Using Institutional Theory to Explore Local Variations in United Way’s Community Impact Model

Abstract

In response to ongoing changes in local economic and philanthropic structures, the United Way of America has encouraged local affiliates to adopt a new philanthropic model—Community Impact. Despite efforts to rebrand the system, significant variation exists in local implementation of the new initiative. Drawing on case studies in 6 communities, we explore how local contexts shape local practices. Consistent with a growing body of research that describes the impact of local institutions on organizational practice, we find that local United Way practices are shaped by local institutions and the field level pressures to adopt Community Impact often conflict with local performance logics. These local logics are influenced by historical stocks of philanthropic and civic capital that both constrain and offer alternatives for local strategies.

Keywords

philanthropy institutions environmental change

For the last decade, United Way of America, in response to a series of environmental changes, has encouraged local United Way affiliates to adopt a new model of fund-raising and fund allocation that rebrands the United Way system. Change in the United Way system is not new (Brillant, 1990), but often such change emerged from local innovations. For example, at the beginning of the Great Depression the introduction of workplace solicitations in one factory in Cincinnati quickly became a generally accepted practice in United Way systems across the nation (Aft & Aft, 2004). While institutional theory suggests that national institutional pressures ensure uniform adoption across local affiliates (DiMaggio & Powell, 1983), evidence suggests that systemwide change initiatives face significant barriers (Brilliant, 1990; Brilliant & Young, 2004) and local practice often remains inconsistent with broader national change efforts (Beene, 2001).

This article draws on institutional theory, to explore why variation exists in local implementation of Community Impact, specifically changes in the highly institutionalized local allocation systems. We are interested in the differences across local United Way systems and the contextual factors and local processes associated with such differences. We explore these issues through comparative case studies of United Way systems in six local communities in the Southeast and Midwest. We begin by describing the Community Impact model and theoretically reviewing the contextual forces, environmental and social, associated with adaptation in local systems. We then describe our case study methodology. Finally we review our findings, describing local variation in allocation processes and the forces associated with such variation.

Community Impact

Community Impact represents a top-down response from the United Way of America to the wave of environmental challenges affecting the national United Way system, including increased competition from other professional fundraisers, the deindustrialization and globalization of local economies, and changing nature of donor expectations (Barman, 2006; Graddy & Wang, 2009; Hanson, 2008). The Community Impact model differentiates the United Way brand by focusing on identifying and addressing core community problems and making funding decisions based on grantees’ abilities to affect such issue areas. This paradigm encourages United Way affiliates to play stronger roles as local conveners (Aft & Aft, 2004; Brilliant & Young, 2004) and involves significant change in local organizational practices. See Table 1.

Table 1.

Comparison of Traditional United Way Model and Community Impact Model

UW strategies	Traditional UW model	Community impact model
Role in community	• Efficient fundraiser and effective distributor	• Community leader and convener
Determination of community needs	• Partner agency needs and priorities	Use of data to determine core community issues Community involvement in problem/issue identification
Distribution of community resources	Partner agencies Outcome based relative to organization goals	Outcome based relative to contribution to addressing impact issues Competitive granting
Resource development strategies	• Workplace giving	• Diversified fund-raiser
Assessment of UW performance	• Growth in annual campaign	• Change in community conditions

Community Impact requires that United Way affiliates adopt new fund-raising and allocation practices that renegotiate relationships in their local communities. Traditionally the United Way allocated grants to “member” agencies who received funding to address organizational issues and priorities. As one nonprofit leader described, “In the past if you got money, unless you screwed up, you were pretty much assured that you were going to get that money.” Community Impact implies a competitive, performance-based model of funding that allocates resources to community “partners”¹ based on their ability to achieve outcomes related to United Way priorities through an open and competitive allocation process.

The Context of Organizational Adaptation

Local United Way affiliates face significant pressure to adopt Community Impact in response to the environmental challenges facing their communities and to remain consistent with the United Way brand. Institutional theory has oftentimes been used to explore how national or even global norms and regulations foster the spread of practices that result in the development of stable and homogeneous fields, even when the adoption of such practices may not be supported by organizational needs (DiMaggio & Powell, 1983; Tolbert & Zucker, 1983). Within the nonprofit sector, institutional theory has been used to study the adoption of financial reporting standards by Belgium NGOs (Verbruggen, Christiaens, & Milis, 2011), the diffusion of venture philanthropy practices in the United States (Moody, 2008), and the behavior of social movement organizations in the Czech republic (Carmin & Jehlička, 2010).

Despite the attention paid to isomorphic processes, homogeneity is not inevitable. Rather organizations adapt their responses to various institutional stakeholders in ways that allow them to be successful in their political, social, and resource environments (Bies, 2010; Carmin & Jehlička, 2010; Ramanath, 2009). Increasingly scholars using an institutional framework have explored how local logics—social prescriptions, understandings, and expectations—shape diverse local responses creating unexpected variation in organizational practices in the face of isomorphic pressures for conformity (Greenwood, Diaz, Li, & Lorente, 2010; Marquis & Battilana, 2009; Suddaby, Elsbach, Greenwood, Meyer, & Zilber, 2010). This involves a move away from a focus on field-level characteristics to explore how local context influences organizational practices (Barman, 2006; Christopher & Julie, 2009; Guthrie & McQuarrie, 2005; Lounsbury, 2007; Marquis, Glynn, & Davis, 2007). Rather than presuming isomorphism, this body of new institutional research suggests that local market conditions and social logics may result in great diversity of practice across communities and even organizations.

