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How the State and Labor Saved Charitable Fundraising: Community Chests, Payroll Deduction, and the Public–Private Welfare State, 1920–1950

Published online by Cambridge University Press:  09 April 2015

Andrew Morris
Andrew Morris*
Affiliation:
Union College
*
morrisa@union.edu
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Abstract

Payroll taxes and payroll deductions became ubiquitous in the United States by the mid-1940s, crucial to the financing of the emerging “mixed” welfare state as well as World War II. While scholars have firmly established the importance of elements of the warfare/welfare state such as Social Security, employer-based pensions and health insurance, and the mass income tax, voluntary sector institutions have garnered less attention. The history of payroll deduction demonstrates how this “infrastructural power” also advantaged institutions outside of the state, notably, charitable fundraising organizations commonly known as Community Chests (the forerunners of the United Way). Chests began to look toward the payroll deduction in the 1920s as an efficient and effective way of extracting donations from workers of modest means—though these were often fiercely resisted by an empowered labor movement in the 1930s. But it took the state's vast expansion of deductions during World War II, and the patriotic impulse of donating to war-related charities, to convince industrial unions and employers to support this method of donation. Like the income tax, this change in charitable giving remained in place after the war and became a vital element of financing this part of the public–private social safety net—a crucial boost to the voluntary sector from the state.

Type
Research Article
Information
Studies in American Political Development , Volume 29 , Issue 1 , April 2015 , pp. 106 - 125
Copyright
Copyright © Cambridge University Press 2015 

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41. “Of Course!” The Kodak Magazine (June 1923): 28; “Kodak Park Regular Subscribers Contribute $22,481.94 to Chest,” The Kodak Magazine (July, 1923): 18.

42. Harry Wareheim, “Annual Report to the Members of the Corporation,” 1925, and “Annual Report,” 1927, both Annual Corporation Reports, 1925–1932, United Way of Greater Rochester, Rochester, NY. Their concerns about depending on big givers were reinforced following Eastman's death in 1932; his estate continued making large donations to the Rochester Chest, but when Eastman's money dried up, the Chest board renewed its determination to promote the “52-week plan” of payroll giving by employees; see “Twentieth Annual Meeting of the Corporation,” Dec. 16, 1937, Minutes, 1936–62, United Way of Greater Rochester; “Chest Urges Wider Use of 52-Week Plan,” Rochester Democrat and Chronicle, Apr. 21, 1937.

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51. Morris, The Limits of Voluntarism, 12.

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56. “Employee Solicitation, Payroll Deduction, and the Social Security Bill,” Campaign Plans for 1935, 6. Ashton is also quoted in Elwood Street, “The United Way,” Elwood Street Papers, 1277, Box 2, Social Welfare History Archives, University of Minnesota. “The United Way” is a voluminous unpublished history of the United Way movement; a shorter, heavily edited version was published after Street's death as United Way of America, People and Events.

57. “Big Spending Seen for Office Devices,” New York Times, Oct. 20, 1936. The New Deal was a boon for many business machine manufacturers, who sold and leased machines to businesses impacted by new regulations as well as new government agencies such as the Social Security Administration. See Cortada, James W., Before the Computer: IBM, NCR, Burroughs, and Remington Rand and the Industry They Created, 1865–1956 (Princeton, NJ: Princeton University Press, 1993)Google Scholar, 113, 146–47, 221.

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60. Community Chests and Councils of America, “Community Survey of Social and Health Work in Minneapolis: Pressure Groups” (New York: 1938), 19, Folder 15, Box 130, United Way of Minneapolis Records, Social Welfare History Archives; Donald Ross, “The Administration of Employee Solicitation Campaigns for Charity Fundraising within Business and Industrial Firms With Emphasis on Employee Attitudes” (master's thesis, Duquesne University, 1971), 21. The Congress of Industrial Organizations (CIO) would later specifically oppose participating in fundraising for the Red Cross, due to the organization's refusal to grant relief to strikers and for its general disdain for labor unions; Foster Dulles, Rhea, The American Red Cross: A History (New York: Harper and Brothers, 1950), 303–304 Google Scholar; Cutlip, Fund Raising in the United States, 417–18; Brilliant, The United Way, 37; Fones-Wolf, “Labor and Social Welfare,” 616–17.

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64. Duane W. Beck, “An Historical Study of Organized Labor's Participation in Community Chest and Council Activities in Lansing, Michigan” (master's thesis, Michigan State College, 1955), 47–50.

