If true, this could further hurt the reputation of large charities like the United Way and the Red Cross.

United Way is by far the largest organization raising money in American workplaces. It channels money to thousands of small local charities that would otherwise struggle to find donors and increasingly creates its own programs to address community needs.



No one disputes its good intent. But its accounting practices raise questions for potential donors who want to know precisely how much of their contributions go to people in need rather than the organization helping them. In effect, these practices, by artificially inflating reported contributions, make it seem as if expenses consume a smaller portion of donor dollars. That makes United Way look better against competing charities at a time when more and more donors are relying on services that rate charities.

"Because they miscount the totals, they start off with a faulty number," said Rick Cohen, president of the National Committee for Responsive Philanthropy, a watchdog group in Washington. "That's their fundamental flaw."