Market Conditions and Organizational Performance

Population ecology, resource dependence theory, and institutional theory explore the relationship between local market conditions and organizational behavior, strategy, and performance (Freeman & Audia, 2006; Marquis & Battilana, 2009). Local economic conditions exert a strong influence on organizational behavior, particularly for those organizations that have a local or regional focus or are highly visible in their communities (Greenwood et al., 2010). Three characteristics of the task environment that significantly affect organizational practice include munificence (capacity), dynamism (turbulence), and complexity (concentration of organizations; Dess & Beard, 1984). The United Way of America system faced challenges on each of these environmental dimensions. United Way’s identity had long been tied to efficient workplace campaigns with long-term corporate partners. However, the need for corporate adaptability in a highly competitive and global environment and growing competition in workplace campaigns has threatened this model (Barman, 2006).

Despite broad macroeconomic changes, each local United Way system occupies a unique position in its local market that will shape its strategy and practice. However, there is little consensus about how organizational performance influences practice. On one hand, well-resourced organizations are the most likely to have the capacity to change because they have “greater access to critical resources, such as information, financial capital, human capital and better potential network partners” (Kim, Oh, & Swaminathan, 2006, p. 713) that are needed to take implement changes (Beene, 2001). Well-resourced organizations are also more likely to be able to influence other actors in the field (Minkoff, 1999).

However, well-endowed organizations may also have much to lose from change and may be reluctant to change long-held practices. In a study of the response of liberal arts colleges to environmental turbulence, Kraatz and Zajac (2001) found that colleges with better reputations, longer histories, more supportive external relationships, and greater financial resources were less likely to change their curriculum. They draw on Selznick’s (1957) concept of distinctive competencies to suggest that in resource-rich organizations, resources become valued as ends in and of themselves. Also, consistent with the concept of “competency trap,” they find that those organizations that are relatively better resourced than those around them may be less likely to perceive environmental challenges and more likely to exploit existing resources than seek new opportunities. Beene’s (2001) study of change in the United Way system suggests similar contradictions. She observes that rich local conditions often buffer organizations from the global conditions affecting the national system, reducing pressure for local change, but large organizations are most often aware of national pressures for change and have the slack resources to implement such change.

Local Norms and Cognitions

Increasingly, the institutional lens has been used to explore the process by which local institutions create diversity in local practice. A study of Spanish manufacturing companies (Greenwood et al., 2010) finds that distinctive regional perspectives on the state and religious values continue to influence Spanish manufacturing firms’ strategic decisions about downsizing. Marquis et al. (2007) similarly suggest that “. . . standards of appropriateness regarding the nature and level of corporate social action are embedded within local communities, and organizational conformity to these institutionalized practices yields systemic patterns that vary by community” (p. 926).

Marquis and Battilana (2009) propose that geographic communities influence organizational behavior through three non-market-based mechanisms: informal and formal regulation, social norms, and cultural cognitions. Cultural-cognitive mechanisms are deeply shared frames of reference that are self-maintaining (Marquis & Battilna, 2009). For example, Minneapolis corporations have a deeply engrained tradition of funding the arts while Atlanta corporations have focused on civic “boosterism” (Marquis et al., 2007). Such logics are historically embedded—they persist over long periods of time (Greenwood et al, 2010) and may be shaped by regional belief systems, historical geographic factors, and even community demographics (Marquis & Battilana, 2009). In contrast, social norms developed through ongoing interactions between peers provide consensus about the “right way” and consequences from straying from such expectations. Shared values and expectations are shaped and reinforced by social networks and local infrastructures, such as social clubs and professional associations (Galaskiewicz, 1997). Such social logics also shape local organizations’ beliefs about their performance, including desired goals and the technical process by which to achieve those goals (Lounsbury, 2007).

Social logics are often hierarchical and even competing. Local logics are embedded in field logics that are contained in national or even global logics. Often these logics are in conflict, for example, market logics versus family logics versus religious logics versus government logics (Greenwood et al., 2010). Recognizing that local understandings and norms differ across communities, and multiple logics may create conflicting pressures, we would expect that local practices would exhibit great diversity even in the face of strong national isomorphic pressures.

Method

We use a comparative case study to explore the contextual factors associated with the diversity of United Way affiliates’ adoption of Community Impact. We identified six United Ways located in small to midsized cities or metropolitan regions (3 in the Southeast and 3 in the Midwest), ranging in population from 100,000 to 350,000. Selection was limited to small to midsized communities because United Ways in the largest urban areas are embedded in very complex local systems, while in very small communities, the United Way may have limited ability to fully implement the community impact model (Brilliant & Young, 2004) and may be less aware of United Way of America initiatives (Beene, 2001).

We limited our analysis to local United Way systems in two states to reduce the influence of state-level policies and initiatives on local action (Guthrie & McQuarrie, 2005). We then created a list of potential United Ways within each state that fit our size criteria. These United Way systems were then stratified by size of UW solicitation, region, and performance, as measured by per capita yields on United Way campaigns. We conducted a preinterview by telephone with each United Way Executive Director to confirm that the community had begun moving to the Community Impact model and that organizational leaders would be willing to participate in subsequent interviews. Using these selection criteria, three communities were selected from each state, seeking regional diversity within each state. Tables 2 and 3 describe stratification criteria and population characteristics of our final sample.

