In 1943, under the headline “Power of Deduction,” Time reported with tongue-in-cheek that Des Moines sportswriter Leighton House, after receiving his paycheck with the “usual list of wartime deductions (for Social Security, hospital insurance, company pension, Community Chest, war bond, victory tax), made a natural mistake, tore up the check, and tried to deposit the stub at his bank.”Footnote 1 House's pay stub was a vivid, humorous sign of how ubiquitous “collection at the source” had become by World War II; the list is a tour through the institutional foundations of the newly constructed warfare and public–private welfare state, much of which would persist beyond the war.
Each of those deductions ended up on House's stub through distinctive political processes, many of which we are familiar with: the choice to make Social Security a payroll tax rather than drawn from general revenues, which had significant ramifications for the equity and durability of the program;Footnote 2 the boom in employer-based health and retirement benefits during the war, which propelled the social safety net toward its distinctive public–private postwar structure;Footnote 3 the dependence of wartime finance on borrowing from citizens through bond sales; and the wartime shift in income taxation from a “class” to a “mass” tax.Footnote 4 Each of these has an individual history, but within a short period all converged on the powerful tool of payroll deduction, which allowed for small sums to be regularly and automatically collected from a wide variety of Americans, particularly those of modest means.
But what of the Community Chest? To the uninitiated in the twenty-first century, it is little more than an inexplicable pile of cards on a Monopoly board (for those who still play board games). Those familiar with social welfare history, though, will recognize the Chests as the forerunner of today's United Way: local organizations that raised money for charities in the community through a combined fundraising effort. Over the course of the twentieth century, Chests and their successors provided a vital income stream for many charities, raising over a billion dollars a year by the 1970s, but they remain best-known among historians as examples of a pre–New Deal voluntarism overwhelmed by the crisis of the Depression and sidelined by the emerging welfare state.Footnote 5 Their presence on House's pay stub in the 1940s—ranked with other elements of the welfare state—suggests the need to reconsider the role of voluntary agencies in the post-WWII welfare state and to firmly place them in the matrix of institutions that threaded together the mixed social safety net. Scholars such as Jacob Hacker, who have championed the study of the postwar public–private welfare regime, have acknowledged the significance of the voluntary sector but prioritized the study of the large-scale health and retirement programs; now it is time to draw this other set of institutions into our understanding of this regime.Footnote 6
The adoption and promotion of workplace and payroll giving by Community Chests is a significant milestone in the history of the nonprofit sector, and its signal importance in sustaining the charities within the United Way has been demonstrated by scholars such as Eleanor Brilliant and Emily Barman.Footnote 7 It transformed the nascent “federated financing” of charities—where fundraising was conducted by one organization and proceeds distributed to member charities—from a system that depended largely upon door-to-door solicitation of individuals and large gifts from rich donors, to a truly mass-based structure that, for a time, saw the majority of its gifts come through workplace donations; indeed, by the 1970s, workplace giving, much of it through payroll deduction, accounted for about half, over $500 million, of the United Way's fundraising.Footnote 8 Brilliant, Barman, and others have demonstrated that the payroll deduction itself became the locus of conflict within the voluntary sector in the postwar era— first, as national charities such as the Red Cross and the American Cancer Society battled with Chests for access to workplace donations in the 1940s and 1950s, and later, in the 1970s as civil rights organizations and other advocacy groups used payroll deduction as leverage to broaden the range of institutions financed by United Way organizations.Footnote 9 But they give only cursory attention to the origins of the practice and the contingencies that surrounded it: We do not learn, for instance, that it was subject to class-based resistance from the labor movement in the 1930s, which, if sustained, might have crippled the Chests permanently. Moreover, the crucial role in this history that broader government interventions in fiscal policy and labor markets during World War II played is understated, and the connection to the emergence of other elements of the mixed welfare state is not examined.
A more sustained consideration of the broader political context of the voluntary sector's appropriation of payroll deduction makes clear its relevance as an element of America's twentieth-century political development. We must consider it, as this article does, as part and parcel of the extension of the federal government's “infrastructural power” (to borrow sociologist Michael Mann's phrase) during the 1930s and 1940s—in which collection of income at the source played a significant role.Footnote 10 The programmatic reach of the state vastly increased during the New Deal and World War II, and the financing required to support an expanded welfare state and to fight a world war demanded new fiscal instruments—among which were the imposition of payroll taxes. But the story of how the Community Chest made it onto the pay stub of Leighton House and others makes it clear that this was not simply a dynamic rooted in public sector expansion. Rather, as this article demonstrates, state and nonstate actors were all energetically searching for ways to more efficiently extract resources from citizens, consumers, and donors, and they freely exchanged techniques and strategies across sectoral lines. While the coercive power and national reach of the federal government was the most significant factor in the expansion of payroll deduction, the lines between coercion and voluntarism were hazy for virtually all of the deductions that appeared on American's paychecks by the 1940s.Footnote 11
The presence of a voluntary sector institution in this welter of taxation and quasi-taxation underscores the continuing relevance of the insights of the “organizational synthesis” school to our understanding of the shared institutional forms and strategies that transcended the boundaries of public and private institutions.Footnote 12 The move toward systematization of charity and charitable fundraising is an element of this history. As social welfare historian Roy Lubove argued, organizations such as Community Chests attempted in the 1920s “a rationalization of the welfare machinery and an increase in the economic surplus diverted to its support.” As this article will demonstrate, the expansion of the state in the 1930s and 1940s aided in this effort, by legitimizing practices such as payroll deduction sought by charitable fundraisers—practices that often elided the distinctions between the voluntary sector and the government and drew on a common “bureaucratic imperative,” as Lubove put it.Footnote 13
The success that Community Chests enjoyed in embedding donations into workers' paychecks was not foreordained by the generic processes of modernization or by the relentless growth of an autonomous state. As this article reveals, the process was deeply contested and depended not only on the widespread adoption of the technique by federal taxing authority but also on other forces released by the New Deal and the war itself. The war reversed a trend in which workers in the 1930s, acting through unions in a newly empowered labor movement, withdrew their consent for payroll donation in many instances, threatening many Chests and casting the future of Chest fundraising in doubt. But it took the war—and with it the expansion of unions across war industries that forced employers to negotiate with organized labor, and the pressure put on both unions and employers to participate in wartime fundraising—to draw the support of organized labor for such quasi-voluntary taxation. The war also forced employers and business-oriented Chest leaders to collaborate with unions in newly formed “War Chests” for wartime charitable fundraising.Footnote 14 Both the eventual embrace of payroll donations for charity by a newly unionized workforce and the relative ease with which a “pay-as-you go” tax plan was instituted again points to the war as a crucible for instituting these practices and advancing an organizational society.Footnote 15
This brings us back full circle to the primary contribution of this article: to use the story of payroll deduction to draw in a set of institutions not generally examined in the literature on the origins of the “mixed” welfare state in the 1930s and 1940s. Workplace giving through payroll deduction accelerated at the same time that workers were contributing to other elements of the hybrid social safety net, including Social Security, private pensions, and health insurance plans. Rather than choke off alternate means of social provision, as critics then and later charged, the expansion of the state-based social welfare programs stimulated programs outside of the state in a variety of ways.Footnote 16 Life insurance agencies found their business growing, as Social Security encouraged Americans to become more “insurance minded,” and wartime restrictions on wages and the empowerment of the labor movement led to the expansion of private pension and health benefits (later buttressed by preferential tax policies).Footnote 17 Charitable giving, rather than fading away as a relic of pre–New Deal voluntarism, became squarely integrated, via the workplace and from workers' paychecks, into the new paradigm of social welfare.Footnote 18
This study is rooted in the examination of national trends in voluntary fundraising. Given the fundamentally local character and organization of Community Chests, the study utilizes primary source material from a variety of Chests (whose names sometimes varied; they would occasionally be known as “Community Funds” and other similar titles) across the country, drawn from archival sources when available, as well as contemporary media accounts and analyses by contemporary observers, supplemented by material from other secondary sources. While the selection here cannot pretend to be absolutely representative of a group of organizations whose number swelled from 375 in 1930 to 561 in 1940 to 1,498 in 1950, it is particularly attentive to places where Chests were concentrated, in small to midsize cities in the Midwest and East Coast, some dominated by one company or industry, such as Rochester, New York; Akron, Ohio; or Lansing, Michigan, and others with more diversified economies, such as St. Paul and Minneapolis, Minnesota.Footnote 19 This material is buttressed by data and analysis generated by the Community Chests and Councils of America, the umbrella organization of local Chests, which gave technical advice to local Chests and served as a national spokesperson and lobbyist for Chests, but which did not exert operational control over them.
