By TRACEY DRURY
tdrury@bizjournals.com | 716-541-1609

In a major shift that will benefit area nonprofit groups, the United Way of Buffalo & Erie County will eliminate its 13 percent processing fee for most contributions coming in that are identified for specific organizations.

The decision to change the donor-designed contribution fee reflects the agency's mission, according to board members - plus it could help attract more donors, said Robert Zak, board chairman and president of Merchants Insurance Group.

"We bring people, organizations and resources together to improve community well-being," he aid. "Ultimately, this decision will help us attract more donors and get even more resources to not-for-profit community agencies."

The agency kicks off this year's annual campaign in mid-September. Last year's campaign brought in $13.3 million, including about $3.8 million in donor-designated contributions.

Since 1984, the agency has accepted and processed donor-designated contributions - those that come in from contributors with a specific beneficiary identified. The United Way also collects unrestricted donations that funnel through its annual fund, with those dollars pooled and distributed to nonprofit group programs that address the areas of education, income and health and wellness.

The agency for years worked to dissuade designated donations, pushing donors instead to support the annual campaign and trust that its volunteers and executives would make the best funding decisions based on reported outcomes by the agencies. Earlier this year, the agency awarded $4 million in funding to 81 human-service programs at 50 organizations in Erie County through those non-designated donations.

The donor-designated funds continued to come in at the same rate, however, averaging $3.5 million to $4 million annually. In some cases, donors have opted not to give at all through the payroll deduction offered by the United Way program.

In some cases, a fee will continue to be applied for state and federal campaigns, as per statutory regulations out of the control of United Way. Of the $3.8 million donated last year, $1.7 million came from non-federated campaigns, Michael Weiner said. Eliminating the fee on those donations would generate an additional $220,000 in unrestricted funds for community groups.

Eliminating the fees were among the changes proposed when Weiner joined the agency as president in spring 2009, when he told Business First that individuals and corporate groups should be encouraged to give to whichever individual organization or need suits them best.

Today, the change is the next natural step for the agency, he said, following other organizational changes and strategic planning efforts.

"We wanted to generate some goodwill, and we wanted to increase market share in our campaign," Weiner said.

"People are looking at their pocketbooks more than ever before," he said. "We want to be as innovative and flexible as we can. And given our role to bring resources into the community, we see this as very consistent with our mission."

According to Weiner, it will likely take two to three years for the agency to recoup the losses from the fees and will rely on reserves and other operational efficiencies in the meantime. The policy will be evaluated over the next three to five years to determine its impact on both community groups and the United Way.

"We think it's the right thing to do," he said. "Community agencies should get 100 percent of the investment that comes through from the donor."

The announcement was timed just days before the agency's annual Day of Caring, when thousands of volunteers will spend their day completing projects at nonprofit agencies throughout the region, including painting and construction projects, playground cleanups and other tasks.

The agency will announce a goal for its 2012 campaign on Sept. 12.