Table 2.

Community Selection

	Lower performing campaign (< US$20 per capita)	Higher performing campaign(> US$20 per capita)
Population < 150,000	SE_3 (Metro 4)	MW_3 (Metro 3)
Population 150-250,000	MW_1 (Metro 2)	MW_2 (Metro 2)
Population 250-350,000	SE_2 (Metro 3)	SE_1 (Metro 1)

Table 3.

Characteristics of Selected Communities

Community	Population range^a (100,000)	Population trend^a	Percent in poverty (2005)	% of Adults 25&0x002B; bachelor’s degree or more—(2000)^a	UW metro size	Nature of UW region
MW_1	150-250	Steady < state average < national average	12	17	2	Multicounty
MW_2	150-250	Negative < state average < national average	18	20	2	Single county
MW_3	<150	Positive = state average < national average	18	30	3	Single county
SE_1	250-350	Positive < state average < national average	14	29	1	Single county
SE_2	250-350	Positive = state average >National average	14	24	3	Multicounty
SE_3	< 150,000	Positive < state average >National average	12	24	4	Single county

Sources of data: U.S. Census Bureau.

We gathered data from interviews with local United Way philanthropic leaders, other nonprofit sector leaders, as well as from a variety of secondary data sources. In each community, interviews were conducted with United Way leaders, including Board Presidents (present and past), United Way Executive Directors and key United Way staff, local human service leaders (local foundation executives and local government officials working in the human service field), as well as a random sample of United Way affiliated nonprofits. Forty-one interviews were conducted, ranging in length from 30 to 112 min. Our longest interviews were with United Way leaders. We used a semistructured interview format that focused on respondents’ perceptions of changes in the economic environment and the nature of the philanthropic landscape. Interviews with United Way leaders, both staff and board members, also included specific questions about the changes in United Way processes.² We supplemented interview data with a variety of existing archival data, including annual reports, IRS 990 forms, organizational documents and publications, state and local economic databases, and U.S. Census data. Data sources are identified in their respective tables.

Consistent with Miles and Huberman’s (1984) recommendations for analyzing data in comparative case studies, we used case-level display matrices. For each United Way, we began by organizing our qualitative interview notes and supplementary data along the identified contextual themes: economic conditions and local institutions, particularly community philanthropic traditions and civic capital. Our dependent variable is change in allocations. We calculated this variable as median percent change in the percent of the total United Way allocations that each nonprofit partner received (i.e., their share of United Way allocations). We then compared change in allocation practices to these contextual factors. We completed our analysis by developing a process map that explores the relationship between community context and change in allocation practices.

Findings: Contextual Factors and Changing Allocation Processes

Local United Way systems varied greatly in their implementation of Community Impact. What does Community Impact look like in each community? What are the contexts, both market and social, that might be associated with those differences? We begin by describing the changes in allocation processes and then the environmental and organizational contexts of the local United Way affiliates. Later we describe the relationships between change in allocation processes and community context.

Changing Allocation Processes to Advance United Way Goals

All United Ways in our study reported having completed or being in the process of adopting more deliberate processes to distribute funds. All United Ways emphasized that they no longer fund particular agencies, but rather programs or issues central to United Way goals. Consistent with the performance management movement of the 1990s, most United Ways were using performance measures, including partner agencies’ social outcomes and financial accountability, to guide allocation decisions. United Ways were also asking nonprofit partners about operational indicators, such as an organizational sustainability, collaboration, and service duplication. All United Ways described the use of similar allocation structures—councils of trained community members who offer recommendations on United Way grant allocations.

Despite common language and structure, United Ways are taking a variety of approaches to fund allocation. One United Way had adopted a systemized grant application process that scored organizational practices, such as the use of strategic planning tools. Instead of moving to a more complex system, another United Way simplified the application process, asking only for those outcomes that are relevant to United Way priorities. A third United Way removed the organizational assessment from the allocation process for a year. Allocations were stabilized and partner organizations informally met with community solution teams to describe their program, service delivery models, and reasonable social outcomes. As this United Way leader explains, “We did that taking money out of the whole thing because people have a tendency to overreport when there’s money attached.”

Allocation of Funds

In principle, the Community Impact model bases funding on the nonprofit’s ability to demonstrate outcomes that contribute to United Way goals and implies a competitive and open allocation process. However, in most communities this was reflected in a change in language rather than an actual change in the allocation of resources. We find that there has been little significant change in the actual distribution of allocations across nonprofit organizations even during the move to Community Impact. In the five communities reporting fund allocations in all three time periods, there has been greater change in allocations in 2004-2008 than 2000-2004. The larger changes in allocation between 2004 and 2008 suggest some movement toward Community Impact³; however, except for SE_2, the change in the distribution of allocations has been modest. See Table 4 for a summary of these responses.

Table 4.