65. Davis, Horace, Labor and Steel (New York: International Publishers, 1933)Google Scholar, 110.

66. Rubin Latz to Rabbi Albert Gordon, Nov. 2, 1937; Gordon to David Liggett, Nov. 4, 1937; both, Folder 10, Box 128, United Way of Minneapolis Records, Social Welfare History Archives; John Kestner, “Organized Labor and the Minneapolis Community Chest” (honors thesis, University of Minnesota, 1987), 9–10. In Minneapolis, the Council of Social Agencies performed both planning and fundraising functions for local voluntary agencies.

67. MacDonald, Alexander, Revolt in Paradise: The Social Revolution in Hawaii After Pearl Harbor (New York: Stephen Daye Press, 1944)Google Scholar, 53. Chest organizations were not the only charity to use such direct or indirect pressure in the workplace to obtain employee donations; the Red Cross on occasion used similar tactics to obtain onetime dollar deductions from employee's paychecks. See Clemens, “Nationalizing Reciprocity,” 28–31.

68. Campaign Director's Report, Northampton (MA) Community Chest, 1929 and 1931, Folder 5, Box 1, Northampton Community Chest Records (MS 42), Special Collections and University Archives, W. E. B. DuBois Library, University of Massachusetts at Amherst.

69. Chester C. Cooley, “A Study of the Community Fund of Lorain, Ohio” (master's thesis, Ohio State University, 1939), 50–51.

70. H. Davis, Labor and Steel, 257–258.

71. Rachleff, Hard Pressed in the Heartland, 28–31.

72. Ibid.

73. Robert Lynd and Helen Lynd, Middletown in Transition, 132.

74. Robert Diller, “The Public and the Community Chest: A Study of Public Opinion in Akron, Ohio” (master's thesis, Ohio State University), 11, 14.

75. Chalmers et al., Labor-Management Relations in Illini City, 183.

76. Beck, “Historical Study of Organized Labor's Participation,” 57–58, 60.

77. Arthur J. Katz, “A Study of Conflict and Cooperation in the Relationship Between Organized Labor and Voluntary Social Welfare in America During the Years 1905–1955” (PhD diss., New York University, 1968), 221–24, 228–30.

78. Board of Directors, Oct. 31, 1941, Box 17, United Way of Minneapolis Records.

79. Beck, “Historical Study of Organized Labor's Participation,” 61–66.

80. “Labor Endorses Chest Drive,” The Norwalk Hour, Oct. 31, 1940.

81. Bethlehem Community Chest Board of Directors, Mar. 9, 1939; May 22, 1940; both in Vol. 5, United Way of Northampton and Warren Counties Records, Bethlehem Public Library, Bethlehem, Pennsylvania. On Bethlehem's anti-unionism, see Fones-Wolf, Elizabeth and Fones-Wolf, Ken, “Conversion at Bethlehem: Religion and Union Building in Steel, 1930–1942,” Labor History 39:4 (1998): 381–395.Google Scholar

82. Community Chests and Councils of America, News Bulletin, June 1938, quoted in A. Katz, “A Study of Conflict and Cooperation,” 219.

83. Cohen, Making a New Deal, 213–89.

84. Seymour, Harold J., Design for Giving: The Story of the National War Fund, 1943–1947 (New York: Harper and Brothers, 1947)Google Scholar, 98.

85. Murphy, The National Debt, 130–31, 199–200; Morse, Paying For a World War, 76, 164. The New York Times reported in 1942 that the Treasury Department used Cedar Rapids, Iowa's bond program as a national model, which had borrowed the payroll deduction strategy from the local Community Chest. See “Cedar Rapids to Get First Treasury ‘T,’” New York Times, Nov. 7, 1942.

86. Sparrow, Warfare State, 130.

87. “Victory Bonds Ask 35,000,000 Buyers,” New York Times, Dec. 12, 1941; Morse, Paying for a World War, 165–166. Even in the bond program, though, labor and management occasionally sparred over control of fundraising; Bethlehem Steel refused to allow a union in its Brooklyn shipyard to conduct its own payroll deduction plan for the bond drive; see Samuel, Pledging Allegiance, 83.

88. Lichtenstein, Nelson, Labor's War at Home: The CIO in World War II (New York: Cambridge University Press, 1982)Google Scholar, chap. 5; Kersten, Andrew, Labor's Home Front: The American Federation of Labor During World War II (New York: New York University Press, 2006)Google Scholar, 54.

