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Teaching Note: Case 18 – United Way Worldwide
Case Objectives
1. To apply the concepts of strategic management to a nonprofit organization.
2. To evaluate the impact of negative publicity on a nonprofit organization and the implications for
strategic leadership in such a case.
See the table below to determine where to use this case:
NOTE: There are both PRIMARY and Secondary chapters that can be used for this case. The Teaching
Chapter Use Key Concepts Additional Readings or
Exercises
PRIMARY
1: Strategy Concept
Strategic management; vision,
See NOTE video interview with
2: External
Industry competition five forces;
SECONDARY
9: Strategic Control
Behavioral control; corporate
See NOTE United Way ratings by
10: Organizational
Design
Organizational structure
11: Strategic
Leadership capabilities; ethical
See additional articles, video
Case Synopsis
The United Way Case illustrates the problems that have been created due to a well-established business
model, in a challenging environment, facing the possibility of declining growth and competition from
new directions, all under the threat of eroding trust. This case shows how a mature brand, with a powerful
and mostly honorable history, can still stumble. Since the year 2000, United Way had seemingly reached a
In this environment, Brian Gallagher, United Way of America CEO since 2002, had established
membership standards to enhance the level of accountability and transparency in United Way affiliates’
was imperative for a nonprofit organization to get the necessary support at the local level in order to
achieve stated organizational goals. Was Gallagher’s shift in strategy sufficient to ensure the continued
viability of the United Way, or was its very mission perhaps no longer relevant?
Teaching Plan
This case is best used to illustrate the importance of a clear strategic mission in the face of external
environmental challenges. Since most students will be familiar with this organization, the instructor can
ask students for their personal impression of giving to United Way, and their attitude toward charitable
giving in general. This will position the discussion about strategy in a more personal context. If students
were trying to encourage giving for a cause they believed in, what might they have to do? Do these
umbrella charities still have a role to play in an environment where self-help services such as Go-Fund-
Me were gaining increased attention?
As a community service exercise, after discussing the case, the instructor can encourage students to make
themselves aware of the local charities supported by their community United Way. Students might be
encouraged to participate in community service activities as a result of this new knowledge.
Summary of Discussion Questions
Here is a list of the suggested discussion questions. You can decide which questions to assign, and also
This case can start with an icebreaker. Starting from the perspective of a customer may make it easier for
students to transition to a strategic analysis. All students should be able to identify with the concept of
nonprofit missions and charitable giving. Choosing any of the following questions can get students
thinking about their experiences with the products and the industry:
Have any of you ever given to United Way or know someone who has? Based on what you know, even
before reading the case, what is your opinion of United Way and other broad-based charities such as the
American Cancer Society and the Salvation Army? Have you ever used their services or do you know
someone who has? Do you trust them? If asked, would you donate to them? Would you rather donate to
some other charity? Why?
Discussion Questions:
1. What are the current challenges facing United Way? What are key issues in the general and
nonprofit charitable giving industry environments that affect United Way’s operations?
2. OPTIONAL QUESTION: What unique responsibilities does United Way have to its stakeholders,
and how successful has the organization been with its overall strategy? Is United Way’s mission
still viable?
Discussion Questions and Responses
1. What are the current challenges facing United Way? What are key issues in the general and
nonprofit charitable giving industry environments that affect United Way’s operations?
To start with, the instructor might want to position the discussion by reviewing what strategic
management really is:
Referencing Chapter 1: Strategic Management
Strategy is all about the ideas, decisions, and actions that enable a firm to succeed. See Chapter 1, Exhibit
01: Strategic management consists of the analyses, decisions, and actions an organization undertakes in
order to create and sustain competitive advantages:
●strategy directs the organization toward overall goals and objectives;
●includes multiple stakeholders in decision making;
Leaders face a large number of complex challenges. Leaders must be proactive, anticipate change and
continually refine changes to their strategies. This requires a certain level of “ambidextrous behavior,”
See Chapter 1, Exhibit 06: The primary role of the organizational leader is to articulate vision, mission,
and strategic objectives. Leaders must communicate their initial vision of the organization’s purpose: what
was the original goal that evokes a powerful and compelling mental image of a shared future, one that
would be massively inspiring, overarching, and long-term, that represented a destination that is driven by
and evokes passion?