COLLECTION AT THE SOURCE
Americans were becoming used to paying on time for a variety of goods and services on the eve of the widespread adoption of payroll deductions for social insurance and charitable giving. The massification of elements of the consumer market was one important precedent: While farmers had been paying in installments for farm machinery since the mid-nineteenth century, and working-class consumers obtained credit from local merchants and paid for their purchases over time, the practice of installment buying was formalized and expanded during the 1920s, driven in particular by the auto market and by manufacturers of durable goods such as General Electric.Footnote 20
The use of payroll deduction for social insurance in the United States derived from a variety of private and public sector precursors. The most widespread example in the United States prior to the 1930s was for payments for group life insurance plans, usually offered by large employers. Group life insurance policies began to be offered by some East Coast insurance companies in the 1910s for a variety of reasons: they opened up a potential new market of working-class clients for an industry that had generally focused on wealthier people, and they offered an alternative to the labor-intensive practice of marketing of insurance policies and collection of insurance premiums individually. Group life insurance could be sold to a single employer to cover many workers under a single policy, and it allowed insurance firms “to reach far more workers than its field force could ever contact travelling door to door.”Footnote 21
The interests of insurance companies coincided with the movement by some large employers to build up a welfare capitalist infrastructure to help bind workers to a firm and to discourage unionization. Employers found group life insurance more and more attractive as an element of welfare capitalism during the 1920s, and by the end of the decade, 4.5 million workers were covered by such policies.Footnote 22 Employers initially often covered the entire cost of the policies, but starting in the 1920s, they shifted to make the policies contributory, and workers were required to make regular payments for their portion of the policies. Employers in Europe had been using payroll deduction arrangements for group life insurance for several decades, and under what often came to be known as “salary allotment plans,” workers covered by group life insurance at the workplace began to pay for it by deductions from their paychecks.Footnote 23
A number of precedents also existed for use of employers or firms to gather income tax payments. The British government had begun “collection at the source” for income taxes by 1803 and, according to some accounts, even as early as the sixteenth century.Footnote 24 The U.S. federal government, both during the Civil War and after the passage of the Sixteenth Amendment, had experimented with a crude form of withholding known as “stoppage at the source.” Civil War income taxes were withheld from the salaries of higher-paid government workers, and taxes on interest and dividends were withheld by several different types of corporations.Footnote 25 The Revenue Act of 1913 required corporations to withhold taxes on salaries, dividends, and interest. The practice was more or less abandoned by 1917. In both cases, like the income tax itself, these practices affected only a relatively small number of upper income Americans.Footnote 26
Thus by the 1930s, Americans were familiar with the practice of small monthly payments for purchases, savings, and insurance, at times taken directly from their paychecks; businesses and employers had led the way in these practices in the United States. But it was the state that made the payroll deduction part of every payday for millions of American workers through the incorporation of payroll taxes into the Old Age Insurance program of Social Security in the 1930s. The Roosevelt administration's Committee on Economic Security (CES), which drafted the Social Security Act, noted both domestic examples of deductions for private benefits and European social insurance precedents and observed that “percentage deductions from wages are now being made by employers in all types of private and public enterprises in financing pensions and other forms of thrift.”Footnote 27 First and foremost, payroll taxation appealed to some on the CES and in other parts of the administration and Congress because the deduction imitated an insurance-like, contributory account. That sense of contribution, as Roosevelt famously stated, would help build political support for the program: “With those taxes in there, no damn politician can ever scrap my social security program.”Footnote 28
But using employers to collect the tax, as they had done for their own group insurance plans (and for social insurance in Europe), also promised simplicity and efficiency. As the CES report observed, “With the employer acting as the agent of Government in the collection of the employee's contributions and remitting the proceeds along with his own contributions, great economies in administration would be possible.”Footnote 29 The “colonization” of employers to do the work of tax collection for masses of workers had a distinct administrative (and political) beauty to it.Footnote 30 A corollary to this logic, though, was that some on the CES and in the administration argued to exclude many nonindustrial workers (notably, farm laborers and domestic workers, jobs where African Americans were overrepresented) from coverage by contributory social insurance, due to the administrative difficulties of arranging for such payroll deductions.Footnote 31 The argument for payroll deductions, and for the exclusions, won the day—a choice of significant consequence not only for the structure and equity of American social insurance but also, as it would turn out, for American charity.