89. Morse, Paying for a World War, 164, 200–205; Samuel, Pledging Allegiance, 77–93.

90. “Bond Drive Begun by Labor, Industry,” New York Times, Aug. 28, 1942.

91. Seymour, Design for Giving, 1–5; United Way of America, People and Events, 92.

92. “Agreement Between CIO Committee for American and Allied War Relief, United Nations Relief (AFL) and Community Chests and Councils, Inc,” August, 1942, Folder 10, Box 128, United Way of Minneapolis Records; United Way of America, People and Events, 91; Seymour, Design for Giving, 97; Fones-Wolf, “Labor and Social Welfare,” 617–19. The Red Cross also was able to negotiate with the union organizations to forestall competition with the separate Red Cross fund drive by incorporating labor representatives into the Red Cross's wartime campaign organization (Dulles, The American Red Cross, 363–64).

93. Kestner, “Organized Labor and the Minneapolis Community Chest,” 18.

94. David Liggett to Carel Koch, Aug. 19, 1942, Folder 10, Box 128, United Way of Minneapolis Records.

95. Liggett to Carel Koch and Andrew Shea, Mar. 4, 1943, Folder 10, Box 128, United Way of Minneapolis Records.

96. Bent Taylor, “Labor Becomes a Big Giver,” Survey Graphic (Feb. 1943): 46–49, 61; Monroe Sweetland, “Labor Lengthens Its Perspectives,” Common Ground (Summer 1943): 23–29.

97. Liggett to Koch and Shea, Mar. 4, 1943.

98. C. M. Bookman, “A Study of the Community Chest and Council of Social Agencies of Rochester, New York” (Rochester, NY: Survey Committee, Rochester Community Chest, 1941), 26; Twenty-Fourth Annual Meeting, Rochester Community Chest, Dec. 19, 1941; Twenty-Fifth Annual Meeting, Dec. 17, 1941; Twenty-Sixth Annual Meeting, Dec. 16, 1943; Meeting of the Executive Committee, June 2, 1944; Meeting of the Executive Committee, Oct. 20, 1944: all in Minutes, 1936–1962, United Way of Greater Rochester; “End of Split a Civic Gain,” Rochester (NY) Times-Union, Dec. 23, 1944; Garlock, Jonathan and Donahue, Linda, All These Years of Effort: 150 Years of Rochester's Central Labor Councils (Rochester, NY: Roland Pettengill Labor Education Fund, 2005), 36–40.Google Scholar

99. Liggett to Koch, Aug. 19, 1942; Taylor, “Labor Becomes a Big Giver.”

100. President's Report 1943–1944, United War Fund of Delaware; President's Report 1945–1946, United War Fund of Delaware, both in United Fund 1934–1946 Folder, Box 100, Jasper Crane Papers, Hagley Museum and Library, Wilmington, DE; Crawford Greenewalt memo, Sept. 21, 1948, United Fund 1948 No. 2 Folder, Box 100, Crane Papers.

101. Seymour, Design for Giving; Sweetland, “Labor Lengthens Its Perspectives,” 26–27.

102. Lichtenstein, Labor's War at Home, 80–82.

103. “Summary of Answers to Questionnaire on Payroll Deduction,” National War Fund Special Services Bulletin No. 8, Sept. 3, 1943, United Way of America Archives; Seymour, Design for Giving, 56.

104. Brownlee, W. Elliot, Federal Taxation in America: A Short History (Cambridge: Cambridge University Press, 1996), 94–98 Google Scholar. Milton Friedman, a young analyst for the Treasury Department during the war, noted that the payroll deductions for bond purchases had paved the way for the payroll deduction of income taxes; Milton Friedman, “Attitudes Toward Payroll Deductions: The Proposed Payroll Tax and Increased Social Security,” Office of War Information, Bureau of Intelligence, Special Report No. 20, Sept. 4, 1942, Box 22, Office of Tax Policy Subject Files, RG 56, National Archives, College Park, Md. Thanks to Romain Huret for this source; see generally, Huret, Romain, American Tax Resisters (Cambridge: Harvard University Press, 2014), 177–82Google Scholar. Beardsley Ruml was the well-known advocate for instituting a “pay as you go” system for the expanded income tax (as well as forgiving a year of taxes); his experience with consumer credit as the treasurer of Macy's in the late 1930s may have shaped his idea, though Macy's itself was a late adopter of installment buying. Reagan, Patrick, “The Withholding Tax, Beardsley Ruml, and Modern American Public Policy,” Prologue 24:1 (Spring 1992): 19–30 Google Scholar; Calder, Lendol, Financing the American Dream: A Cultural History of Consumer Credit (Princeton, NJ: Princeton University Press, 2009), 276–277.Google Scholar

105. Rochester Community Chest, “Twenty-Sixth Annual Meeting,” Dec. 16, 1943, Minutes, 1936–1962, United Way of Greater Rochester.

