Whoa, wait a minute there. I work in university fundraising, and CASE (our governing arm) considers about 12.5% overhead to be a good target total. And some of are members are going to have less than that.
The important thing to remember, though, is that technically speaking United Way isn’t a charity. Sure, it’s a 501©(3) organization, you get tax breaks for donating to it, etc., but it’s more properly called a “fundraising consortium,” not a charity. That means that it collects money from donors, and passes it on to other charitable organizations, but does not actually engage in charitable activity itself. (This is an overgeneralization, of course: there are some projects that are wholly funded by UW monies, and so those projects could logically be called “charitable activity.”) Comparing UW’s overhead costs to the overhead costs of charities is an apples-to-oranges comparison: they are not the same type of organization.
Is UW’s overhead excessive? Truthfully, I’m not sure. We work with other fundraising consortia, but they don’t work in the same way as UW. The other day I was sorting out a gift from a place called…ah, actually, better not reveal that name–donor confidentiality, you know. Let’s call it Blank Charitable Endowment Fund. You give money to Blank, they invest it, and then some time down the road they donate it to the charity of your choice. Since they’re a private investment company (their Charitable Endowment Fund is an arm of a larger investment company), I don’t know what their overhead vis-a-vis the Endowment Fund is. I’d wager, though, to say it’s similar to UW. For all the grief I could give UW (their strong-arm tactics really hurt public perception of the rest of us), I wouldn’t fault them over overhead.