CFC Might Charge Fee, Plans Rule Changes

June 3, 2013       Zach Halper and Patrick Sullivan      

The federal government’s Office of Personal Management (OPM) is proposing rule changes for the Combined Federal Campaign (CFC) that would, among other things institute an application fee for charities that want to participate. Organizations have until June 7 to submit public comments to OPM.

The changes were initially announced in April and were based on recommendations from a report issued last year by the CFC 50 Commission – chaired by two former members of Congress Thomas Davis (R-Va.) and Beverly Byron (D-Md.) – on ways to rebuild interest in the CFC. The proposed rule is designed to save the program money and increase its accessibility, accountability, transparency, and affordability.

“These steps follow through on CFC 50 Commission’s excellent recommendations for strengthening the CFC,” said OPM Director John Berry. “Getting 100 percent of an employee’s donations to go to the charity they choose focuses energy on the CFC’s core purpose.”

While the proposed rule has 13 changes, the one that will get most charities’ attention is the application fee they would have to pay for participating. The fees would be taken from donations and would pay for CFC’s administrative costs. The amount of the fee is not yet established.

According to the CFC 50 Report, the fee would help strengthen the program’s credibility among donors. This is all part of the process of “shifting the burden of CFC costs from donors to participating charities.”

“Even if only a portion of the costs are paid by charities, the CFC will still be able to assure donors that a very high portion of the money donated ultimately reaches the beneficiaries,” the report read.

“We believe the proposed changes, if implemented, will result in a dramatic drop in giving and participation, thus increasing the burden of government and local communities,” wrote Steve Delfin, president and CEO of America’s Charities, in a public comment on the proposed rule change.

Delfin argued that the application fee would create a “pay to play” system, placing an unfair administrative burden and risk on charities. He recommended leaving the current system in place as it is the “most cost effective and efficient.”

“Clearly the CFC can be managed differently and run more effectively,” continued Deflin. “But these proposed changes must be re-examined given the consistent lack of detail, and the overall lack of consideration for the input provided and offered by key expert stakeholders.”

Aaron Dorfman, executive director of the National Committee for Responsive Philanthropy in Washington, D.C., said the shift to an application fee amounted to “a smoke-and-mirrors change.” Dorfman, a member of the CFC 50 Commission, said that the application fee was one of most hotly-contested rule changes, winning support by a slim majority.

“There’s a real desire to be able to claim to donors that 100 percent of donations go to charities,” he said. “Those who believe in this position felt it was important in stopping declines in giving.” CFC revenues fell to $258 million in 2012 from $272 million in 2011.

Of most concern to Dorfman, however, is not a proposed rule change, but rather language in the proposed rule changes. By using words such as “benefits” and “services” instead of “program activities,” advocacy organizations may be excluded from the CFC, said Dorfman. “Our fear is that if they move forward with the rules as written, it could affect advocacy organizations as it gets harder for them to document services rather than being able to point to activities.”

Aside from the language issue and the application fee, Dorfman is largely satisfied by the CFC 50 Commission’s recommendations. “They did a reasonably good job,” said Dorfman. “I’m happy with lowering the requirements for audits on small charities and happy with streamlining the application processes. The change in the campaign solicitation period will be helpful and should result in new revenues.”

Other changes include:

  • The campaign solicitation period moves from September 1 – December 15 to October 1 – January 15.
  • New employees will be provided the opportunity to make a payroll deduction within 30 days of being hired.
  • A new Disaster Relief Program will be created to give employees the ability to contribute to relief programs within hours of a disaster.
  • The responsibilities of the Local Federal Coordinating Committees will be reduced.
  • The name will be changed to Regional Coordinating Committees.
  • Pledges will be made through electronic means.  Cash, check and money order contributions will be eliminated. According to Delfin, over 80 percent of all CFC donors use paper forms of giving.
  • OPM will provide additional training and oversight for Regional Coordinating Committees.

The CFC was established via an executive order by President John F. Kennedy in 1961 to promote and support philanthropy. More than 350 CFC campaigns occur each year in workplaces in the U.S. and abroad. The campaign collects about $270 million a year with proceeds being distributed to more than 20,000 nonprofits.

Bill Kitson, president and CEO of the United Way of Greater Cleveland in Ohio, said that one of the recommended changes — shifting from local management to regional –concerns his organization. “You lose the local ability to influence the campaign,” said Kitson. “Our concern is we might lose something pretty special, and that’s a strong CFC.” The CFC in Cleveland generates about $2 million per year, according to Kitson.

Organization seeking to submit a public comment on the proposed rule change should visit https://www.federalregister.gov/articles/2013/04/08/2013-08017/solicitation-of-federal-civilian-and-uniformed-service-personnel-for-contributions-to-private