The organizational mission also needs to be considered: a mission encompasses both the purpose of the
company as well as the basis for competition and competitive advantages. In writing a mission statement,
Organizations must respond to multiple constituencies if they are to survive and prosper, and the mission
provides a means of communicating to diverse organizational stakeholders. Although vision statements
Anticipating that things might change, an organization’s leadership must then establish strategic
objectives to operationalize the mission statement. That is, objectives help to operationalize the mission
Is United Way’s mission effective? What is United Way’s mission, and does it inspire you? Would you be
willing to give, based on what you know about them? (Visit http://www.unitedway.org/our-
impact/mission to see the mission and goals.)
These vision and mission statements can lead to strategic objectives that have implications for how to
analyze opportunities, manage innovation, and provide leadership to encourage growth. It requires doing
During strategic analysis, the leader does “advance work” to anticipate unforeseen environmental
developments, identify unanticipated resource constraints, assess changes in his or her preferences for
In strategy implementation, depending on the type of organization structure, the leader might include key
individuals in a discussion around selecting which strategies might be best to implement at which level
The basic question strategic management tries to answer is: How can we create competitive advantages in
the marketplace that are not only unique and valuable but also difficult for competitors to copy or
substitute?
NOTE - ADDITIONAL EXERCISES:
In writing a mission statement, it is important to understand the definition of the business: 1) who are its
customers, 2) what customer need is the organization trying to fulfill, and 3) how does the business create
and deliver value to customers and satisfy their needs. Visit the United Way of America’s web-site to view
its mission and vision at:
http://www.unitedway.org/our-impact Watch the following video interview of CEO Brian Gallagher from
2008 on United Way’s 10-year goals – the strategy of working to advance the common good, through
education, income, and health. Does he inspire you? https://www.youtube.com/watch?v=vLmjjDZmUMw
What about this story from 2008 about what one family was willing to sacrifice?
https://www.youtube.com/watch?v=pm9AV5KOTPw
Would YOU be willing to do this? What is the “right” amount to give to charity? Most people give an
average of $250 or 2 percent of individual income, but is that enough?
Based on this, how do you feel about the mission of United Way? Would you feel willing to give, based
on what you know about them and the causes they support?
Referencing Chapter 2: Analyzing the External Environment of the Firm
Organizational leaders must become aware of factors in the overall environment that might affect their
ability to create a competitive advantage. So how do managers become environmentally aware? By doing
Environmental scanning involves surveillance of a firm’s external environment to predict environmental
changes and detect changes already under way. It is a BIG PICTURE viewpoint of the
Environmental monitoring is a firm’s analysis of the external environment that tracks the evolution of
environmental trends, sequences of events, or streams of activities. Leaders need to monitor the trends
What factors or trends might be most important to United Way? To assess how the external environment
might affect United Way’s strategy, it’s necessary to take a look at the factors in the general external
environment.
United Way must consider the political/legal, economic and global, sociocultural and demographic, and
technological forces that might affect the ability of the firm to deliver its services and sustain its business.
Demographic: Certainly the demographics had changed. Mergers and acquisitions were reducing the
number of corporate partners available in local areas, and, although these larger corporations had
significant assets and employees available for potential donations, many such corporations were
Sociocultural: Sociocultural issues included the traditional highly philanthropic nature of the average
American citizen (first noticed by Alexis de Tocqueville in 1831, who wrote “I must say that I have seen
Technological: Technology, especially the growth of the Internet had been a significant boon to all
Political-Legal: Political-legal issues had an effect not only on United Way, but also on the nonprofit
philanthropic industry as a whole. Changes in tax law, pension regulations, potential legislation of
To further answer the question about the key issues in the general and nonprofit charitable giving
industry environments that affect United Way’s operation, it’s also necessary to assess the segments of the
Help students apply Porter’s Five Forces of competition by drawing a diagram on the board similar to the
following, and having students fill in the details:
Suggested: Many rivals
compete for donors. Showing
Suggested: Donors can switch to
being program providers on their
Threat of
Substitutes
High
A look at the external environmental factor and industry analysis shows that the nonprofit charitable
What might CEO Gallagher be able to do to succeed in this industry? Based on this analysis, United Way
has some major challenges. There is no easy answer. In the current charitable giving environment,
especially when technology has removed barriers, it doesn’t matter if the organization is large or small.
NOTE - ADDITIONAL EXERCISES and OPTIONAL READINGS:
The ongoing challenge of philanthropic organizations is to maintain the pace of donations. Historical
context can be important here: In 2006, ABC’s 20/20 did an investigation into why people give, and who
gives the most. The full story is available at http://abcnews.go.com/2020/story?id=2682730&page=1.