106. United Way of America, People and Events, 94. This source mistakenly conflates the start of withholding for Social Security taxes with that for income taxes in 1943, when in fact Social Security withholding had begun in 1937. A number of agency histories, journalistic accounts, and even scholarly sources, apparently relying on this source, have perpetuated this error; see, for instance, United Way of Rhode Island, “History,” http://www.uwri.org/about/history (accessed Aug. 4, 2014); Rindi White, “United Way Workplace Campaign,” Alaska Business Monthly 28:12 (Dec. 2012): 84; Bremner, Robert, American Philanthropy, 2nd ed. (Chicago: University of Chicago Press, 1988)Google Scholar, 227.

107. Street, “The United Way,” 1611–12, 1824; Seymour, Design for Giving, 67; Cutlip, Fund Raising in the United States, 410; President's Report 1944–1945, United War Fund of Delaware, United Fund 1934–1946 Folder, Box 100, Crane Papers. Corporate giving increased from about 30 percent of chest goals to between 35 and 45 percent during the war, driven in part by the wartime excess profits tax; see Seymour, Design for Giving, 67; Heald, The Social Responsibilities of Business, 204.

108. See Hacker and Klein generally for this argument.

109. “Some More Taxes for George to Deduct,” Pittsburgh Post-Gazette, Mar. 7, 1948.

110. United Way of America, People and Events, 84, 118.

111. Hodges, Wayne, Company and Community: Case Studies in Industry-City Relationships (New York: Harper and Brothers, 1958)Google Scholar, 78.

112. Street, “The United Way,” 1809–10, 1868; on labor on boards, see, for instance, James Anderson [Tacoma, WA, Community Chest] to Matthew Woll, Feb. 4, 1946, Folder 1, Box 1, AFL-CIO Department of Community Service Records, Social Welfare History Archives.

113. A. Katz, “A Study of Conflict and Cooperation,” 321–22; see also Fones-Wolf, Selling Free Enterprise, 143–44.

114. Fones-Wolf, “Labor and Social Welfare,” 622–24.

115. “Give Labor More Voice, Community Groups Urged,” The Machinist (May 21, 1959), 4.

116. “Payroll Deduction for the Community Chest,” 1950, Folder 13, Box 153, United Way of Minneapolis Records.

117. Executive Secretary's Report, Bethlehem Community Chest, Dec. 6, 1948, United Way of Northampton and Warren Counties (PA) Records.

118. Brilliant, The United Way, 29–32; Carter, Richard, The Gentle Legions (New York: Doubleday, 1961)Google Scholar, 267; Hodges, Company and Community, 74–85.

119. Carter, The Gentle Legions, 252.

120. Demetrius Iatridis, “Industrial Management for Federated Fund-Raising” (PhD diss., Bryn Mawr, 1955), 40–41; for a highly critical account of the United Fund strategy, see Carter, The Gentle Legions, chap. 9.

121. “United Way: Jim Douglas Remembers Its Beginnings,” HistoryLink: The Free Online Encyclopedia of Washington State History, http://www.historylink.org/index.cfm?DisplayPage=output.cfm&file_id=2442 (accessed August 2, 2011). Douglas was the first chairman of the Good Neighbor Fund, which eventually became the Seattle United Way.

122. Community Chests and Councils of America, “Experiments with More Inclusive Federation” (New York: Community Chests and Councils of America, 1951), 11–16; Daniel McDonald, Jr., “An Experiment in Community Chest Public Relations With Small Business Firms in Youngstown, Ohio” (master's thesis, Ohio State University, 1951).

123. Board of Directors Minutes, Northampton (MA) Community Chest, Mar. 21, 1956; Nov. 21, 1956; Sept. 1968, Northampton Community Chest Records.

124. Andrews, F. Emerson, Corporation Giving (New York: Russell Sage Foundation, 1952)Google Scholar, 99.

125. Hanlan and Cohen, “Do Unto Others”; Fones-Wolf, Selling Free Enterprise, 151; “Advisory Committee on Labor Participation, Report of Results and Proposed Statement of Policy,” Dec. 1951, Folder 4, Box 1, AFL-CIO Department of Community Service Records.

