The Civil Society War and the Popularization of the Fundraising Efficiency Ratio – William Suhs Cleveland, PhD, Philanthropic Studies, IUPUI
Building on the success of War Chest fundraising efforts during World War II, the organization known today as the United Way sought to dominate American fundraising for social services and health advocacy. Through the 1950s, the United Way solidified its dominance of social service fundraising but met stiff resistance from the leading national health agencies. The United Way coerced the health agencies to join their campaigns using various tactics. Most extreme were fundraising permitting ordinances that included fundraising efficiency ratios and conveniently exempted the United Way, while naming them as the arbiter of disputes arising from the permitting process. Charity rating agencies aligned with the United Way embedded the fundraising efficiency ratio into their evaluations. Executives from seven health agencies met about monthly for twenty-five years with the express purpose of staying out of United Way fundraising campaigns. Health agencies responded with coordinated action, highlighted by lawsuits against permitting ordinances in several jurisdictions. Ultimately, fundraising efficiency ratios in fundraising permits were declared unconstitutional on First Amendment grounds by the US Supreme Court. While the permitting regulations have been changed, many donors reportedly continue to use financial ratios of questionable value when evaluating charities.