COMMUNITY CHESTS: ORIGINS
By the 1920s, charities in several hundred American cities had come to depend on the “federated fundraising” embodied in Community Chest organizations. The principle of federated fundraising was simple: instead of enduring multiple appeals from a host of different charities, a community would instead create a single fundraising organization that would conduct one or two fund drives a year and distribute the proceeds to local charities, which would forgo their own individual drives. The foundational story of what would become the Community Chest movement can be traced back to a pleasantly ecumenical joint fund drive in Denver run by a local rabbi, a priest, and two ministers in 1887. By the mid-1910s, more than a dozen cities ran some sort of federated fundraising operation, while in other cities the Jewish community created its own charitable fundraising federations. But businesspeople and other wealthy donors were at the heart of the effort to rationalize charitable giving and to impose efficiency on local charitable agencies. Early financial federations, such as that of Cleveland (organized in 1900), often originated in local Chambers of Commerce. As Roy Lubove noted, financial federation of charitable giving
captured the imagination of businessmen by promising efficient coordination and organization of the community welfare machinery, immunity from multiple solicitation, economical collection and distribution of funds, and the development of a broad base of support which would relieve the pressure on a small circle of givers. The corporation, increasingly regarded as a source of gifts, appreciated the conveniences of federated finance.Footnote 32
World War I and the multiplicity of appeals for foreign relief accelerated this process. Paralleling the intense, short-term Liberty Loan campaigns by the federal government, local business leaders helped organize “war chests” that would distribute the proceeds from one fund drive to all the different agencies and, in the process, eliminate the “general sense of harassment” by solicitations from both local and wartime charities. The success of this model inspired hundreds of communities to convert their war fundraising into organizations for peacetime charitable donation, and by 1929 there were more than 300 Chests at work in the United States, often managed by an emerging cadre of professional fundraisers.Footnote 33
Such efforts caught the eye of Robert and Helen Lynd as they studied Muncie, Indiana, in the 1920s, an industrial city of the sort that was early to embrace the Chest concept. The dominant fundraising technique by Chests in the 1920s focused on individual givers solicited by wide residential and business canvassing by volunteers and boosted by the gifts of large donors. Chests—led by the “big men in town, the Rotary crowd”— set up elaborate campaign organizations to divide up cities by neighborhood and types of businesses, and the annual campaign was accompanied by a mass publicity effort in local newspapers that tracked the effort (usually a week or so) to put the campaign “over the top.”Footnote 34 Isaac Rubinow, a social insurance advocate and critic of the voluntary sector, acerbically described Chest drives such as Muncie's as an annual “orgy of charity, philanthropy and good will.”Footnote 35
Even in the 1920s, though, it was clear that this method was labor-intensive, time consuming, and, as one analyst put it, “there is too much reliance on luck.”Footnote 36 It tended to depend—as it did in MuncieFootnote 37 —on the gifts of a handful of large givers to supplement the canvassing, a source subject to, as the Rochester (New York) Community Chest noted in 1925, the “death, failures, and removal” of those donors. In Rochester, Chest campaigns in the mid-1920s were struggling due to a decline in large individual gifts, and the attention of the Chest began to drift over to a more efficient method: soliciting employees at their place of work, especially at large industrial firms, where, gathered into one spot, they could be reached and collected from as a group. The Rochester Chest had a head start on this strategy thanks to the active cooperation of the city's largest employer, Eastman Kodak. George Eastman had been the first president of the Chest and its leading donor, giving between $150,000 and $200,000 a year until his death in 1932. At Kodak, participation in the Chest drives was cast as part of the company's welfare capitalist ethos. Kodak had allowed and promoted in-plant campaigns since the Chest's first drive during World War I.Footnote 38 Chest donations were encouraged through the company's house organ, The Kodak Magazine, whose editor wrote in 1920, “We are proud of our record in drives, whether they are for Liberty Loan, Red Cross, Thrift Stamps, or Employees Clubs. It only proves that the co-operative spirit we possess is paying dividends in efficient organization for the material benefit of Managers and Employees.”Footnote 39 Moreover, the company recruited groups of workers and managers to visit the agencies financed by the Chest, and The Kodak Magazine ran regular reports of these visits in order to familiarize workers with the beneficiaries of their donations.Footnote 40 These efforts, plus competition encouraged by the company within the various divisions of Kodak, led to 100 percent employee participation in the Chest drive in many units within the company.Footnote 41 Thanks to Kodak's lead and emulation by other local employers, the Rochester campaign met its goal again in 1927, with the decline in large gifts being made up for by employee giving. This left Rochester with one of the largest numbers of givers per capita of any of the Chest cities.Footnote 42 Other industrial cities followed the same pattern; for instance, a professional fundraiser hired by the local Chest in Lowell, Massachusetts, in 1926 created a special committee to obtain permission from employers to set up either a collection committee or a payroll deduction plan for employees.Footnote 43
Payroll deduction of donations was a particular stroke of genius, as it opened the door to appeal to a wider swath of potential donors outside of the business and professional classes of the community. Other charities, such as the Red Cross and the National Tuberculosis Association, had already innovated “mass” fundraising techniques, such as the sale of Christmas Seals, but these campaigns were also labor-intensive and required only one instance of donation.Footnote 44 Spreading a donation out across a number of payments made the bite of a gift sting less, and workers of more modest means could be coaxed (or forced) to give larger amounts than they would have in a single donation. Varieties of such an “installment plan” had been implemented during the World War I War Chest drives in some areas, though more often for middle class and wealthier donors.Footnote 45 In Rochester, Kodak had allowed for Chest deductions from employees' paychecks for years. Sol Heumann, a prominent figure in the city's textile industry, was credited with the first use, in the late 1920s, of a year-round deduction from worker's paychecks to the Community Chest. Per-capita giving at the Keller-Heumann-Thomson Company for the 1929 campaign far surpassed the average per-capita gift in Rochester by almost two to one.Footnote 46 By 1933, a number of other Chests had embraced paycheck deduction from employees in addition to their residential solicitation.Footnote 47
Employers, who controlled access to plants and payrolls, had to be brought on board by Chests that sought to reorient their campaigns toward the workplace and take advantage of payroll deduction. There was a concerted effort during the 1920s and 1930s to increase direct corporate donations to Chests, and many companies realized the public relations value of both corporate contributions and encouraging employee contributions—which, as one critic noted, were often credited to the company rather than the employees.Footnote 48 However, despite the fact that the community's business and professional leaders generally dominated the Chests, many businesses resisted Chest efforts to conduct drives in their facilities and to allow payroll deduction for their employees' donations. For some, the distraction caused by fundraising drives within their plants was the primary reason. For others, the accounting challenges of deducting donations from paychecks discouraged their embrace of that specific practice, though they might still allow solicitation in plants. For others, though, payroll deduction bore too strong a resemblance to the “check-off” for union dues—a common demand by some unions in the 1930s. Fearing a precedent that might open a door for labor organizing in their businesses, they shied away.Footnote 49
THE DEPRESSION AND NEW DEAL
Community Chest organizations were put under tremendous pressure in the early years of the Depression. As unemployment mounted and the relief cost of voluntary agencies skyrocketed, Chests raised campaign goals to try to meet “the rising tide of relief.”Footnote 50 Chests and other fundraising organizations created in the early Depression bore the initial burden of the attempts to meet the unemployment crisis through voluntary means, as urged by President Hoover. Charitable drives in fact raised unprecedented amounts in 1931 and 1932, but their totals were a mere fraction of the need of the mounting numbers of unemployed and impoverished, and donor exhaustion was clearly evident by 1933.Footnote 51 As Rubinow had predicted in 1929, “Voluntary self-taxation is picturesque, but infinitely less effective than the official tax collector.”Footnote 52 By the dawn of the New Deal, charities had been supplemented and supplanted by local and state monies, and then ultimately by federally funded relief.Footnote 53
With the burden of providing direct relief largely shunted off onto the public sector, Community Chests muddled along in the 1930s. The amount raised by Chests plummeted in 1933 and 1934, but began a slow recovery during the remainder of the decade; other communities, seeking efficiencies among their charitable agencies during straitened financial times, organized new Chests. At the same time, Chests began to examine their operations on both the community organization and fundraising fronts. In the former case, they looked for ways to encourage local social agencies to reduce redundancies and overlaps, and in the latter, to seek out more effective ways to raise more funds.Footnote 54 They had received a boost from the creation of a federal corporate tax deduction for charitable donations of up to 5 percent of taxable income in 1935, a provision Chest organizations had lobbied hard for.Footnote 55
In addition to expecting that corporate contributions would increase in that year, Chest organizers detected an unexpected windfall in the passage of the new Social Security Act. Joseph Ashton of the Ashton Insurance Agency of Kansas City, Missouri, declared the passage of the law a “splendid opportunity” for Community Chest fundraising.