Typology of United Way Responses

Opening of allocations	Stabilization of allocations	Consolidation of allocations
Move to competitive open allocation process	No change in relative allocations to existing partner agencies	Removal of low-performing partners from United Way system
New partner agencies decrease percent of funding available to traditional partner agencies	May involve minor reallocation of resources among existing partner agencies	Reallocation of United Way allocations among smaller pool of organizations, resulting in a relative increase in allocations for remaining organizations

Our findings suggest that United Ways pursued three allocation strategies as part of the move to Community Impact. First, consistent with Community Impact, United Ways opened up the allocation process to new partners in the community, reducing the level of resources available to historical partners. As new partners are added to the system, the pie is divided between an ever-growing number of partners. MW_1 and SE_2 are characterized by an opening of the allocation process, with MW_1 making modest changes and SE_2 significant changes. Explicitly as part of the Community Impact model, SE_2has moved to a request for proposal process that ended the traditional United Way partner agency relationship and distributed all funding through a competitive process. This change resulted in a radical reallocation of funding from existing partner agencies to accommodate new agencies. The change in MW_1 has been more modest. As will be discussed later, they were able to bring in a few new organizations by securing new funding to support community coalitions outside of the historical allocation process.

In contrast, other United Ways (MW_3 and SE_1) took an opposite course and consolidated funding among existing partners by removing low-performing partners from the system and reallocating resources across a smaller number of organizations. This resulted in an increase in the percentage of total allocations received by current nonprofit partners. By eliminating funding to some traditional partners and increasing funding to other existing partners, this strategy solidified “heritage” relationships with strong partner organizations. United Way leaders in SE_1 described this as an intentional effort to “get the right players on the bus.” Finally, other United Ways stabilized funding to partner organizations and made no changes in the relative distribution of allocations across agencies. See Table 5 for a typology of these strategic responses.

Table 5.

Median Change (%) in United Way Fund Allocations

	2000-2004	2004-2008	Nature of change^a
MW_1	−4%	−5%	Opening-modest
MW_2	N/A	N/A	No change
MW_3	3%	6%	Consolidation-modest
SE_1	7%	14%	Consolidation-significant
SE_2	−29%	−63%	Opening-significant
SE_3	10%	1%	No change

We characterize change greater than 10%, either negative or positive, as significant.

Despite the emphasis of the Community Impact model on creating new funding relationships, interviews suggest that most United Ways are committed to maintaining “heritage” funding to long-term community partners. Local realities make such realignments difficult. Instead some United Ways sought alternative ways to move to Community Impact by “growing the pie” through additional funding initiatives.

Alternative Impact Strategies

Several leaders (MW_2, MW_3, SE_1) mentioned the use of a Community Investment triangle that allocated United Way resources to partner organizations across three categories, intervention, prevention, and “root causes.” Rather than disrupt existing relationships, some United Ways have sought to allocate new resources to the third level of the investment triangle—root causes—through “breakthrough” initiatives. Such new or “breakthrough initiatives” were funded with “slack resources,” such as reserve dollars or campaign “excesses” (MW_2, SE_1) or foundation grants (MW_1). The use of noncampaign resources have allowed United Ways to pursue new community impact initiatives, even bring in new partners, without jeopardizing existing relationships. What explains these different responses? In the following sections, we explore the contextual factors, both economic and institutional, that are associated with variations across communities.

Market Conditions

In the last three decades, the United Ways in our study have experienced a dramatic flattening of their worlds, consistent with vast macro changes in the United States economy and general declines in campaign performance. While some informants identified key community changes that are very recent, closures, buyouts, and shifts to more strategic philanthropy, respondents also described changes that began in the 1950s and accelerated in the 1970s and 1980s. In the following section we review these changes and their impact on local philanthropy.

Deindustrialization and Delocalization

United Way leaders identified two ongoing trends that were having great impact on philanthropy in their communities: delocalization and deindustrialization. Waves of consolidations have led to locally owned companies being purchased or replaced by larger regional, national, or even internationally owned companies. An examination of the ownership of the 25 largest employers in each community (Table 6) indicates that most are nonlocally owned. At most, one third are locally owned companies and in only half of the communities are locally owned banks, traditionally local philanthropic leaders, one of the region’s largest employers. Reflecting the historical lack of industrial development in the south, in two of the southeastern communities, none of the largest employers had a presence in the region prior to 1950. In some Midwestern communities, local companies have been bought and sold several times. In most communities, multiple units of government, including local governments, school systems, universities, and health care systems are now among the largest employers.

Table 6.

Economic Characteristics of Local Communities

	Characteristics of 25 largest employers in United Way Region^a					Percent change in employment characteristics: 1970-2006^b
						Service industry		Manufacturing
	No. of companies locally owned	No. of companies pre-1950	No. of locally owned banks	Subsidiary of foreign parent	No. of government organizations	% employed	% total employed	% employed	% total employed
MW_1	8	6	2	1	3	306	97	6	−48
MW_2	6	2	2	2	7	230	176	−68	−73
MW_3	2	7	0	3	5	290	102	35	−30
SE_1	5	6	1	0	6	474	185	−36	−68
SE_2	5	0	0	0	10	416	47	5	−78
SE_3	2	0	0	1	5	389	75	40	−50

Data sources: Chamber of Commerce listings, Regional Economic Development listings, Employment security commission, Reference USA,Lexis Nexis Business.

Data source: U.S. Census Bureau–Economic Census.

The nature of employment has also changed significantly. In all communities, the percentage of individuals employed in the manufacturing sector, long the backbone of workplace giving (and United Way campaigns), has decreased between 30% and 78%. In addition, in all communities, the percentage of individuals self-employed increased significantly. One exception is that MW_3 has been able to retain a relatively strong diversified economy that includes a healthy industrial base although few of the corporations are locally owned.

