There are times when you wish you hadn’t been right. Unfortunately, those who predicted the negative impact of many of the federal charity drive’s changes could not have been more right.
Last fall -- the year these changes were finally implemented – saw the CFC experience by far its biggest decline ever, both in total dollars given and number of donors.
Donations plummeted by nearly 40%, to $101.4 million. This is a stunning loss of $66 million for charities.
Even more stunning, the number of donors went down 58.6%, from 409,275 to 169,232. The participation rate went from 10.7% to just 4.3%.
The one thing that increased: the cost of running the campaign, which went up by about $1 million, according to a Chronicle of Philanthropy article. Ironically, the CFC's main justification for the big changes was to lower the campaign’s cost and make it more efficient. (The CFC says that high costs in 2016 and 2017 were transition costs and that eventually costs will decrease.)
Why such a big decline in donors? And even more important, what can be done to restore what used to be called the world’s largest workplace charity drive, a drive that as recently as 2011 was raising more than $281 million?
Fortunately, the managers of the CFC seem to be feeling some pressure to fix what went wrong in 2017. And a lot of these problems should not be that hard to fix.
So what went wrong?
There are two broad answers to this question. One involves how the CFC’s big changes were implemented. The second involves the changes themselves. The easiest problems to fix involve implementation, so we’ll focus on these first.
While the CFC's new rules were finalized in 2014, implementation kept getting postponed until 2017, presumably to give the CFC enough time to prepare. It wasn’t enough time.
The problems began early, with the new online application process.
The application deadline, initially in January, was postponed twice, to March 17. The CFC said more time was needed to get the word out to charities.
Some think the CFC was also concerned about not getting enough applications, which meant less revenue from the new application and “listing” fees. These fees were supposed to cover the CFC costs, thus allowing the CFC to say that all a donor’s money was going directly to the charities.
Whatever the reasons, the delay set back the entire process of reviewing applications and developing the list of eligible national charities. Normally the list is released in late July or early August. This gives the local/regional CFC campaigns time to combine the national list with their local lists of charities and produce local “catalogs” of charities that donors could support.
Another cause of this delay was the need to collect the “listing” fees from charities once they had been approved. A charity could only be on the official list if it paid this fee. The official list wasn’t released until Sept. 29. Even then it had to be quickly withdrawn because it included numerous mistakes. (OPM said that it delayed the start of the campaign to give charities involved in hurricane relief time to complete the application process.)
The list was also needed to get the CFC’s new online giving portal ready.
This new online portal was in many ways the centerpiece of the “new” CFC, an easy way that federal employees and military personnel across the world could quickly donate through the CFC. In the past, each local CFC campaign had its own website.
The CFC’s managers touted the web portal as a way to modernize the CFC and greatly reduce its costs, pointing out that a donation made online costs much less than a gift made by check, cash or using a paper pledge card.
Unfortunately, when the new portal finally came online on Oct. 16, it had many problems. Long-time CFC charities that were eligible for the 2017 campaign didn’t come up (such as Children’s Inn at NIH). Charities with asterisks in their names (A Child’s Help Fund) would come up only if a donor didn’t include the asterisk. ACHF’s CFC donations plunged more than 63%.
There were many other search-related problems. The search engine focused only on charities’ names, not the descriptions of their work, according to a good article by Marshall Strauss of the Workplace Giving Alliance. This hurt charities like JDRF International, whose names are acronyms. If you searched on “Juvenile Diabetes,” JDRF wouldn’t come up.
The search engine focused on letter sequences, not words, thus a donor searching on “cat” would get a list of charities whose names included “education,” since of course you can’t spell education without a “cat.”
The CFC reports that, despite these problems, 72% of CFC pledges were made online and that 80% of the donors who started the giving process online completed it. But two other factors may account for this increase in online pledging. One is that cash donations (nearly $18 million in 2014) were eliminated. The second is that the campaigns began so late in many CFC regions that employees didn’t have other ways of giving.
The CFC’s other huge implementation challenge was to rebuild the entire human and organizational infrastructure of local CFC campaigns.
Prior to 2017, local campaigns had been conducted by local organizations, mostly United Ways. In 2017, local campaigns were consolidated into 37 regional campaigns. Each campaign was overseen by one of five OPM-approved consulting companies (only four ended up running campaigns).
Many charities warned that eliminating local management of CFC campaigns would be disastrous. But our focus now is implementation. And implementation of this new management structure was slow and very uneven.
The DC-area CFC was the only campaign that kept its existing staff and structure. Even it started very late, with many employees receiving nothing about the campaign until November. But having an infrastructure in place made a big difference in the bottom line: the DC CFC fell “only” 27.5%, vs. a decline of 44% for the other 36 CFCs.
For many of these 36 campaigns, the actual start date was even later. Several regional CFC websites had calendars showing that webinar training for “keyworkers” and managers – the people who actually conduct the campaign agency by agency – didn’t take place until mid-November. In the past, this is when many campaigns – especially on military bases -- were wrapping up.
One result: the fall-off in military donors was stunning: from 216,148 in 2015 to 54,652 in 2017.
Another reason for this huge drop was no doubt the elimination of cash contributions and activities such as bake sales.
The campaign was extended for about two weeks, until Jan. 12. But judging by the nearly 60% decline in the number of donors, this extension didn’t make up for all the time lost during what is normally the peak of the campaign, in the mid-fall.
Even the CFC acknowledged that its campaign among retired employees had “significantly less campaign time” than the regular CFC campaign, with only about $522,000 raised from millions of newly-eligible retirees.
Finally, with all the delays, the CFC never developed and activated a marketing campaign for the new CFC. The campaign theme was the same as in 2016: “Show Some Love.” Most employees had no idea about the major changes the CFC had made to lower costs and make the campaign more efficient, the very features that the CFC touted when it was defending its new CFC rules.
Admittedly, a marketing campaign touting the CFC’s increased efficiency would have been somewhat hamstrung by one final implementation problem: the cost.
When the final figures were released in April, the percentage that charities had to pay to cover the CFC’s costs went up, not down. The CFC announced a “distribution” fee of 16.5%. In 2015, the CFC’s costs added up to 13%.
Even actual campaign costs went up last year, to $28 million, despite the elimination of local campaign management. OPM says there were transition costs and that costs will decline in future years.
As if all this isn’t painful enough, charities only start receiving CFC donations after the 16.5% is paid. For most charities, this means they won’t see any support from the 2017 campaign until June 2018. Remember that they all had to pay their 2017 application fees ($400 for most national charities) as early as the fall of 2016.
The CFC web portal was closed as soon as the CFC ended on Jan. 12, so it’s impossible to know if its many problems are being fixed. But there is certainly time to do so.
There was only one delay in this year’s application deadline. Plus, the results of the 2017 campaign will no doubt mean many fewer charities applying to the 2018 campaign.
The new campaign structure will have a full year to prepare for this fall’s campaign. Hopefully both the CFC office and its private sector partners will be very motivated to improve the amount raised. We’ll soon be reporting on the CFC’s plans to turn around the 2018 campaign and the pressure that is building on the CFC.
We’ll also be reporting on the other reason the 2017 CFC declined so drastically: the changes themselves, as well as other steps the CFC could take to restore giving.