Many firms have not fallen in line on payroll deductions, and use the excuse that their books are not set up for deductions and it would interfere with accounting. If, and when, this Bill becomes operative, Mr. Executive will be obliged to set up his books for payroll deductions for the insurance, and it ought not to take much effort on our part to persuade him to add another column to his payroll books for payroll deductions.Footnote 56
Ashton's awareness of group life insurance payroll deduction plans undoubtedly alerted him to their utility. Social Security, he and other Chest leaders hoped, would ease the way for Chest check-offs, since companies that had lacked the administrative capacity to handle payroll deductions prior to the passage of the Act would now, in many cases, be required to institute it. Indeed, the business machine industry rushed out new calculating and check-printing equipment in 1936 designed for businesses to handle Social Security and unemployment insurance deductions.Footnote 57 By 1938, local businesspeople in St. Petersburg, Florida, lumped both Social Security and the Community Chest together when they complained that “payroll deductions for this and that keep the bookkeeper for any business up to his neck in work.”Footnote 58 But Social Security deductions themselves were not powerful enough on their own to break open company payrolls; indeed, in Providence, Rhode Island, several employers withdrew from the payroll deduction plan for the local Chest, claiming that “the Social Security deduction is more than they or their employees can handle,” leading an analyst to speculate that “this method of collection [payroll deduction] was on the wane.”Footnote 59
Employers were not the only constituency with whom Chest leaders had to negotiate in order to tap into the paychecks of employees. A newly mobilized labor movement bearing deep resentments over early charitable practices was also a formidable barrier. In Minneapolis, union members recalled the Community Fund's refusal to grant relief to the families of strikers in the early 1920s, a practice duplicated in many communities by other private welfare agencies.Footnote 60 Moreover, in the late 1920s and early 1930s, many businesses that allowed workplace solicitation often put great pressure on employees to donate, what one author described as “the vicious habit of passing the hat down the assembly line.”Footnote 61 In Columbus, Ohio, in the early 1930s, a survey found that many workers despised the Community Fund and gave only because “it was a choice of contribute or look for a new job.”Footnote 62 And employees at the Staley Company, one of the largest employers in Decatur, Illinois, recalled
… they made a community chest drive about every year. They wanted each employee to give a certain amount of his wages—so many hours of his pay or a day's work. If he refused to contribute then he'd be called to someone higher up. He'd be called in on the carpet. He'd be asked why he didn't contribute. If it wasn't a good reason, they soon got rid of him one way or another.Footnote 63
Workers in many communities directly associated payroll deductions with this sort of forced giving. In Lansing, Michigan, the Community Welfare Fund implemented a payroll deduction plan in 1929 in many of the automobile-related mass production plants in town. “As far as could be determined,” a later researcher concluded, “the workers were not consulted before the plan was introduced.” Executives, superintendents, and foremen apparently approved, and the protests of workers were dismissed by management as coming from “‘the group, for the most part, that object to any new ideas.’”Footnote 64 A study of the steel industry in 1933 noted a similar pattern of involuntary deductions for Community Chests.Footnote 65 In Minneapolis, the common Chest practice of pitting businesses against each other to obtain donations from every employee had also produced an unpopular payroll deduction scheme. Rabbi Albert Gordon in 1937 relayed a complaint from the laundry and dry-cleaning union that donations were being deducted without workers' permission. As Gordon observed to the director of the Council of Social Agencies,
I am certain that you will understand that the zeal of certain employers to secure one hundred percent representation from their plants oftimes leads them to force employees to make contributions. In this particular case … he stated that one employer had simply notified his employees that he had pledged the sum of $3.50 for each employee and that he was deducting that amount from their pay checks.Footnote 66
Even in the Hawaiian Territory, the “Big Five” sugar processors who dominated the economy and local politics divided up Community Chest quotas among local businesses, who in turn assessed employees their share via payroll deduction. “Anyone who took exception to the system, and said so, became a likely candidate for the Big Five's roll of malcontents.”Footnote 67
With the extra pressure of the Great Depression on their income, many employees found themselves unable or unwilling to donate. In some places, the resistance was passive. In the small city of Northampton, Massachusetts, donations by millworkers dropped from 1776 employees contributing $3,660 in 1929 to 480 employees donating $955 in 1931.Footnote 68 Elsewhere, opposition was more forceful. In Lorain, Ohio, in 1930, members of National Tube's union refused to participate in the Community Fund's solicitation in the plant; thanks to the “violent opposition” of the workers, the Fund dropped its industrial solicitation and lost 5,000 donors, more than half of its total giving base.Footnote 69
By the early 1930s, some radical unions picked up on involuntary charitable deductions as a potential organizing tool. The Communist Party–affiliated Steel and Metal Workers Industrial Union included “compulsory contributions in shop for charity and welfare” among its complaints in 1932.Footnote 70 In Austin, Texas, the Hormel family attempted to implement an array of paternalistic welfare capitalism programs at their meatpacking facilities, including payroll deductions for Community Chest donations. One worker recalled that company foremen, seeking to fulfill Hormel's desire for 100 percent participation in the drive, “just backed you up against the wall, and told you you were going to give. If you didn't, it meant your job.”Footnote 71 When a new deduction for a pension plan was added in July 1933, and Chest pledge cards passed out at the same time, organizers for the Independent Union of All Workers led a work stoppage that forced the company to recognize the union.Footnote 72 But workers were often not powerful enough to challenge these practices; as the Lynds observed when they returned to Muncie, Indiana, in the early 1930s, they noted the remarkable number of plants which reported one hundred percent participation in the Chest's payroll deduction plan, a rate they attributed to “an open-shop town in which ‘black lists’ are believed to be passed from plant to plant.”Footnote 73
The passage of the Wagner Act and the organization of many mass production industries brought about the end of many of these involuntary deductions and crippled many of the Chests that depended on them. In Akron, Ohio, following the successful sit-down strike by the United Rubber Workers in 1936, organized labor demanded an end to the payroll deductions by the Community Chest. The Chest lost 34,373 of its 61,345 pledges the following year, and more than half of the (presumably working-class) community members surveyed said that they “actively disapproved” of the Chest.Footnote 74 At the Staley plant in Decatur, Illinois, a worker recalled, “About that community chest thing, that was the first thing the union took up when they came into the plant…. We don't have it any more.”Footnote 75 In Lansing, General Motors dropped its existing payroll deduction to try to forestall the Congress of Industrial Organizations (CIO) from using the issue as a wedge for unionization. They were unsuccessful, and the United Auto Workers (UAW) went one step further and withdrew completely from Lansing's Community Welfare Fund's in-plant solicitation. The Fund's contributors dropped from 28,919 to 13,271 from 1937 to 1938.Footnote 76 Labor unions boycotted fund drives in Wilkes-Barre, Pennsylvania; St. Paul, Minnesota; and Racine and Waukesha, Wisconsin, during the 1930s.Footnote 77
Some prescient Community Chest boards and agencies in the 1930s saw the need for a conciliatory approach to labor. In Minneapolis, the Council of Social Agencies tentatively entertained the notion of reaching out to local labor unions in 1937, but it was not until 1941 that they extended an invitation to the Central Labor Council (the unions affiliated with the American Federation of Labor [AFL]) and the CIO to have union members join the board—though they were listed as individuals, and not as official representatives of the unions.Footnote 78 Similarly, in Lansing, following the precipitous drop in labor donations, the Community Fund invited labor members to join its board; the AFL accepted, but the UAW local refused, claiming that the proposal was an effort to “screw money out of the workers without our consent.” By 1941, though, after a period of turmoil within the local CIO, the union agreed to participate in the Community Fund drive, if it were granted seats on the board and the Council of Social Welfare, and representation in the Fund's campaign organization.Footnote 79 In 1940, the Norwalk (Connecticut) Chest added the president of the Central Labor Union to its board, and his support for the drive was featured on the front page of the local paper.Footnote 80
