THE UNITED WAY SCANDAL

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THE UNITED WAY SCANDAL

• A FAILURE OF CHARACTER, A FAILURE OF LEADERSHIP
• By Christopher Watler

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History of the United Way

• 1887 First of what would later become the United
  Way started in Denver
• 1888 New tax law exempts charities
• 1918 The American Association of Community
  Organizations founded in Chicago.
• 1957 Eisenhower signs executive order allowing
  federated charities to solicit federal employees.
• 1963 30 community organizations merge under the
  name United Way.
• 1964 Federal employees begin payroll deducted
  donation (the Combined Federal Campaign).

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History Continued

• 1970 William Aramony becomes the president of
  United Way of America
• 1974 NFL United Way partnership begins. United
  Way receives millions of dollars in free
  advertising during football games
• 1985 Raised 2.33 billion Dollars
• 1992 Aramony Resigns from the United Way and is
  subsequently tried and convicted along with 2
  co-defendants.
• 2000 United Way raises 3.91 billion in best
  campaign ever.

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The Organization
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WHAT HAPPENED?

• Executive perks, privilege and salary
• Lack of accountability at the Board level
• Poor communication with donors, local UWays and
  the press
• Friends and relations given jobs at spin-offs.
• Financial improprieties, co-mingling of funds

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What Would Tichy Say?A leadership analysis

• Aramony was a high performer who modernized the
  United Way movement and was successful raising
  funds. He had IDEAS, ENERGY, AND EDGE
• He lacked sound VALUES. According to Tichy,
  Personal Conduct Embodies the Values.
• Aramony was blinded by his success and ego,
  REALITY was lost.

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GLASERS 13 LESSONS

• Boards must represent constituencies
• Character is more important than administrative
  ability
• Boards must evaluate staff and have a clear
  mission and goals.
• Public expectations of charities
• Activates must be defensible in the court of
  public opinion
• Boards must know their legal responsibilities

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Glassers lessons Cont

• 7. Boards must have clear conflict of interest
  statements
• 8. Boards should have viable internal standing
  committees
• 9. Boards should have risk management plans
• 10. Set acceptable salary ranges
• 11. Enforce equal application of policies
• 12. Set reasonable term in office with mandatory
  retirement
• 13. Bring in outside evaluators

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HAPPILY EVER AFTER?

• 1995 Aramony sentenced to 7-years for tax
  evasion, conspiracy, and fraud. Thomas Merlo and
  Stephen Paulachak also convicted.
• United Way completed a record breaking year in
  2000 for fundraising.
• 1/18/00 A federal judge ruled that UWay of
  America must pay 4.4 million in pension benefits
  to Aramony. Aramony owes the UWay 2 million
  dollars for his salary from 1989 to 1992.