With the U.S. economic downturn that began in 2008, what happened to charitable giving trends? See this
additional story from 2009 which includes an interesting graphic available in the left sidebar:
http://www.nytimes.com/2009/06/10/us/10charity.html And here listen to or read about how charitable
contributions dropped in 2008:
http://www.npr.org/templates/story/story.php?storyId=105178804
Rivalry
High
Buyers’
Bargaining
Power
Suppliers’
Bargaining
Suggested: Donors encounter
almost no switching costs, so
Suggested: There are no
traditional suppliers in the
Suggested: Almost no
In addition, students can be given an assignment to read the 1996 article by Michael Porter, “What is
strategy?,” Harvard Business Review, 74(6): 61-78, and the 1999 article by Porter and Kramer,
“Philanthropy’s New Agenda: Creating Value,” Harvard Business Review, 77(6): 121-130. Concepts from
these articles will allow the students to further develop their understanding of the issues facing United
Way Worldwide and its strategy.
Instructors might log onto HBR for an overview of the 2011 article “Creating Shared Value” by Michael
E. Porter and Mark R. Kramer, from Harvard Business Review, January 2011:
http://hbr.org/2011/01/the-big-idea-creating-shared-value
Here’s a video by Porter on “Rethinking Capitalism.” https://www.youtube.com/watch?v=LrsjLA2NGTU
This challenges for profit corporations to consider the needs of others. Is this a possible erosion of United
Way’s competitive advantage, or is this an opportunity for United Way to create more strategic alliances?
2. What unique responsibilities does United Way have to its stakeholders, and how successful has
the organization been with its overall strategy? Is United Way’s mission still viable?
NOTE: there are no PowerPoint slides to accompany the following.
Referencing Chapter 9: Strategic Control and Corporate Governance
Corporate governance involves the relationship among various participants in determining the direction
and performance of corporations. The primary participants are (1) the shareholders, (2) the management,
and (3) the Board of Directors. The strategic control mechanism known as corporate governance focuses
However, management cannot ignore the demands of other important firm stakeholders such as creditors,
suppliers, customers, employees, and government regulators. At times of financial duress, powerful
United Way is governed via a federation of affiliates, with each responsible for keeping its own relevant
stakeholders happy. How might this be monitored and controlled by the United Way Worldwide corporate
structure?
Strategic control involves the process of monitoring and correcting a firm’s strategy and performance. It
Informational control is concerned with whether or not the organization is “doing the right things,” while
behavioral control is concerned with whether or not the organization is “doing things right” in the
implementation of its strategy. United Way needs to make sure enough information of the right kind is
United Way has a unique challenge because of its structure of affiliates. To what degree do the role
models at United Way Worldwide seem to affect the behavior at the local affiliates? United Way needs to
make sure enough information of the right kind is available to monitor activities – this is where things
NOTE - ADDITIONAL EXERCISES
United Way is governed via a federation of affiliates. To see how the United Way in your area is rated,
search below: http://www.charitynavigator.org/index.cfm?
keyword_list=united+way&Submit2=GO&bay=search.results
Note that different affiliates receive different ratings! What might that mean for the overall reputation of
United Way Worldwide?
United Way Worldwide is rated per below:
http://www.charitynavigator.org/index.cfm/bay/search.summary/orgid/4629.htm
The Better Business Bureau publishes standards for charitable accountability, available here:
http://www.bbb.org/us/Standards-Charity/ United Way meets these standards, per below:
http://charityreports.bbb.org/Public/Report.aspx?CharityID=1994
Perhaps contrast United Way’s ratings with that of another charity that serves your student’s local needs.
How do they compare?
Based on the reports from these watchdog groups, how does the United Way of America appear to handle
its financial responsibility? Does it increase its long-term value in the eyes of its various stakeholders?
Referencing Chapter 10: Creating Effective Organizational Designs
Strategy consists of analysis (setting goals, assessing the internal and external environment of the firm),
formulation (deciding which industries to compete in and how to compete in those industries), and
Chapter 10 stresses that organizational strategy has implications for a firm’s structure. Students should
relate concepts from Chapter 10, such as the differences between various structures and the effectiveness
of each possible structure for United Way’s possible choices of strategy. Organizational structure refers to
Structure identifies the executive, managerial, and administrative organization of a firm and indicates
Factors that facilitate the effective coordination and integration of key activities include having a
An effective organizational design can encourage the flow of information and enhance working
relationships between functional departments and activities. However, achieving the coordination and
integration necessary to maximize the potential of an organization’s human capital involves much more
United Way has a loosely coupled system, more a modular than a divisional structure, with every chapter
unit operating in a semi-autonomous fashion. Organizational structures should help improve decision
An organizational structure is meant to integrate the various organizational groupings in a way that leads
to efficiency and effectiveness by coordinating and integrating key activities. With no required oversight,
each chapter affiliate is free to engage in its own activities. Although this might be effective for local
constituencies, is it an efficient use of United Way Worldwide resources?
