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By Annetta Miller
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They were the kind of perks usually associated with politicians and CEOs. William Aramony enjoyed chauffeured automobiles, first-class air travel and an office with motorized window blinds-not to mention $463,000 in annual compensation. But Aramony was neither a politician nor a corporate chieftain; he was the head of the largest charitable organization in the country. Last week his lavish spending and management practices spelled an end to his 22-year tenure as president of the United Way of America. Under fire from many of the nation's largest United Way chapters, Aramony resigned his post at a teleconference broadcast to United Way leaders nationwide, apologizing for "any problems my lack of sensitivity to perceptions has caused this movement."
Just what kind of damage the scandal may have already done is a subject of concern within the philanthropic community. The allegations against Aramony extend beyond his free-spending practices to charges he hired friends and associates and approved several for-profit spinoffs that have engaged in questionable activities. According to reports by The Washington Post, one such operation, Partnership Umbrella Inc., used about $430,000 to buy and decorate an apartment in New York City, primarily for Aramony's use on business trips. The organization reportedly spent more than $200,000 to cover the debts of another spinoff, a travel agency set up to cut travel costs for nonprofit organizations. Dr. LaSalle Leffall Jr., head of the charity's executive committee, said an outside investigative firm found "no wrongdoing on the part of Bill Aramony" and promised that a follow-up investigation will be completed in April. But some participants in the teleconference seemed unmoved. "I believe we are being seriously damaged by these allegations and this publicity," said a caller from Des Moines.
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Among those with the most to lose from the scandal are the 2,100 local groups the United Way of America represents. The flagship group functions as a trade association for the locals, providing management training and fund-raising help. In return, the local United Ways pay United Way of America about 1 percent of the contributions they collect. (In 1990 the locals raised $3.1 billion.) At least 21 local groups--which support everything from child care to soup kitchens-have announced they will withhold dues until all questions have been answered to their satisfaction. For fear of losing donations, many are scrambling to distance themselves from the national office. "We are associated in name only," says York Haines, of the United Way in Portland. "We have our own operations, our own budget and our [own] volunteers."
Experts fear the controversy may have a negative impact on donations to other organizations as well. Says Raul Yzaguirre, president of the National Council of La Raza, a Hispanic charity: "Experience shows that we will all suffer from this." Meanwhile, the United Way has begun a campaign to restore public confidence. Last week it appointed senior vice president Alan Cooper as acting director until it implements a transitional management plan. It has also issued rules prohibiting excessive travel expenditures. But those moves may be too little too late. In these recessionary times, allegations of profligacy and betrayed trust could leave donors feeling even less charitable than before.
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