Implications for Community Fund-raising

Interviews with United Way and other community leaders in all six communities provide very similar descriptions of how economic restructuring has affected philanthropy in their community. Most describe significantly weakened local corporate leadership in civic activities, as corporations reduce involvement and commitment to local causes and organizations (Guthrie & McQuarrie, 2005; Hanson, 2008) and local executives scale back their roles in local civic affairs. As one Midwestern community leader describes,

. . . we’ve seen a lot of corporations that are home grown that have now changed hands, moved, sold, something major. So the fact that we have fewer corporations that are headquartered here has a trickledown effect. There are fewer corporations that give the majority of their funding to this community. There are fewer executives here that tend to be large givers and community leaders that tend to not just be money givers, but volunteers and people willing to be in leadership positions. So I think that we have seen a metamorphosis in this community.

Second, giving in the workplace is increasingly viewed by corporate headquarters as a strategic management tool—regional, national, or international companies may seek to align workplace giving with strategic initiatives. For example, one corporation that traditionally supported a large United Way campaign

. . . actually quit doing the United Way campaign. They opened it up to any organization. The United Way became one option along with two internal initiatives supporting AIDS in Africa and Literacy in Africa. . . . Guess what? Tied to some of the [products] they manufacture. That cost us approximately US$400,000.

In several cases, large United Way workplace campaigns became charitable giving campaigns that enabled employees to donate during an open fair; however, such campaigns generally did not benefit United Way partner agencies. In those communities with a large government presence, the opening of the combined federal campaign also created challenges for the United Way.

We see in that situation where they have a thousand choices that they can make and people are like “it’s so complicated who wants to go through a book sixty pages long. I’d just as soon not give.” So that happens as well . . .

Third, as companies merge and restructure into national and international entities, philanthropic decision making is no longer a local matter. For example, the decision to move away from a United Way campaign to funding two AIDS organization in Africa was not made by local plant leadership, but rather by corporate headquarters decision makers. While local United Ways have often succeeded because of their close connections, or what one United Way described as “intimate” relationships, with corporate leaders, globalization of corporate decisions weakens those relationships.

The changing economy has resulted in job loss and a move away from employment in large corporations to job growth in small organizations. A diversified service economy is no longer an “efficient” environment in which to raise funds. The United Way can no longer rely on

. . . 6 or 7 doors to get their money and their talent. They now have to go all over town to smaller firms that might have 3 principals, saying “Can you do this piece?” instead of going to—and saying can you do the marketing, printing, volunteers. It’s a very different stage.

Finally, employment in the service industry and individually owned companies is often characterized by lower wages and less stable and secure employment—reducing the ability of “average” employees to donate to United Way campaigns. According to one Midwestern nonprofit leader,

. . . jobs are coming in but they are minimum wage jobs . . . it’s fast food, restaurant type of things are not businesses that we need . . . things that families can support themselves on . . . It’s more the minimum wage, part time, type of things.

United Way Performance

Looking at performance over time, United Way campaigns in our six sample communities, as measured by per capita contributions, have remained flat or declined since 1990 (Table 7). While all six campaigns experienced an absolute increase in contributions during this time period, when adjusting per capita contributions for inflation, all but one community had actual decreases in per capita giving levels ranging in size from a modest 3% decrease to a 56% decrease. MW_1 experienced a modest 1% increase. As one United Way leader described,

The trend for giving is down, the trend for need is up and those lines are going to intersect and cross and ultimately if you follow that trend line for giving it gets near zero and those were some frightening things that really shook the community . . .

Table 7.

United Way Per Capita Contributions (US$)

	% change: 1990-2001	% change: 2001-2007	% change: 1990-2007	Per capita campaign contributions 2007
MW_1	5	−3	1	15.59
MW_2	−11	9	−3	25.71
MW_3	11	−22	−14	29.68
SE_1	−19	16	−6	54.88
SE_2	−23	−43	−56	6.91
SE_3	−23	23	−5	17.79

Source: UW Data: NCCS Core Files. Population figures drawn from U.S. Census Bureau.

Despite similar campaign trends, significant differences exist in the performance of local United Way campaigns. Per capita contributions ranged from a low of US$6.91 per person in SE_2 to a high of US$54.88 per person in SE_1, differences that are not solely explained by differing stocks of human capital or wealth. Although SE_2 has the lowest per capita giving rates, this community is average (compared to the other 5 communities) in both educational attainment and poverty rates.

Local Logics—Cognitive, Normative, and Performance

Logics are the broader cultural beliefs, rules, and patterns of behavior that structure individual’s understanding and guide decision making (Lounsbury, 2007). Local noneconomic factors that may explain the variation in allocation practices include the stocks of philanthropic capital in the community and local civic climates. Measures of local philanthropic capital, such as contributions to public grant-making organizations (e.g., local hospital or educational foundations and other public funding intermediaries) and the resources of local private foundations, differ significantly across communities. Per capita contributions to public grant-making organizations ranged from a low of US$30 per person in communities MW_1 and SE_2 to more than US$400 per person in SE_1. Similarly, private philanthropic capital, as measured by both assets and grants distributed by local private foundations differ across communities. Distributions ranged from a low of US$21 per person in SE_2 to a high of US$648 per person in SE_1 and per capita assets followed a similar pattern (Table 8).

Table 8.