On the other hand, in 1939 in Bethlehem, Pennsylvania, where Bethlehem Steel was still holding out against the encroachment of the Steel Workers Organizing Committee (SWOC), the Community Chest (with two members of Bethlehem Steel management on its board) rebuffed an inquiry from the SWOC into the work of the Chest. Employers in that city, including Bethlehem Steel, also resisted implementing the payroll deduction, blaming the administrative burden, though in all likelihood the echoes of the union check-off probably also deterred them.Footnote 81
Nor did inclusion in Chests necessarily sway unionized workers toward the virtues of organized charity, particularly as the public welfare state was expanding during the 1930s. Clarence Martin, a labor representative brought on the Trenton, New Jersey, Community Chest, said, “I don't know what attitude toward the chest I would recommend to labor. I am on the board to find out more about it. When the people I have known best were in trouble or needed help, it was the government, not private charity, that helped them out.”Footnote 82 Martin's statement reflects a trend discerned by Lizabeth Cohen among workers in Chicago where, during the Great Depression, ethnic self-help institutions had collapsed and broader charitable efforts, such as the Community Chest, had been unable to meet the needs of the unemployed. Workers then turned to support New Deal public programs that offered greater economic security.Footnote 83
By the end of the 1930s, Chest organizations had survived the unprecedented demands of unemployment brought about by the Great Depression thanks to the expansion of social provision by the government. But the ultimate fate of voluntary fundraising remained uncertain. Chests benefited from newly allowed tax deductions for corporate charitable contributions, and the path into the paychecks of workers seemed to have been cleared somewhat by the Social Security Act; but at the same time, the mobilization of labor and labor's historic resentment of the voluntary sector seemed to block that path. As one fundraiser reflected after World War II, “there was tall talk about ‘broadening the base of giving,’ but with few exceptions not much was done about it. And it didn't matter that much, as campaign goals were generally low enough that success could be attained on the old patterns.”Footnote 84
WORLD WAR II
The state's fiscal expansion during World War II had a profound and unintended impact on voluntary fundraising. Community Chests were able to leverage this transformation—the harnessing of employers to collect for war bond campaigns and the compulsory withholding of income taxes—to gain a permanent foothold in workplace giving through the payroll deduction. At the same time, the expansion of unions in war-related industries and the increased demand for fundraising for a host of wartime voluntary relief organizations encouraged a rapprochement among Community Chest leaders, businessmen, and the labor movement that gave Chests access to donations from union members. These trends normalized payroll deduction and put pressure on both management and labor to assent to requests from Community Chests to include the voluntary sector in their check-offs.
Even more than Social Security, the success of the war bond drive helped diminish employer resistance to payroll deduction. The Defense Savings Bond organization assembled by the Treasury Department in 1941 made payroll savings a central element of its sales strategy, modeling its efforts not on the payroll taxes of Social Security but on “salary savings plans” promoted by life insurance companies—though at least one report also credits Community Chest campaigns as an inspiration. The bond organization also drew on the capacity of the insurance industry, enlisting the cooperation of local chapters of the National Association of Life Underwriters to help businesses set up the bookkeeping required to handle the somewhat cumbersome administrative task of tracking payments and issuing bonds.Footnote 85
As James Sparrow has observed, the cooperation of both management and labor was essential for the bond sales strategy at the workplace.Footnote 86 General Motors, which had discontinued its payroll deduction plan for the Community Chest in the face of union drives, organized one of the earliest company-wide payroll savings plans for war bonds, as did Bethlehem Steel (finally organized in 1941 by the SWOC).Footnote 87 As important, if not more so, was the increasingly powerful labor movement. A National Labor Relations Board (NLRB) decision granting of automatic enrollment of new workers into unions at defense plants (in exchange for a no-strike pledge by the unions) led to a dramatic increase in union membership and in the clout of unions during the war.Footnote 88 The bond organization reached out to labor unions early on and dedicated a special section to dealing with organized labor. Unions, particularly in industries close to the war effort, responded enthusiastically, especially after the attack on Pearl Harbor and U.S. entry into the war. Labor leaders endorsed payroll savings as the preferred method of purchasing bonds, and thanks in large part to the cooperation of labor unions, the number of people participating in the bond payroll program rose from 700,000 in December 1941 to 20,000,000 in October 1942.Footnote 89 In Akron, by then one of the most heavily unionized cities in the country and where CIO locals had pulled out of the Community Chest's payroll deduction plan in the 1930s, joint management–labor bond sales committees promoted the payroll savings plan for bonds and reported that 5,000 Goodrich employees had signed up within the first 48 hours.Footnote 90
The explosion of war-related charitable fundraising also brought the federal government directly and indirectly into the organization of the voluntary sector. In 1939, the State Department required all charities raising money for overseas relief to register with the department; in 1941, the Roosevelt administration created a Commission on War Relief (changed to the War Relief Control Board after the United States entered the war) to regulate and consolidate the hundreds of voluntary agencies involved in war-related work. On the fundraising side, with the encouragement of the federal government, national leaders of the Community Chest movement created the National War Fund in December 1942 to apply the principles of federated financing to the expanded range of war relief appeals. The once-a-year War Fund campaigns in the fall were usually coordinated with Community Chest fund drives in locales where Chests existed, and the Chests often renamed themselves or added “War Fund” to their names.Footnote 91
These voluntary sector organizations were able to capitalize on the same patriotic sentiments and desire for positive publicity that drove union enthusiasm for the war bond effort, and they were able to deflect efforts to establish separate labor-run charitable fundraising—a significant turn of events that would have a far-reaching impact. The AFL and the CIO both created their own overseas relief agencies in the 1930s. Facing increasing demands to provide for war charities and competition for workers' paychecks from the labor charities, the national Community Chests and Councils of America hammered out an agreement with representatives of the two labor organizations. The CIO and AFL agreed to forgo their independent drives and coordinate with the Chest campaigns, in return for representation at all levels of the campaign organization, inclusion of the AFL and CIO relief agencies among the funded agencies, and the promise that union locals, not employers, would be credited with the donations made by their members. When the National War Fund was organized, it accepted these principles of cooperation.Footnote 92
The success of these agreements depended on local Chests' outreach to organized labor. Even before the war, in 1941, the Minneapolis Council of Social Agencies had contacted the local AFL and CIO affiliates to offer representation in the Council's expanded fund drive; labor's endorsement allowed the Council to meet its fundraising goal for the first time in a decade.Footnote 93 In 1942, voluntary fundraisers in that city organized a special Labor Committee for the newly created War Chest and arranged for labor representatives to head up employee solicitation in unionized firms. In addition, the Chest made a concerted effort to publicize to workers the agencies supported by the Chest, offering “come and see” tours to emphasize that workers were not just donors but also consumers of the services they supported.Footnote 94
