions

Public attitudes

Historical trends

Media messages

Public sector practices

Private sector practices

Neighborhood conditions

System relationships

Family characteristics

Personal choices

Health care system practices

Educational system practices

Community Issue

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Individuals Corporations Labor groups Government Foundations Media Academia Institutions Systems Formal organizations Informal associations Neighborhood networks Faith-based groups etc.

Agencies

Whoever can play a role

Change #2

Who Helps Create Community Change?

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Change #4

What Resources Will We Need?

Not only money

People Relationships Time Talent Wisdom Expertise Leadership Influence Technology Financial assets . . . . . .

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Essential Steps in United Way’s New Business Framework

1. Develop impact strategies that improve lives

2. Turn them into investment products

3. Segment investor markets

4. Connect investor aspirations with needs/opportunities/strategies

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What Makes the New Business Model Viable?

Occupies on an open niche (mobilizing community partnerships to achieve community change on pressing issues)

Aligns with customer interests

Relates to United Way’s traditional mission

Builds on United Way strengths

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United Way’s Strengths

Relationships with diverse stakeholders (business, government, individuals, nonprofits)

Reputation as a neutral player Ability to mobilize communities Knowledge of community assets and needs Focus on outcomes/results 17 million donors $5 billion+ raised or leveraged Locations everywhere

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Implications of the New Business Model

The new model requires new ways of thinking about:

Strategies

Partners

Ownership

Resources

United Way’s role

Resource development

United Way operations

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United Ways Implementing Impact Areasin their Resource Development Plan

5.0

9.9

0

2

4

6

8

10

12

14

16

18

20

UW1b

United Way System United Ways with Impact Areas

Source: UWA Research

Percent

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United Ways Actively Positioning Impact Areas in their Resource Dev. Plan

16.3

-0.1

0

2

4

6

8

10

12

14

16

18

20

UW1b

Actively Promoting Not Actively Promoting

Source: UWA Research

Percent

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Community Impact Model What is it we must do to be successful?

“Gallagher has worked to move the mission away from ‘How much did we raise?’ to ‘How much impact can we

have in our communities?’

The new model is to focus on outcomes, not dollars”

-- Knight Ridder News, 10/19/05

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United Way. United Way. Advancing the Common Good Advancing the Common Good

Education

• Quality child care

• School readiness

• Academic completion

• Maximized income

• Increased savings

• Financial assets for long-term stability

• Preventive / Everyday Healthcare

• Healthier Teens: Drug-free, within weight and reduced pregnancy rates

Dra

ft

Me

asu

rem

en

t A

rea

s

Creating the opportunities for a good life for all by focusing on:Creating the opportunities for a good life for all by focusing on:

Community & Volunteer Engagement

Partnerships

2-1-1Community Investment

Public Policy

Donor Relationships

Resource GenerationS

tra

teg

ies

Income Health

Inclusion

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United Way. United Way. Advancing the Common Good Advancing the Common Good

Education

• Quality child care

• School readiness

• Academic completion

• Maximized income

• Increased savings

• Financial assets for long-term stability

• Preventive / Everyday Healthcare

• Healthier Teens: Drug-free, within weight and reduced pregnancy rates

Dra

ft

Me

asu

rem

en

t A

rea

s

Creating the opportunities for a good life for all by focusing on:Creating the opportunities for a good life for all by focusing on:

Community & Volunteer Engagement

Partnerships

2-1-1Community Investment

Public Policy

Donor Relationships

Resource GenerationS

tra

teg

ies

Income Health

Inclusion

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Economic Challenges

• Over 38 million Americans have incomes below the federal poverty level. More than fifty percent are employed.

• Income Disparities – Top 20% control 85% of wealth; Bottom 60% control 4%

• One out of three households reported using credit cards to cover basic living expenses.

• The personal savings rate in 2006 (as a percentage of disposable income), was a negative 1 percent.

• 2 million people filed for bankruptcy in 2005. Approximately 50% of bankruptcies are caused by medical debt.

• Average credit card debt among American households is about $9,300.

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Economic Drivers

Key economic factors affecting the ability of average persons to achieve long-term financial stability, include:

Lack of Economic Mobility

Soaring Personal Debt

Wealth Inequality

As evidenced in recent articles in:The New York TimesThe Washington PostWall Street JournalMiami HeraldThe Chronicle of Philanthropy

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United Way’s Financial Stability Partnership™

A National Initiative Focused on Financial Stability

An initiative focused on financial stability leading to independence designed in steps to can help individuals and families to get off the financial tightrope, overcome basic subsistence needs, and allow them to plan for the future.

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A Stepped Approach to Financial Independence

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Who Benefits From the Work?

Low to moderate income workers by helping them develop and implement strategies that:

– Increase Income

– Build Savings

– Gain and Sustain Assets

Employers by creating a stronger, more crisis-resistant workforce

Communities by increasing home and business ownership, and the financial stability of its residents

This Work Matters

Five years ago, Brownsville, Texas had the highest poverty rate in the nation. In just a year’s time, United Way worked with 1,000 Brownsville families to apply for the Earned Income Tax Credit, resulting in nearly one million additional dollars in that community.