126. Walker, Charles, Steeltown: An Industrial Case History of the Conflict Between Progress and Security (New York: Harper and Brothers, 1950)Google Scholar, 45.

127. Bruno, Robert, Steelworker Alley: How Class Works in Youngstown (Ithaca, NY: ILR Press, 1999)Google Scholar, 56.

128. A. Katz, “A Study of Conflict and Cooperation,” 309, 319; Fones-Wolf, Selling Free Enterprise, 151–52.

129. Fones-Wolf, Selling Free Enterprise, 151–152; Form, “Organized Labor's Place,” 536; Bok, Derek and Dunlop, John, Labor and the American Community (New York: Simon & Schuster, 1970), 434–38.Google Scholar

130. Brilliant, The United Way, 45. Cloward advanced one of the more influential critiques of the voluntary sector's response (particularly the Chests') to urban poverty in Cloward, Richard, “Social Class and Private Social Agencies,” in Education for Social Work: Proceedings of the Annual Program of the Council on Social Work Education, 1963 (New York: Council on Social Work Education, 1963), 128–34Google Scholar, revised and republished in Cloward, Richard and Epstein, Irwin, “Private Social Welfare's Disengagement from the Poor,” in Brager, George and Purcell, Francis, Community Action Against Poverty (New Haven, CT: College and University Press, 1967), 40–64 Google Scholar; see also Morris, Andrew, “The Voluntary Sector's War on Poverty,” Journal of Policy History 16:4 (2004): 275–305 Google Scholar; Morris, The Limits of Voluntarism, 149.

131. Bok and Dunlop, Labor and the American Community, 438.

132. “Something Old, Something New,” Time, Nov. 4, 1946.

133. Brilliant, The United Way, 157–58; United Way of America, People and Events, 8.

134. Ross, “The Administration of Employee Solicitation Campaigns,” 60.

135. On the challengers to the United Way in workplace charity, see Brilliant, The United Way, 180–208; Barman, Contesting Communities; on shifting base of donations, see “United Way is Reporting 3.8% Increase in Donations,” New York Times, August 8, 2001; Sally Beatty, “Giving Back: Trying to Mend the United Way,” Wall Street Journal, Apr. 28, 2006; America's Charities and The Consulting Network, “Employee Workplace Campaigns at the Crossroads: Recommendations for Revitalization,” (Chantilly, VA: America's Charities, 2000); Stephen Greenhalgh, “Changing Direction: Developing Employee-Friendly Workplace Campaigns with Technology and Best Practices” (Chantilly, VA: America's Charities, 2006).

136. Lubove, The Professional Altruist, 188.

137. Andrews, Corporation Giving, 100.

138. Carter, The Gentle Legions, 278, 311.

139. Charles Cabot, “The Accomplishments of Federation,” in The United Way: Planning and Financing Health and Welfare Services, 32nd National Conference (1950), 18, 21, United Way of America Archives. In a parallel critique, some union activists decried the dependence on payroll deductions for union dues for the passivity it seemed to encourage on the part of members, and for reducing the need for union officials to stay in active contact with the rank and file. See Lynd, Alice and Lynd, Staughton, ed., Rank and File: Personal Histories by Working-Class Organizers (1973; reprinted by Princeton University Press, 1981)Google Scholar, 111, 126, 257.

140. “Help From Neighbors,” Life, Oct. 13, 1952, 40.

141. Jasper Crane to Eugene duPont, Oct. 25, 1946, Folder “United Fund 1934–1946,” Box 100, Jasper E. Crane Papers, Hagley Museum and Library, Wilmington, DE. This was not an attitude linked solely to the Chests and Funds; a similar rhetoric surrounded corporate giving to higher education and other nonprofit organizations in the postwar era; see Cutlip, Fund Raising in the United States, 517–21; Clemens, “Nationalizing Reciprocity,” 46.

142. Hazard, Leland, “Community Chests,” in The Manual of Corporate Giving, ed. Ruml, Beardsley and Geiger, Theodore, (Kingsport, TN: National Planning Association, 1952)Google Scholar, 93.

143. Lichtenstein, Nelson, The Most Dangerous Man in Detroit: Walter Reuther and the Fate of American Liberalism (New York: Basic Books, 1995), 281–84.Google Scholar

144. United Way of America, People and Events, 95.

145. Carter, The Gentle Legions, 276–277.