In Minneapolis and in other communities where unions agreed to participate in War Fund fundraising, donations from labor surged. Minneapolis doubled its take from union givers between 1941 and 1942, and the per-capita giving by union members increased from $3.66 to $5.78.Footnote 95 The “industrial division” (mostly manufacturing workers solicited at the workplace) in Bay City, Wisconsin, tripled its contributions from 1941 to 1942; union members in Seattle also tripled their giving. In Kansas City, per-capita giving by union members tripled from 1941 to 1942. In Gary, Indiana, the combined War and Community Chest raised $338,873 in 1942, compared to $91,895 the previous year, with much of the credit for the increase given to labor unions.Footnote 96 Minneapolis War Fund leaders in early 1943 predicted a further increase of $150,000 for the campaign that fall, and they expected most of the increase to come from even stronger giving by labor unions.Footnote 97
Where organized labor was excluded, charitable drives continued to falter. The business-led Chest in Rochester, New York, resisted the full inclusion of labor in the city's wartime charitable fundraising. The city's major firms, including Kodak, had held the CIO at bay during the 1930s, though many of the local clothing manufacturers had been organized by the Amalgamated Garment Workers. So while the city lacked a robust union presence, the city's Central Trades and Labor Council (CTLC) obtained representation on a number of local public and private wartime agencies, including local draft boards, the Red Cross, and the rationing board—but not on the Chest. While the Chest still enjoyed strong employee giving at the outset of the war, it had been nudged by an outside consultant in 1941 to add representatives from industrial employees to its board. The Chest's board bickered with the CTLC for several years on union representation, to the point where the CTLC formed its own “United Labor Chest” and withheld donations to the War Chest. Giving to the War Chest slumped in 1943 and 1944, which finally brought the War Chest into negotiations with union representatives. Unions were accorded places on the Chest Board, and on its Executive and Budget committees, in return for securing their active cooperation in the 1945 campaign.Footnote 98
The payroll deduction was the critical mechanism for translating the new willingness of workers to give into sustained income for the Chests. Just as they were doing with the bond drive, most union locals involved in war fundraising helped promote payroll deduction plans “as the most convenient, efficient and economical way of collection.”Footnote 99 In many cases, the resistance to the payroll deduction came from management rather than labor. In Wilmington, Delaware, the War Fund complained that many of the large employers (including, apparently, the DuPont corporation) were reluctant to give corporate donations or support plant drives conducted by employees; by the end of the war, though, the War Fund reported great progress in obtaining access to employees' paychecks, something “practically unheard of” before the war—though it would take until 1948 for DuPont to agree to the practice.Footnote 100 The National War Fund's historian observed that many companies, even in 1943, “frowned on” payroll deductions, “possibly because the idea in general resembled too closely the ‘checkoff’ for union dues.”Footnote 101 However, the check-off argument was losing force, thanks to the NLRB's “maintenance of membership” ruling, which automatically enrolled newly hired defense workers in existing unions and required that employers collect union dues through a paycheck deduction.Footnote 102 With union check-off a fait accompli, at least for the duration of the war, corporate opposition weakened. The War Fund mobilized powerful supporters, including Winthrop Aldrich of Chase Manhattan Bank, Gerard Swope of General Electric, Ralph Hayes of the Coca Cola Company, and Chester Bernard of New Jersey Bell Telephone, to lean on other national corporations to allow payroll deductions; they convinced 40 corporations to do so over the course of the war, opening up the opportunity to solicit two million additional industrial workers.Footnote 103
The gradual corporate willingness to accede to payroll deduction plans may have been facilitated by the imposition of compulsory deduction of income taxes. The Roosevelt administration's effort to shift the income tax from a “class” to a “mass” tax with the Revenue Act of 1942, combined with rising wartime incomes, had made millions of workers eligible to pay the income tax for the first time. In order to avoid the problem of workers neglecting to save for quarterly tax payments and to keep tax payments current, the Treasury proposed a payroll deduction system modeled on Social Security tax withholding, and this mechanism was adopted in 1943.Footnote 104 For some Chests already using payroll deduction, the addition of the payroll tax in 1943 caused a delay in processing that year's contributions; in Rochester, the Chest noted that “payroll departments, especially in industry, are operating under tremendous pressure due to the additional responsibility of making deductions for war bonds and the withholding tax.”Footnote 105 However, in general, the payroll tax was a boon for Chests. The United Way's official history described the beginning of income tax withholding as a “far-reaching event,” stating that “since the machines set up for computing and deducting tax payments had room for additional deductions, it was not too difficult to persuade employers to authorize Chest deductions.”Footnote 106 While this observation neglects the influence of bond drive deductions, it underscores how quickly collection at the source became a vital method of financing for both the state and the voluntary sector.
Wartime fundraising overall was a resounding success; Detroit raised 153 percent more in 1943 than in 1942; St. Louis, 136 percent. The average Chest total, either independent or combined, rose 67 percent from 1942 to 1943; the average for just those that combined with War Chests rose 82.9 percent. The War Fund itself raised three-quarters of a billion dollars over the course of the war. The payroll deduction helped employee giving increase in importance for Chests; employee giving rose from about 20 percent of Chest goals in 1941 to between 25 and 35 percent by the end of the war; the percentage of employees contributing in participating firms rose from about 60 percent to 75 to 85 percent. It was clear to Chest leaders that the future lay in the workplace, or as the Delaware War Chest put it, “in the organization of these workers is to be found the success of the campaign.”Footnote 107
The locking in of labor to support private-sector charitable fundraising at the workplace during the war occurred at precisely the same time as the extension of workplace-based private social insurance. As Jacob Hacker, Jennifer Klein, and other scholars have emphasized, World War II was a critical juncture in the creation of the distinctively mixed American welfare state—a moment at which political and economic circumstances created and cemented a set of policies that determined the course of postwar social policy. As these scholars have shown, wage controls imposed on businesses and labor made it impossible to bargain over wages during the course of the war. Instead, fringe benefits such as health insurance and pension plans that built on Social Security, which fell outside of the restrictions of wartime labor policy, became a popular alternative in collective bargaining. Some of these required an employee contribution, deductions that joined the list blossoming on the pay stubs of American workers. Like the income tax, these programs would persist beyond their growth as a wartime innovation, and the benefits were encouraged by the government with preferential tax treatment. This private welfare state for many workers, plus a more conservative political climate after the war, would channel much of labor's energy into extending these employment-based benefits rather than seeking broader public programs.Footnote 108 Payroll deductions for War Chests, sharing space on workers' paychecks with these programs, were part of this broader contingent moment during the war that laid the groundwork for sustaining the voluntary sector as an element of the mixed welfare state of the postwar era.
POSTWAR
A Pittsburg Post-Gazette editorial complained in 1948 that the
new spirit in this country is to farm out the job of tax collecting to business houses…. The government has the employer up to his neck these days in official work. In addition, he finds it necessary to make deductions from wages for Community Chest, Red Cross and other campaigns, Federal bond purchases, and various other odds and ends. The payroll department has become pretty much a “deduction bureau.”Footnote 109
Despite the paper's protestations, though, both the federal government and local charities had found a permanent place on their workers' pay stubs.