Philanthropic Resources Per Capita (2007) (US$)

	Contributions to publicgrant-making organizations (US$) per capita^a	Distributions by private foundations (US$) per capita	Assets of local private foundations (US$) per capita
MW_1	30.48	37.25	726.51
MW_2	205.34	118.12	2625.67
MW_3	486.95	11.28	181.15
SE_1	127.67	648.53	8081.47
SE_2	29.94	20.86	433.32
SE_3	71.37	77.51	174.90

Source: UW Data: NCCS Core Files & PF Core Files| Population figures drawn from U.S. Census Bureau.

Includes public grant-making organizations listed in the NCCS Core Files, including educational and health care foundations as well as community foundations.

While these measures describe a community’s current philanthropic resources, there are also differences in the philanthropic history of each community. Three communities are home to foundations that were established before 1940 and these foundations continue to play important leadership roles in MW_2 and SE_1 (Table 9). In these communities, the pre-1940 foundations continue to hold a large portion of the community’s philanthropic resources and play a key role in community decision making.

Table 9.

Historical Legacy of Private Foundations

Rule dates of private foundations located in United Way communities
	Pre-1939	1940-1969	1970-1999	2000-2007
MW_1	0	14	52	23
MW_2	1	7	16	4
MW_3	0	2	13	10
SE_1	4	87	203	89
SE_2	0	7	23	13
SE_3	1	1	8	5

Source: UW Data: NCCS PF Core Files.

Although such philanthropic capital may not accurately represent local grant-making activity, as foundations may grant regionally or even nationally, these stocks of philanthropic capital represent historical philanthropic and civic traditions. Leaders in SE_1 and MW_2 frequently referred to philanthropic values that were embedded in the DNA or culture of the community. In the early days of the 20th century, both communities’ founding industrial families endowed private foundations. These legacies continue to shape a shared understanding of philanthropic responsibilities. As one United Way leader in SE_1 describes,

There is a great historic commitment to philanthropy in this community that is really beyond in my view the normal kinds of things where folks think their community is unique. So with the advent of the [local corporation] money and [local corporation] money and all industries that complement their work, there were a lot of folks that were wealthy and had strong faith based, giving was a part of their culture and it was part of the culture of the company.

Community expectations of philanthropic giving are also ingrained in MW_2 where giving has remained strong despite persistent regional economic challenges. In both communities, historical philanthropic “anchors” continue to shape local giving. Such philanthropic leaders, “. . . are the DNA of the community—they represent the wealth of the community and philanthropy of the county.”

While private foundations shaped philanthropic attitudes in MW_2 and SE_1, in MW_1 and MW_3 community leaders described how religious values and community culture also encourage philanthropy and civic engagement. One United Way leader described the religious influence of the 18th-century settlers. Another United Way leader described their community’s unique attitude about wealth,

[] is an interesting community in the sense that it is wealthy, but not ostentatious about its wealth . . . A lot of people have significant wealth but are not showing it around. . . They live in ranch houses . . . you just can’t tell by their lifestyle.

While MW_1 and MW_3 lack philanthropic history, they are characterized by community institutions that support civic engagement. Leaders in MW_1 describe a close-knit community in which business, government, and the nonprofit sector work together on a variety of issues, ranging from disaster response to transportation needs to early childhood education. As one nonprofit leader observed, “. . . most people in the community recognize that we are much better off if we work together.”

In this community, local corporations, particularly locally owned banks and small companies, continue to encourage employee engagement and create expectations for philanthropic behavior.

When the new CEO came to town, he stood up in a Rotary meeting and said,“. . . We only have 35 leadership donors and that’s not good enough and we will increase that number.” They are now the number one company in leadership giving and they have up to 120 leadership givers and he [the new CEO] is the largest.

In this case, the new CEO’s expectations “. . . actually raised the bar on philanthropy in our community.”

While MW_3 is not characterized by the same high level of community collaboration, local leaders report that the local public university is a connecting point for many local initiatives. In addition, the United Way and community foundation leaders communicate frequently on community issues and even share office space. The community foundation has supported United Way campaigns and in several years has provided key “campaign lifting” contributions that enable the United Way to “make goal.”

A recent multiyear capital campaign at the local state university has nurtured the development of a local professional fund-raising field. Not only do fundraising professionals migrate from the university to local nonprofits, raising the professional skill levels of local professionals, but successful university campaigns are credited with educating community donors. Rather than seeing the success of the local university campaigns as a source of competition, United Way leaders describe how the university has “raised the bar” and that the fundraising for the United Way and university “complement each other fabulously.”

Philanthropic and civic traditions and stocks of philanthropic capital clearly influenced United Way actions in all the Midwest communities, as well as SE_1. However, not all communities are endowed with strong philanthropic understandings or the local institutions that support such behavior. SE_2 is characterized by weak philanthropic traditions and low levels of philanthropic activities across a variety of measures, which cannot be accounted for solely by a lack of community wealth. Community leaders report that they continue to face many challenges in building relationships within the nonprofit sector and across sectors. As one nonprofit leader described, although there is a shared agreement about the nature of community issues,

. . . we have not stopped and taken the time and said, “hey let’s sit down together to do this” . . . We haven’t sat around a common table as community problem solvers to say, collectively, “what are we going to do about this?”

