the united way a non-profit monopoly.doc

Economics Senior Thesis The United Way’s Effects on Donor Behavior By Matt Bonniwell University of Puget Sound Class of 2008 The United Way’s Effects on Donor Behavior Introduction The United Way of America (UWA) is one of the oldest charities in the United States. The United Way began in 1913 in Cleveland and has grown from that one branch into an organization of over 1,300 branches in the U.S.; each with local leadership from the community and a local branch manager. Each community branch follows the headquarters’ guidelines and regulations. Every local United Way raises its own funds in an annual campaign that occurs in the fall. In 2006, the combined annual campaign of all United Ways generated over $4.07 billion dollars, clearly making it the largest nonprofit in the United States. Each United Way has member organizations. These member organizations sign a contract with the United Way that allows the United Way to fundraise for their organizations. The United Way’s sole purpose is to fundraise; organizations whose purpose is to fundraise are called “federated funds”. The United Way’s service is to raise funds at a lower cost than most non-profits can on their own. The United Way, due to economies of scale, can raise funds at a small cost of only 10 cents per dollar. Once the funds have been collected they are distributed among member organizations. Member organizations are those that have a contract with the United Way, and there are hundreds of such partners. 57% of the United Way’s funds are distributed among 13 member organizations or agencies. The most popular agencies include the Family Service, Boy Scouts, Girl Scouts, Boys Clubs, YMCAs, YWCAs, the Salvation Army, and the Red Cross. The United Way has received much criticism for its allocation process and the small number of new member organizations that are admitted every year. The allocation process of the United Way involves community members that democ