Several postwar developments solidified the gains that the voluntary sector had achieved in its wartime fundraising efforts. Hundreds of communities that lacked Community Chests prior to the war created War Chests that were then converted into peacetime Community Chests; the number of Chests increased from 598 raising more than $90 million in 1940 to 1,498 raising $213 million in 1950.Footnote 110 Community Chests were now a permanent and widespread element of local philanthropy. They were also increasingly important to both corporate and union public relations. As a postwar study of Syracuse, New York, claimed, Chest drives were “central if not downright crucial, to [corporate] community relations.”Footnote 111 For unions, the wartime collaboration with Community Chests was extended at the national level and in many localities. The national organization of the Chests, Community Chests and Councils Inc., integrated some of the staff of the AFL and CIO's war relief agencies into a new Employee-Labor Department after the war; at the local level, many Chests brought union members into board and committee positions.Footnote 112 Organized labor also viewed participation in Chest fundraising and other social agencies as central to its public image, to show “labor as community minded rather than a self-seeking institution.”Footnote 113 The “community service” branches of the national offices of the AFL and CIO, which grew out of the unions' wartime charity fundraising, held yearly institutes to encourage union giving.Footnote 114 Clinton Golden, a former vice president of the United Steelworkers, told a union audience that “to gain wider acceptance in the communities in which they function, union members … must demonstrate to other members of the community that they are prepared to assume and discharge broader citizenship responsibilities.”Footnote 115
All of these factors accelerated the use of payroll deduction. Income tax deductions from payrolls became a fact of life, which made the approach to management much easier for Community Chests. As a fact sheet drawn up by the Minneapolis Chest in the late 1940s noted, “practically all firms now have Old Age benefits, federal income taxes, pension plans for which payroll deductions must be made. Community Chest deductions are handled in exactly the same manner.”Footnote 116 Management, particularly in larger firms, came to appreciate the relative simplicity of the payroll deduction once the system was up and running. Unions also found that they preferred payroll deduction plans to having shop stewards collect donations in person. Community Chests, of course, appreciated both the dependability and generally larger contributions that came as a result.
This was enough to drag recalcitrants such as Bethlehem Steel to build on their bond deduction programs and agree to Chest payroll deductions by the late 1940s. As the Bethlehem Community Chest's executive secretary observed in the 1948, “The campaign results show numerous examples of outstanding accomplishment being attained at placed of employment … particularly those that are granting pay-roll deduction.”Footnote 117 He singled out Bethlehem Steel for thanks, and rightly so; the plant's worker, management, and corporate donations would provide the overwhelming majority of the Chest's revenue for the next two decades.
The significance of payroll deduction for the postwar voluntary sector was highlighted by competition within the voluntary sector between Community Chests and independent agencies such as the Red Cross, the American Heart Association, and other health-related charities that conducted their own fund drives. Health charities gained prominence after the war (based in part on wartime medical innovations) and aggressively moved to run their own independent local fundraising campaigns; they sought access to workplace solicitation and payroll deductions to take advantage of mass donations. This, in turn, prompted another effort at the consolidation of charitable appeals similar to that which prompted the formation of Chests in the first place, led by businesspeople but now with the close support of organized labor. In Detroit, in 1947, Henry Ford II called a meeting to create the United Health and Welfare Fund of the State of Michigan, which combined the Chest fundraising with the fund drives of the independent charities. The “United Fund” movement was embraced by both management and labor in many areas, with unions now feeling the same sort of harassment from multiple appeals that businesses had in earlier decades.Footnote 118 As one critic of this consolidation wrote in 1961, both big industrial cities and cities with more diverse economies such as Boston, Miami, and San Francisco moved toward the United Fund idea, “attracted by the prospect of regulating philanthropy so that one gift could replace many, industrial time could be saved, and corporate money conserved.”Footnote 119
Chests that had locked in payroll deduction arrangements found them a key advantage in the running battle between the Community Chests and national health charities in the postwar era, and this practice hastened the adoption of payroll deduction elsewhere. The strategy functioned as a gatekeeping mechanism to prevent outside charities from conducting their own workplace campaigns; once payroll deduction with a Chest or United Fund was established, firms were reluctant to grant the privilege to other organizations. Those groups would then have to join the United Fund if they wanted to tap into workers' giving.Footnote 120 For instance, in Seattle, the Boeing Corporation and other local businesses, in conjunction with labor leaders, consolidated the Chest and health appeals in 1951, creating the Good Neighbor Fund of Seattle and Kings County to supersede the local Community Chest. Despite the “violent opposition” of independent health charities such as the American Heart Association, the American Cancer Society, and others, the Fund secured commitments from major local industries and unions to allow one “once and for all” campaign for the Fund, using the payroll deduction.Footnote 121 As a result, in the same way that the War Chests during World War I and II had hastened federated financing, many communities that moved toward expanded United Funds and that adopted payroll deduction plans saw their fundraising totals begin to rise back toward their wartime levels, after a dip in the few years after the war.Footnote 122
None of these trends were universal. Management in some places steadfastly believed that to allow payroll deduction for Chests was to let the wolf's nose of unionism in the door. The Community Chest of Northampton, Massachusetts, limped along for years after World War II, regularly missing its campaign goals. Chair after chair of the Chest's board put the blame squarely on the town's largest employer, the Prophylactic Brush Company, which refused to allow payroll deductions until the 1960s, despite the Chest's pointing out that “many other firms that are not union allow and encourage Chest solicitation with payroll deduction.”Footnote 123 Smaller businesses tended to shy away from the payroll deduction as well, though whether this was for administrative or anti-union reasons is unclear; less than 40 percent of smaller businesses in a 1952 survey allowed the payroll deduction, while the number rose to 72 percent in the same survey for companies with between 1,000 and 5,000 employees.Footnote 124 Anti-union Chest executives and board members elsewhere also conspired to keep unions away from any meaningful say in Chest affairs.Footnote 125
Unions' enthusiasm for active participation in Community Chests also varied. On the one hand, labor had successfully leveraged its members' donations to gain a voice in the charitable establishment; as one union member in the small industrial community of Ellwood, Pennsylvania, recalled, “They used to run the Chest, and they wanted us in only if we'd be good boys and pay in our money and do what they said. The only way we got fair representation was by using our power.”Footnote 126 On occasion, unions used their clout to bend Chests toward more progressive policies, such as when the United Steelworkers local in Youngstown, Ohio, boycotted the Chest drive in 1948 because some member agencies refused to employ African Americans.Footnote 127 But despite the surge in participation during the war, Chest executives as well as officials at the AFL-CIO's Department of Community Service complained in the following decades about lack of interest by the union representatives in the day-to-day work of the Chests.Footnote 128 Though their power in community welfare was clearly significant, primarily through controlling access to their members' donations, unions remained “junior partners” in the Chest structure, and their influence in the direction and nature of the services supported by Chests remained attenuated.Footnote 129
