Charities See Losses, Wins in Court Ruling

One of the most significant trends in American charity--the rapid growth of competition in workplace fund raising--suffered a severe setback this week before the U.S. Supreme Court, nonprofit leaders nationwide say.

The high court ruled, 4 to 3, that the Reagan Administration may exclude nonprofit political and legal advocacy groups from sharing in the Combined Federal Campaign, the U.S. government’s annual drive for charitable donations that raises $120 million from federal employees .

Soliciting charitable donations is a form of constitutionally protected speech, the high court held. But the majority also ruled that the Combined Federal Campaign is not a “public forum” with guaranteed access for all organizations.

Activist Charities

The big losers appear to be activist charities--both conservative and liberal--that lobby and litigate for changes in law and social policy on behalf of the poor, minorities and unpopular causes.

The big winners appear to be the 2,200 local United Ways and their 37,000 health and welfare charities, which in many places of employment have a monopoly or near monopoly in the lucrative, low-cost business of workplace fund raising.

Howard Marlowe, editor of Tax Exempt News, called the high court’s ruling “a tremendous victory for United Way and an equally significant defeat for non-traditional and newer charities.

“The local United Ways, which contract to run the Combined Federal Campaigns are, at best, going to tilt toward the charities that are part of the United Way system and, at worst, exclude those that are not part of the UW system,” Marlowe said.

“I assume it also sets back efforts to open up other workplace giving programs to non-traditional charities. I think that, as a whole, the charitable sector loses by that,” Marlowe said.

Danny Bakewell, president of the Brotherhood Crusade in Los Angeles and board chairman of the National Black United Fund, a coalition of 16 local black funds, said “the decision threatens to set back progressive philanthropy many, many years because, basically, what it does is allow this Administration to determine who will participate, who qualifies as a valid charity; and as we know, this Administration has not been very progressive in this respect.”

Steve Delfin, a United Way of America spokesman, said: “we agree with the Supreme Court’s decision. It is consistent with our historical position, which is a focus on health and welfare charities.

“Finding that the Combined Federal Campaign is a non-public forum is a landmark decision from our standpoint,” Delfin said, “because it gives the employer, in this case the federal government, appropriate discretions to develop criteria to determine who can participate in the Combined Federal Campaign.”

United Way critics interviewed by The Times agreed with Delfin’s assessment on the importance of the non-public-forum finding.

Charitable Prediction

Robert O. Bothwell, executive director of the National Committee for Responsive Philanthropy, an organization that critiques Establishment charities, predicted that nationally “United Way is going to send out an executive memo saying, in effect, ‘OK, boys, go out and cut the knees off from those blankety-blank advocacy groups.’ ”

Delfin said Bothwell “gives us credit for a lot more clout than we really have. We have no plans yet.”

Bothwell said he expects that “in all 30 campaigns among state employees, which are now open to non-United Way charities, of which 15 are open to non-traditional and advocacy charities, United Way is going to press its case to get regulations to exclude non-traditional charities--and in some cases they are going to be successful.”

Gloria DeRobles, executive director of the California Combined Health Agencies, which represents 17 health charities that compete with the United Way, predicted the high court ruling will hamper efforts by alternative funds to get equal access with United Way to solicit California state government workers. United Ways run nearly all segments of the annual drive for donations from state workers.

“United Way has stopped us every way that they can, which means we don’t have access to more than 200,000 state employees, and this decision is more ammunition for United Way to hold us back from solicitation,” DeRobles said.

Thomas Vais, president of United Way in Santa Clara County, said that the “decision isn’t any different than the government code, which already exists in California, where a government entity can include or exclude any group in California so long as the reason is reasonable and just. In this case the Supreme Court has accented the need to include human-service programs, which is just because it allows the government to put together the kind of campaign that people can respond to, direct human-service programs that capture the thinking and giving of individuals.”

Payroll Deduction

Last year United Ways raised more than $2 billion, half of it through payroll deduction.

Last year the 85 alternative funds raised $18 million, 80% of it through payroll deduction, according to the National Committee for Responsive Philanthropy. The committee estimates that United Ways raise 96% of all workplace donations while alternative funds raise 4%.

The vast majority of alternative fund money comes from solicitation of federal, state and local government workers. Only a relatively few corporations give alternative funds equal access to their workers. United Ways nationwide have fought efforts by competing groups to solicit workers directly.

In 1980, a federal judge ordered that advocacy groups be admitted to the Combined Federal Campaign, but in 1983 the Reagan Administration removed them.

The Reagan Administration rules affecting federal workers were challenged by the NAACP Legal Defense and Education Fund, the Sierra Club Legal Defense Fund, the Puerto Rican Legal Defense Fund and others that together received $2 million from federal workers. They were later joined by such conservative organizations as the National Right to Work Legal Defense Foundation and the Conservative Legal Defense and Education Fund.

Justice Sandra Day O’Connor, who wrote the majority opinion, said that the Reagan Administration’s rules barring advocacy charities were, on their face, permissible. The case was returned to a federal district court for further examination of whether the rules are, as the activist charities contend, only a guise to exclude them because the Reagan Administration dislikes their policies.