Might a more consistent vision across chapters increase donations? Strategy should lead to structure, so
more increase in accountability should suggest a clearer more controlling structure, and that should then
increase donations. But what does that do to the culture of autonomy that chapters currently experience?
Might a tighter structure affect the existing culture at the affiliate level, and have a negative affect on local
leadership and volunteerism?
Regarding what can happen at the local level, here’s a news story from 2009 about how Washington DC
area charities were suspending their memberships with the local United Way and partnering with another
fundraising group, America’s Charities, partly as a result of United Way’s past financial scandals at that
local chapter:
http://www.washingtonpost.com/wp-dyn/content/article/2009/04/28/AR2009042803701.html
What should nonprofits do to ensure that temptation doesn’t result in inappropriate behavior from
individuals in leadership positions in chapter affiliates and create subsequent reputational problems for
United Way Worldwide?
In 2012, United Way Worldwide announced it was restructuring to better “leverage operational resources”
and “foster a model of distributed leadership where the network leads the organization.” Other than
Referencing Chapter 11: Strategic Leadership
See the concept of leadership, the process of transforming organizations from what they are to what the
leader would have them become. Leadership is proactive, goal oriented, and focused on the creation and
implementation of the creative vision. This definition implies dissatisfaction with the status quo, a vision
of what should be, and suggests a process for bringing about change. Leaders are change agents whose
success is measured by how effectively they formulate and implement a strategic vision and mission. See
Exhibit 11.1. This involves:
●Setting a direction
The interdependent nature of these three activities is self-evident. Consider an organization with a great
mission and a superb organizational structure, but a culture that implicitly encourages shirking and
Leaders need to continually scan the environment to develop knowledge of all stakeholders, and
knowledge of salient environmental trends and events. Then leaders must integrate that knowledge into a
Difficulties in implementing the leader’s vision and strategies include a lack of understanding of
responsibility and accountability among managers, reward systems that do not motivate individuals and
Leaders, especially those who have responsibility for some degree of public trust, as United Way does,
must also maintain at least the outward appearance of an ethical business culture. See the definition of
organizational ethics toward the end of Chapter 11: organizational ethics are the values, attitudes, and
Organizational ethics helps to define what a company is and what it stands for. The ethical orientation of
The practices that a firm can use to promote an ethical business culture include providing ethical role
CEO Brian Gallagher has acknowledged the potential difficulties of his plan to change the way both the
national United Way and its local affiliates plan for and deliver service in this interview with Boston
Consulting Group:
https://www.bcgperspectives.com/content/videos/leadership_transformation_brian_gallagher_uniting_uni
ted_way/ (registration may be necessary, but it’s worth it for Gallagher’s take on the challenges he
inherited and what he tried to do at the local level to achieve a common vision around the issues of
education, income and health…see the embedded video)
From this 2011 interview, when asked about how to sustain the momentum of change, Gallagher had this
advice for a new CEO: “Understand your environment. Take the time to know the organization’s history,
know the industry’s history, and know the national and global history as it relates to your organization. Be
Here’s an interview from 2012 where CEO Brain Gallagher reflects on the progress of his vision and
strategy first announced in 2008. This interview is over an hour, but the beginning gives context:
https://www.youtube.com/watch?v=hejpY7ZjYNw
Here is an article with the highlights from that talk:
http://www.today.mccombs.utexas.edu/2011/09/united-way-ceo-offers-inside-look-at-non-profit-
management
What strategies might Gallagher use to get everyone to buy into his strategic vision?
Let students know that at this point, it is not clear whether Brian Gallagher’s strategy is sufficient for
enlisting the local affiliates’ long-term support, especially given the history of ethical violations. Students
don’t have to identify one best strategy, just use this discussion to explore the implications of how
In the current charitable giving environment, especially when technology has removed barriers, it doesn’t
matter if the organization is large or small. It’s the organizational mission and vision that can attract
One interesting discussion might be regarding United Way’s international outreach. The mission and role
of United Way in developing countries was more of a consultancy model, which might be more relevant