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Expanding Partnerships

Partnered with United Way and provided an innovative process and support in researching and analyzing Benefits Calculators which can scale and revolutionize access to public benefits system wide

Exploring partnership to support a national agreement for benefits calculator and other technology to advance financial stability work

Partnered with United Way to expand Earned Income Tax Credit (EITC) outreach to 33 markets across the country

Host partner for the EITC and Beyond: 2007 Leadership Summit designed to bring UW leaders and elected officials together to focus on EITC and other asset building strategies to strengthen communities

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System Wide Investment Over the next five years, the United Way will increase its investment by 50 percent to $1.5 billion by adding targeted, focused and proven

strategies that impact financial stability.

Increase Income Through Expanded EITC OutreachIncrease the number of eligible families currently not claiming EITC by 25 percent in 200 targeted communities over the next year. Increase the number of eligible families currently not claiming EITC by 50 percent in 400 targeted communities over the next five years.

Bank the UnbankedIn 50 targeted communities, reduce by 10 percent the number of

unbanked and under banked households over the next year.Across the United Way system, reduce by 25 percent the number of unbanked and under-banked households over the next five years.

Expansive Integration of Technology Through technology, increase enrollment by 25 percent of eligible

families in earned public benefits in 20 targeted states over the first year. Through technology, enable all United Ways to enroll eligible families in earned public benefits in 50 states over the next two years.

National UWA Goals

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Brand Forum (Communications)

Los Angeles, January 24-26, 2007

National Public Launch

Washington, DC – Press Club, May 7, 2007

Staff Leaders Conference

Pittsburgh, May 16-18, 2007

EITC and Beyond: 2007 Leadership Summit

host partner National League of Cities

San Francisco, July 11-13, 2007

National Launch Events

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Strategies to Leverage Income

and Build Assets

Earned Income Tax Credit (EITC) Outreach

Volunteer Income Tax Assistance (VITA)

Individual Development Accounts (IDAs)

Financial Literacy Education • Freddie Mac Credit Smart Initiative

• Freddie Mac Loan Prospector Outreach

• Lending Consumer Rescue Fund

• Don’t Borrow Trouble Campaign

• FDIC Money Smart Train the Trainer

Partnerships w/ Financial Institutions

• Marketing of Existing Financial Products & Services

• Development of Alternative Products & Services

Multi-benefit Enrollment • Use of Benefit Calculators (N2L)

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Introduction to Services

Community-based Case Management

Access to Information &

Education Financial Literacy

Change in Behavior

Financial Literacy + High-touch

Case Management

Asset Development Strategies

$ EITC / CTC / Edu. Credits $ IDAs $ Credit Rebuild $ Asset Building and Preservation

Education Campaigns$ Multi Benefit Enrollment $ Marketing & Development of Financial

Products & Services

Acquire Assets

Homeownership

Micro-Business Higher-Education

Working Families

Breaking the cycle of poverty….. by helping individuals access information, save, and acquire assets with long-term value

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EITC Return On Investment

2002 2003 2004 2005 2006

Numberof Sites

41 32 27 26 28

Returns Completed

10,400 15,244 20,850 25,962 30,000

E-Filed 3% 73% 93% 98% 100%

Returned to Community

$12 Million

$21.8 Million

$30 Million

$40 Million $45 Million

San Antonio

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EITC Return On Investment

30 Communities Tax Year 2005 Tax Year 2006

Total # of Volunteers 4,698 8,931

Total # of Volunteer Hours 100,386 276,329

Total # of Filed Tax Returns 161,635 225,824

Total Amount of EITC Returned to Clients $61,905,252 $83,262,273

Total Amount of Tax Refunds to Clients $199,306,955 $269,336,295

Bank of America, $500,000 investment in FSP

Bank of America, > $21,000,000 ROI

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Community Impact Model What is it we must do to be successful?

1. Whether they have confidence in the United Way2. Whether they believe charities do a god job helping people3. Whether they believe charities do a good job spending money wisely4. Whether they have higher levels of education5. Whether they believe charities do a good job running programs and services6. Whether they have confidence in the Red Cross7. Whether they have higher income8. Whether they are older9. Whether they see less charitable waste10. Whether they are female

Paul C. Light, Rebuilding Confidence in Charitable OrganizationsNYU Robert F. Wagner Graduate School of Public Service, Public service brief, October, 2005

Significant positive predictors of confidence in the sector:

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Community Impact

When all of the pieces come together, not only does your work move toward greatness, but so does your life.

For in the end, it is impossible to have a great life unless it is a meaningful life. Perhaps, then, you might gain that rare tranquility knowing that you’ve had a hand in creating something of intrinsic excellence that makes a contribution.

Indeed, you might even gain the deepest of satisfactions: knowing that your short time here on this earth has been well spent, and that it mattered.

--Jim Collins, Good to Great

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Thank You