What a more active engagement by union members in the voluntary sector through Community Chests might have produced, or indeed, what the pursuit of an alternative course might have implied, is difficult to predict. It is conceivable that a wholesale abandonment of organized labor of the voluntary sector might have sped the arrival of government support for the institutions supported by Chests, in the same way that scholars theorize that the embrace of employer-based fringe benefits forestalled a more robust public welfare state. Short of that, though, a more active role by organized labor in the Chest/Fund/United Way system after WWII may have helped heighten rank-and-file awareness of the problems of urban poverty and may have helped position these organizations to respond more proactively to these problems in the 1960s. As it stood, Chests and the voluntary sector as a whole were actively criticized by some of the more vocal proponents of what came to be the War on Poverty, for being inwardly focused on the battles over access to payroll deduction and programs “which did not meet the needs of the 1960s,” as Brilliant put it.Footnote 130 The passive role of union members in these social agencies, certainly reinforced by the practice of payroll deduction, did little to help; as Derek Bok and John Dunlop observed in 1970,
Had union representatives really been alert in promoting the interests of the entire community, they might have led the way…. Despite all its representatives on civic agencies, however, labor did little in local areas to dramatize the issue of poverty for the public or to plot the programs by which the problem could be alleviated.Footnote 131
CONCLUSION
Much like the lead taken by the income tax during World War II, thanks to the payroll deduction Chest/Fund/United Way donations had been transformed from “class” to “mass” and, in many respects, had come to resemble the taxation that it had followed into workers' paychecks. “The Community Chests had worked out systems of extracting funds that were as difficult to dodge as police dragnets,” observed Time in 1946. Footnote 132 Workplace giving, particularly by employees of large corporations, became the centerpiece of the Community Chest/United Fund (by 1970, the United Way) movement. In 1956, employee giving for the first time edged out corporate gifts to Chests and Funds, 39.6 percent to 38.1 percent—a total employee gift of about $152.6 million. This trend slowly continued, until by the 1970s corporate giving stood at about 25 percent while employee giving was roughly 50 percent.Footnote 133 The payroll deduction became nearly universal as well. The National Industrial Conference Board in the early 1970s revealed that 96 percent of the manufacturing companies surveyed allowed the payroll deduction for charitable donations, as did 90 percent of the nonmanufacturing companies.Footnote 134 Workplace giving remains an important dimension of charitable donation, though the emergence of a range of new nonprofits starting in the 1960s, the increased use of public contracting with nonprofits in the 1960s and 1970s, and deindustrialization and the decline of many industrial cities have loosened the United Way's hold and dependence on this particular mode of giving and have also reduced the significance of the United Way in the nonprofit sector as a whole.Footnote 135
While the virtues of the mechanism were many—larger and more reliable gifts for Chests, smaller payments for givers, and, if combined with a single campaign, less time spent on solicitation—it was also a fundamentally passive model of citizenship. This had been an early initial criticism of the Chest idea itself, since Chests interposed themselves between givers and the individual agencies, and the payroll deduction's automaticity further reduced the active involvement of individual donors.Footnote 136 The most common critique of this passivity came at the time from conservatives who lumped the payroll deduction in with the dead hand of government: “such plans are too much like taxation, taking personal choice and the voluntary spirit out of giving.”Footnote 137 Supporters of the national health charities battling against consolidation with the Chests made the same argument.Footnote 138 In 1950, Charles Cabot, former president of the Boston Community Fund, warned that Chest leaders needed to combat the complaint that “the Chest has become too mechanical, and that giving to it is more like a tax than a voluntary contribution.”Footnote 139
But conservatives like Cabot ultimately prized the continued existence of these institutions as at least a symbolic bulwark against the expansion of the public welfare state. An editorial in Life in 1952 asserted that Chest drives, rather than reflecting the “overorganized” state of America, were an example of “the American instinct for efficiency through voluntary mutual aid… [which] keeps welfare a community responsibility, instead of the responsibility of a few rich men—or of the federal government.”Footnote 140 Jasper Crane, a DuPont executive who had volunteered to run the 1947 fund drive for the Wilmington (Delaware) United Fund, stressed in a letter to a potential donor, “As I said to you on the telephone, the outcome of this drive is really a test of the American way of voluntary cooperation. If some of these institutions are not supported by the cooperative efforts of individuals, the government will take over the functions of some of them. Then their activities will become expanded beyond reason, costs go up, and more taxes ensue.”Footnote 141 Leland Hazard, a vice president of Pittsburgh Plate Glass and a national figure in the Community Chest movement, urged fellow executives to allow the payroll deduction and to reach out to draw in organized labor to participate, stating: “If you fail in this, don't be surprised at political schemes for socialized medicine.”Footnote 142
As the last quote suggests, organized labor's support of voluntary charitable fundraising—support that was not foreordained and that had been withdrawn in many communities in the 1930s—was part and parcel of its focus on the extension of a public–private welfare state rather than a broader federal public social welfare system.Footnote 143 Organized labor had initially rejected the coercion of payroll-deducted donations to charity and had looked toward public services or union-organized alternatives. Now, financial support of private charity was encouraged by both the union hierarchy and management; hence, the wire-service photo of William Green of the AFL and Philip Murray of the CIO along with Henry Ford II and H. J. Heinz II, awkwardly posing together in a Detroit day nursery to kick off the 1948 Chest drives in Detroit.Footnote 144 In the now-unionized Ford Motor Company, an executive in the 1950s described how new employees were presented with the “choice” of payroll deductions: “When an employee is hired by the company we acquaint him with his hours of work, his vacation benefits, his group insurance; we give him forms to fill out for Blue Cross, Blue Shield, union dues checkoff, savings bonds, and Torch Drive [the name of the Detroit United Fund drive] checkoff. We don't pressure these people. We explain that we have a community service program here. They don't usually say no.”Footnote 145
That list of deductions—though it omits those for Social Security and the income tax—brings us back full circle to the paystub of sportswriter Leighton House and the insights it gives on the structure and full range of the emerging public–private welfare state, affording us a moment to consider the broader implications. It reminds us that the twentieth-century welfare state, in both its private and public manifestations and including charitable institutions such as the Community Chest, was made possible through the extension of infrastructural power that sought to efficiently extract revenues necessary for financing various social welfare programs. Though there were profound differences in what those deductions financed, and the politics of how they came to be withdrawn, to Leighton House and millions of other Americans in the postwar era, they blurred into each other in a continuum of compulsory and voluntary demands by highly organized institutions—as remote as the federal government and as near as local charities. These systems were efficient and seamless, but they were so because of their passivity; collection did not depend on the continual, active engagement of the taxpayer or donor.
It also reminds us how closely tied some elements of charity were to the expansion of the public–private welfare (and warfare) state and the crucial support afforded by organized labor for the expansion of these charitable practices. This has been acknowledged but not pursued in the broader literature on the mixed welfare state. The expansion of the New Deal–era welfare state profoundly altered the landscape of social welfare in the United States. It disrupted the activities of some charities and eliminated the need for others, but in other ways it directly and indirectly encouraged the growth of the charitable sector. As this article has demonstrated, for Community Chests, the legitimization of payroll deduction through Social Security and, in particular, income taxes and war bonds, allowed a vast expansion of a charitable fundraising system that had been compromised during the 1930s. The expansion of organized labor through the Wagner Act and then through wartime “maintenance of membership” mandates at first challenged these fundraising practices, but ultimately provided an organizational structure through unions that enhanced charitable donations. As with the employer-based system of economic security that it emerged in concert with, though, it linked the fortunes of this strand of social welfare to the stability of a particular form of industrial capitalism and emphasized the realm of private, rather than public, social responsibility.
