New United Way CEO takes over as charity reforms money distribution 

TheGlobeAndMail.com
July 15, 2016
Jeff Gray

When the new head of the United Way of Toronto and York Region, Daniele Zanotti, was growing up in North York, his working Italian-immigrant parents couldn’t afford childcare. So he was left with his uncle, a school janitor on night shifts, during the day.

Mr. Zanotti, now 47, would end up getting a masters in social work from the University of Toronto – a feat he doesn’t believe would be as easy for a child facing the same challenges today. And that, he says, is why the work of the United Way is more vital than ever.
 
“I am not sure that the path between a young kid’s aspiration and achievement is as direct,” says Mr. Zanotti, who started his career as a front-line community worker in troubled neighbourhoods such as Rexdale and Jamestown in the 1990s. “And our commitment is to give those individuals, wherever they are, that chance at a good life.”

Mr. Zanotti takes the reins as the United Way undergoes a period of massive change. The organization is going through a fundamental redrawing of the way it hands out the tens of millions of dollars to about 200 social-service agencies across the city. And it is accelerating efforts to appeal to a new generation of donors as fundraising growth slows. There is a lot riding on its success, as Toronto continues to grapple with rapidly growing inequality.

One key change came last year. Toronto’s United Way – already the biggest in the world, larger than those in New York, Los Angeles and Chicago – got a little bigger, merging with the tiny York Region chapter. Mr. Zanotti was the CEO of the York Region United Way, and moved to become the new merged charity’s chief development officer immediately. Earlier this month, he replaced Toronto CEO Susan McIsaac in the top job, after she left to spend more time with her family.

Other even more dramatic changes now being steered by Mr. Zanotti have been in the works for years. A process launched under Ms. McIsaac is set to transform the United Way from an umbrella grouping with about 200 “member” agencies – which provide everything from career counselling for disadvantaged young people to shelter for the homeless – into an organization with 40 to 60 so-called “anchor agencies.” These anchor agencies will get five-year terms, an amount of base funding and will have to agree to a closer relationship with the United Way.

Those not chosen as anchors will still be able to apply for three-year “program funding,” as well as “special-project” funding. Interested agencies are now submitting extensive applications to qualify as anchors, but won’t find out until next year if they have succeeded.

Many smaller social-service organizations now depend on base funding from the United Way to keep the lights on or pay rent. The head of one Toronto social service agency, who spoke on condition of anonymity for fear of putting her funding in jeopardy, said the new application process has her concerned. “It’s the unknown,” she said. “This time next year, will I be short? Or will I be okay? What do I have to do to backstop that? … I am sure there will be people who don’t get money.”

The United Way says existing funding for all agencies will stay in place until 2018 as it manages the transition to the new system. But clearly, some agencies could soon be receiving less money, or none at all. However, the reforms are also meant to see the United Way distribute funding to new agencies.

“There may be partners that have a different relationship with us,” Mr. Zanotti acknowledges. “But our discussions with partner agencies, our discussions with other funders, all demonstrate that this is the right drive and focus for the region at this time.”

He says the changes have been undertaken after consultation with the charity’s member agencies, whom he says are “energized” about the change.

Ms. McIsaac, who stepped down earlier this month after 18 years with the United Way in senior roles, says the new system will allow the charity to better co-ordinate its efforts – and track results it can show to its donors.

“In the past we had a membership model [for agencies that received funding.] If you passed the litmus test, you became a member,” Ms. McIsaac said. “You had to fail pretty profoundly to get thrown out. ... I had folks from the finance sector say, ‘How can you call that a dynamic portfolio if nobody ever gets thrown out?’ A good investment portfolio means you are always looking at the return on your investment. So we are taking a really tough approach.”

Kate Bahen, the managing director of Charity Intelligence Canada, a Toronto-based charity watchdog, said all United Ways rate highly for their efficient use of funds. But the Toronto United Way has for a long time largely given the money to the same agencies, she says, despite previously announced new strategies.

A more dynamic approach would see the United Way act more like a mutual fund, she said, which typically drops shares in companies it holds and swaps them for others based on performance. Whether the current process at the United Way actually produces this kind of change remains to be seen, she added.

“What I think is really important is to look back on this next year and see, was there a shakeup?” Ms. Bahen said. “One of my concerns in the past is that it has not been dynamic. It has been the same names year after year after year.”

The reforms are not the only change in recent years at the charity. Over the past two decades, the United Way has shifted from focusing solely on its workplace-based paycheque-deduction campaigns to raising money from wealthy individual donors, who now contribute 30 per cent of its donations. It raises about double what it did back in late 1990s each year, with all of the growth coming from those newer, richer donors, including many in the financial sector, Ms. McIsaac said.

However, new challenges are now on the horizon. Fundraising growth has slowed, and is nowhere near the annual boosts seen in the years before the 2008 global financial crisis. The United Way is also trying to appeal to a younger generation of donors – millennials and Generation Xers – who are keen to get more involved in the work the United Way’s agencies do, rather than just hand over cash.

The charity has also changed how it targets need across Toronto, moving its resources and the agencies it funds out of the downtown, where poverty was concentrated a generation ago, and into the city’s inner suburbs, where need has multiplied in the past two decades.

Now, with the York Region merger, that transformation continues, Mr. Zanotti says, pointing out that pockets of Markham, Richmond Hill and Vaughan are seeing fast-growing rates of poverty, along with large populations of immigrants.

“While how we approach it locally will be different in Keswick, Parkdale, Jane and Finch, Scarborough or Markham, the issue is the same,” Mr. Zanotti said. “The neighbourhood, the individual, does not have that opportunity, that fair shot to get a better life.”