Denise Brown, the leader of the local United Way, took a trip downtown last week to deliver a check for $318,514.01 it has owed to the United Way of Metropolitan Chicago since a merger in 2004. While no one disputed the obligation, it is only in recent months that specific details have been ironed out between the two agencies.
In making the large payment, the local United Way tapped an endowment to avoid any need to reduce funding to its local social service agency partners.
The obligation arose after the local United Way merged with the Chicago branch, United Way of Metropolitan Chicago, back in 2004.
But the IOU didn’t become a priority until the past couple of years, with the economy worsening and cash becoming harder to come by, said Barbara Watkins, president of the local United Way’s board of directors.
“They (the Chicago office) didn’t want there to be any disruption or hardship to any of our agencies, which there would have been if they hadn’t been in a position to do that for us,” she said of the money from the Chicago office.
United Way of Oak Park, 1048 Pleasant St., is a nonprofit that raises money and distributes funds to about 20 different organizations in the region. Those include the local homeless-help organization West Suburban PADS, child-fostering agency Hephzibah Children’s Association and the West Cook YMCA in Oak Park.
In an average year, the local United Way raises about $800,000, and 87 percent of that is distributed to the organizations it helps in the area, said Brown, chief professional officer.
About five years ago, the United Way of Suburban Chicago – a network of 57 smaller offices throughout Cook, Lake and DuPage counties – decided to merge with the Chicago office to help lower costs and simplify operations. The 57 suburban United Way offices were pared down to just 13. That number has decreased further in subsequent mergers down to seven offices, according to Watkins.
The local United Way was one of the few stand-alone branches that survived the merger, which was finalized on Jan. 1, 2004. Since then, it has been able to lower costs on things such as outside accounting and legal services, streamlining those functions through the metropolitan office.
“From our standpoint there was lots of emotion attached to this conversion because people were used to it being 57 separate offices in the old days” said David Martin, board member for the local United Way since 2002 and a past board president. “But I think, dramatically, our board feels that that conversion and how things run today is a very good thing for United Way and for the villages.”
As part of the merger, the Chicago United Way forwarded $318,514 to the Oak Park branch over a six-month period to help the organization meet its obligations to the agencies it serves. The local United Way was always aware of the IOU to the Chicago office, but its repayment didn’t become urgent until 2008 and 2009, with the economy in bad shape.
According to Laura Thrall, president and CEO of the United Way of Metropolitan Chicago, a number of branches of the organization carry “inter-company balances.” Typically, the smaller United Ways raise their funds and then funnel them to the Chicago office, which in turn distributes funds to the agencies.
In the midst of the recession, fundraising dollars haven’t flowed into United Way branches as quickly as before, but obligations still exist to make the payments, she said.
“It all balances out at the end of the year,” said Thrall. “We try not to keep a running inter-company balance, but with Oak Park it just continued to get larger and larger. It’s certainly not unusual.”
The local United Way has been working over the past couple of years, trying to hammer out the exact amount owed to the Chicago office. Back in the spring, United Way’s local board started digging into the matter, check by check. And in October, the local board began deliberating options to pay back the Chicago office.
There was never a question of whether or not the local United Way was going to repay the money, Watkins said. But the board debated whether it should repay it in one lump sum or in installments.
“It definitely was never a question of whether we should pay it,” Watkins said. “We knew that the funds had been advanced on our behalf and always intended to pay them. It was really just a question of how much and when we would pay them.”
The board decided to pay it off all at once, as that was the option that would have no impact on the local agencies that United Way serves. So on Dec. 16, Brown hand-delivered a check for $318,514.01 to the United Way of Metropolitan Chicago.
The local United Way was able to pull the payment from a Community Chest endowment, which was started when the organization sold its Oak Park office building at 1042 Pleasant in 2006 – for $999,999, according to county records. Community Chest is a charity organization that existed for 75 years but became affiliated with United Way in the early 1990s, according to Martin.
Community Chest stopped raising funds about six years ago, and exists today as two different endowments. The chest broke off from United Way of Oak Park in 2003 before the merger with the Chicago office, as the organization wanted the endowments to stay in town and benefit the Oak Park area, Martin said. Both the United Way and Community Chest have the same board of directors and staff, but are separate legal entities.
The United Way will lose out on a small amount of interest – between $10,000 and $15,000 a year – that it would have earned had the endowment fund stayed untouched, Martin said. But they felt it was worth it to avoid having to decrease funding to their agencies.
“We really felt that, given the difficult times everyone is in, those reductions at this point were not the best option,” Martin said.