Organizational Adaptation and the Local Context

Our analysis suggests that despite United Way of America’s efforts to rebrand the United Way system through broad adoption of the Community Impact model and despite similar macroeconomic changes and downward trends in United Way campaigns, the implementation of Community Impact varied considerably across local communities. Some United Ways opened the allocation process, others consolidated funding and some sought stability. We find that local philanthropic traditions buffered the impact of macroeconomic changes on United Way performance. Both philanthropic and civic institutions constrained and offered alternatives to the move to competitive fund allocations, a move that many local leaders perceived might jeopardize valuable community relationships. As a result local adaptations mirrored the diversity of community contexts. Table 10 summarizes the local context for each community and the changes in organizational practices.

Table 10.

Summary of Contextual Factors and Change in Allocation Processes—Ordered by Change in Allocation Process

	Environmental jolts	UW campaign success	Philanthropic & civic institutions	Change in allocation process
SE_1	Heavy deindustrialization	Strong (US$54.88 pc) modest declines (–6.4%)	Strong local philanthropic traditions—high private philanthropic capital	Stabilization-significant (14%)
				Use organizational reserves to defund small number of historical partners
MW_3	Limited deindustrialization	Moderate (US$29.67) modest declines (–14.2%)	Weak local corporate leadership	Stabilization-modest (6%)
	Strong mixed economy			Grow campaign
	Population growth		Strong public institution supporting philanthropic field	Use competitive process to reallocate funding among historical partners
MW_2	Heavy deindustrialization	Moderate (US$23.69 pc)	Strong philanthropic traditions—high levels private philanthropic capital	No change (per interviews)
		stable (–3.3%)	Strong private foundation leadership	Maintain heritage funding
				Seek new resources for coalition funding
				Use organization reserves for impact initiatives
SE_3	Moderate deindustrialization	Moderate (US$17.79)	Weak local corporate leadership	No change (1%)
	Rapid population growth	Modest declines (−5.2%)	Moderate public grant-making organizations & and moderate private foundation resources
MW_1	Moderate deindustrialization-moderate globalization and business consolidation	Moderate	Weak local philanthropic traditions—low philanthropic capital	Opening-modest (–5%)
		(US$15.59 pc) stable over time (1.2% change)	Strong civic institutions, with corporate leadership	Maintain heritage funding
				Seek new resources for coalition funding
SE_2	Heavy deindustrialization	Weak (US$6.91 pc)	Weak local philanthropic traditions	Opening-significant (–63%)
	Rapid population growth	Large declines (–56%)	Weak local corporate leadership	Competitive Funding—end all historical relationships

First, it is obvious that all local economies are different. MW_3 has a robust and diversified industrial economy, for which the traditional United Way model may remain appropriate. Second, in some communities, MW_2 and SE_1, which have been strongly affected by deindustrialization, historical stocks of philanthropic capital, and strong local institutions, buffered local philanthropic systems from the impact of these economic changes. Giving to the United Way has remained strong in both communities despite changes in the local economic structure. United Way leaders in these communities describe how the “community has stepped up.” In addition, stocks of philanthropic capital, both within the UW and within local foundations, provided strategic alternatives. As a result, United Way leaders in MW_1, MW_2, MW_3, and SE_1 were all able to consider new revenue generation strategies, often referred to as “growing the pie.” Raising new resources would allow local United Way systems to support special “breakthrough initiatives” above and beyond existing allocation commitments without jeopardizing historical relationships with partner organizations. SE_1 was even able to rely on past campaign success to consolidate funding among current partners.

In contrast, the two United Ways, MW_1 and SE_2, that moved to open their allocation processes are characterized by weak performance (per capita contributions) and are located in communities with limited private philanthropic resources. Not only would such a move be consistent with the United Way of America branding but also might be attractive to corporations that are seeking strategic “impact” from their donations, a theme mentioned in interviews in both communities.

Even when United Way’s appear to be pursuing similar strategies, there are important differences. United Way leaders in SE_2 perceived that large declines in performance, coupled with historically low stocks of philanthropic capital, left them with “no choice.” In contrast, MW_1 had not moved to a competitive allocation process. Instead, they had sought additional foundation funds to support special community initiatives, which had opened up funding for new organizations to receive funding. The United Way in MW_1 played a key role in writing grants for other community initiatives, reflecting the community’s strong sense of social cohesion. In one instance they helped secure a grant for another agency to lead a collaborative initiative, staying active only as a participating agency.

In communities where United Ways have been successful either in fundraising (MW_2 & SE_1) or coalition building (MW_1), jeopardizing historical relationships through a competitive allocation process posed great risk. Many leaders, philanthropic and nonprofit, questioned whether the move to Community Impact threatened the local human service system and the role of the United Way in that system. Local United Way leaders were keenly aware that they rely on the reputation and legitimacy of their nonprofit partners to raise money in the community and achieve community change. Local nonprofits have strong ties to the corporations that fund the United Way and challenging these relationships may jeopardize local United Way’s campaigns. Local United Ways also play an important local role in providing stable and predictable funding streams to agencies delivering basic services, services that need to be supported regardless of where these agencies fit in the new Community Impact model. As one philanthropic leader noted,

I’m concerned that the United Way is going to stop funding operating support for partner organizations. Those organizations are going to come to all the other funders in town looking for dollars. That will throw the community into chaos. There just is not enough flexible dollars in the community for the United Way to stop being a flexible funder.

Several United Way leaders questioned whether their local United Ways would ever move to a truly competitive fund allocation process. The potential disruption of local relationships and disruptions to the stability of local health and human service systems challenged United Way leaders’ conceptions of what it meant to be successful and how to achieve that success.

