Michigan United Way merger reflects national trend; more likely coming

Editors Note: This article originally appeared in MiBiz.

BY JAYSON BUSSA

Sunday, March 13, 2022 05:42pm

Chris Sargent compares the merging of three Michigan-based United Way affiliates to a regional business with local outlets.

“We’re not doing this to cut a certain percentage (of staff), if you will,” explained Sargent, who serves as the president and CEO of the United Way of the Battle Creek and Kalamazoo Region. “We’re doing it, really, to keep the talented team we have and the capacity we have in local communities. Each of our locations in the four communities we serve will have those outlets and we’ll have one regional business entity.”

Sargent’s United Way organization is formally joining with longtime partners in the Capital Area United Way and the United Way of Jackson County. The trio of organizations, which have worked together as partners for roughly a decade, will become the United Way of South Central Michigan.

As a first order of business, the new organization will establish a single board of directors with equal representation from all three United Ways. The board will then create an executive leadership team and maintain other governance duties. Leaders from each chapter plan to formally roll out the new organization in five or six months.

Staying local

While the United Way of South Central Michigan might centralize the administration for all three organizations, leadership for each of the United Ways have stressed that they plan to maintain their prominent presence in their total six-county territory.

“The issues around basic needs we focus on — education, financial stability and health — are similar in each of the communities, but the way we might invest or partner can be different,” Sargent said. “(The merger) allows us to do things across the greater region together, while at the same time there are things we are going to do community-by-community that might be very specific to what that community needs.”

The structure of the new organization also will ensure that donations made at a local level are leveraged within the community and not delivered elsewhere. At the same time, Sargent said the merger opens the organization to new partnerships — perhaps with larger companies that aren’t confined to a single county or community but instead want to build economies of scale with resources.

“We wanted to keep our local staff that people are used to working with,” Sargent said. “Sometimes people want to give locally where they live and work. If I live in Kalamazoo and work in the community, I might specifically want to make sure my annual gift to the United Way stays in that community, and that’s kind of a fundamental principle we have operated under from the beginning.”

Consolidation within the 100-year-old network of 1,300 locally operated United Way organizations has precedent, and the dynamic continues to play out within the country’s largest nonprofit organization.

In fact, merging isn’t even new for two of the three organizations that are rolling into the United Way of South Central Michigan. The Greater Kalamazoo United Way and the United Way of Battle Creek merged in 2012 to form the United Way of the Battle Creek and Kalamazoo Region. Sargent was with Kalamazoo’s organization during the merger.

Capital Area United Way and Eaton County United Way also merged in 2016.

“Ten years ago, I was a part of the merger with Battle Creek and Kalamazoo … so there are examples even in our current region where we’ve done that and what it’s led to,” Sargent said. “It’s something we transparently share with our United Way colleagues across the state and country.”

“Nationally, United Way has merged about 10 percent together — I think this will be more of a trend in the future,” he added.

Come together

Mike Larson served as CEO of the former Greater Kalamazoo United Way during its previous merger and now serves as the president and CEO of the Michigan Association of United Ways. He agreed that United Way organizations are finding success through partnerships and mergers.

“It’s about how we create greater impact in our communities by creating efficiencies and bringing expertise to the table that we can’t have individually as an organization but collectively we can increase our capacity to do greater work in our local communities,” Larson said. “We all have to have the administrative overhead that requires us to manage a nonprofit, but this brings capacity and skills to really allow us to do greater work in the community.”

Larson also alluded to further consolidation here in Michigan.

“I foresee more of these types of things to happen, without a doubt,” he said. “I can’t name any names, but there are United Ways already having conversations. It’s a big step for organizations to look into doing this. It’s not just the organization, but also the community supporting the organization that has to say, ‘Yes, we support this.’ It can be scary.”

As well, consolidation within the United Way network has played out across the country. Last summer, six United Way affiliates across a six-county area of New York merged into one. Similar activity was reported in states including Texas, Maine and Indiana.

While both Sargent and Larson agreed that the consolidation wasn’t necessarily spurred by the dynamics of the COVID-19 pandemic, they were a factor. This is especially true since the United Way leverages at-work giving campaigns, which took a hit during the mass exodus of employees from offices. Some offices haven’t returned to a typical in-person setting, prompting some United Way organizations to rethink their approach to fundraising.

This also isn’t a problem unique to the United Way, according to Larson, who pointed out that nonprofits of all kinds face similar challenges.

“People are reevaluating how they do their work and manage the operations of their organizations, asking if this is the most effective way to move forward and serve the community,” Larson said.

“I think you’ll see more (merging) down the road,” he added. “Some might start with partnerships first and do some things together before they look at a merger, but I think you’ll see United Ways transitioning, and a variety of other nonprofits start looking, too.”