Discussion and Conclusion

Throughout its history, United Way of America has promoted a variety of system changes to strengthen its brand. Community Impact, a top-down rebranding effort driven by the United Way of America, has been the latest such initiative (Brilliant & Young, 2004). However, consistent with a growing body of literature that explores the impact of local logics on organizational practice (Greenwood et al., 2010; Marquis & Battilana, 2009) and previous research on the United Way (Beene, 2001; Brilliant, 1990), our research finds great variation in practice across local communities. Despite the extensive use of common Community Impact language and the adoption of new grant-making structures, actual allocation processes differed significantly across local systems. The result is great variation in local systems that remained only loosely coupled to national change efforts (Beene, 2001). In the following section we review how these findings contribute to theory and the implications for future research.

First, nonprofit scholars have a long history of recognizing that the structure and size of the nonprofit sector are strongly influenced by both community characteristics and institutions (For recent example, see Graddy & Wang, 2009). Our research contributes to the growing body of literature that suggests that local and regional contexts also influence organizational practices. While institutional theory has long focused on the importance of national, societal, and more global professional institutions, our findings support recent research that describes the local institutions that shape organization practices and decision making in the for-profit (Marquis & Battilana, 2009; Suddaby et al., 2010) and nonprofit (Bies, 2010; Carmin & Jehlička, 2010; Ramanath, 2009) sectors. Consequently, isomorphism isn’t inevitable. While we may often assume that local institutions are subordinate to national or field level institutions, in the case of the United Way move to Community Impact, local institutions and the resource environments in which they are embedded trump national isomorphic pressures.

Second, our research offers a model of the process by which local context influences local practices (Figure 1). Stocks of community capital—both philanthropic and civic—buffered the impact of macroeconomic changes on organizational performance and shaped the development of cognitive, normative, and performance logics in local communities (Greenwood et al, 2010; Marquis & Battilana, 2009). Ultimately the shared cognitions and expectations that result from local traditions and social relationships influence an organization’s understanding of success and the strategies that promote organizational performance (Lounsbury, 2007). Path-dependent processes may limit an organization’s search for alternatives (Ramanath, 2009) or provide opportunities for alternative strategies. In the case of local United Way systems, path-dependent processes—strong philanthropic traditions and civic expectations—allowed some United Ways to build coalitions and to seek alternative funding for new initiatives without jeopardizing existing relationships.

Figure 1.

Conceptual model of local institutions and diversity of practice in local philanthropic fields

While our research demonstrates the influence of local contexts on organizational practices and the process by which variation in organization practices continues, there are limitations to our research. First, we use case studies in six communities, which may or may not be representative of the population of United Way systems. Our focus was on medium-size communities. Perhaps larger communities might be more aware of and responsive to national pressures (Beene, 2001) although Barman’s (2006) study of United Way systems in San Francisco and Chicago suggests that local gatekeepers exert strong influence over practices in these large systems. Second, our data describe organizational practice at one point in time. It is important to study institutional changes over a longer period of time. Perhaps decoupling from national change initiatives is an immediate response as organizations try to modify the conflicting demands of national institutional pressures and their own local logics (Tilcsik, 2010). Over time, do United Ways move to competitive funding? Third, our interviews and data are drawn from pre-2008 economic crisis. Will such a drastic environmental jolt have a larger impact and drive organizations to pursue new strategies that may be too risky under normal conditions? Will isomorphism be more likely to result from an environmental jolt? Finally, we find that local resource environments shape and are shaped by local cognitions, which significantly contribute to variations in practice. This model may not apply to other organizations that receive their funding from nonlocal sources, are dependent on more regulated funding sources, such as government grants and contracts, or rely on commercial fees for service. In such cases, local logics may have less influence on organizational behavior (Greenwood et al., 2010).

Despite these limitations, our study moves from providing evidence of variation in the face of national institutional pressures (Oliver, 1991) to describing how local institutions shape local philanthropic practices. Although there is a growing popular belief that global forces are homogenizing organizational practice (Marquis & Battilana, 2009), we find evidence that community-level institutions continue to shape practice and lead to a variety of local strategies, at least for those organizations that are embedded in local resource environments. Furthermore, local institutions that shape practice do not work solely through regulation or other forms of coercion but often through enduring relationships and cultural and social values. From such a perspective local communities are not only acted on by broader trends and forces but are also an arena in which local cultural and social logics shape a local response to broader issues (Marquis et al., 2007).

Footnotes

Acknowledgements

The authors thank their research assistant, Sallie Smyth, for her assistance with secondary data collection. They also appreciate the valuable comments provided by the anonymous NVSQ reviewers.

Declaration of Conflicting Interests

The author(s) declared no potential conflicts of interest with respect to the research, authorship, and/or publication of this article.

Funding

The author(s) received no financial support for the research, authorship, and/or publication of this article.

Notes

Bios

Laurie E. Paarlberg is an associate professor in the Department of Public and International Affairs at University of North Carolina Wilmington. Her research on nonprofit and government organizations has appeared in Public Administration Review, American Review of Public Administration, International Public Management Journal, and Nonprofit Management and Leadership.

Stephen S. Meinhold is the associate dean for research and a professor in the Department of Public and International Affairs at University of North Carolina Wilmington. He has a PhD in political science from the University of New Orleans and extensive field experience studying community response to natural disasters. His recent research interests in the local philanthropy are supported by more than 10 years of community engagement on United Way and other local boards.

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