Charity Choices

A Resource for Donors

New CFC rules will finally be implemented in 2017

Obama expected to issue executive order allowing retirees to be part of the campaign

            More than 3½ years after they were proposed, the new rules for the federal charity drive will go into effect for the next campaign, starting in 2017. The rules were finalized in 2014 but implementation was postponed in 2015 and 2016.  The rules call for profound changes in the CFC, one reason they have taken a long time to implement. 

            Many of the changes were controversial, but getting them finally implemented should help the CFC during the next few years.  In many ways the CFC has been in stasis the past three years, with the local organizations that run the local campaigns (mostly United Ways) knowing they were being phased out. 

            The CFC should also be given a boost by an executive order expected from President Obama that would allow retirees to continue participating in the CFC.  Charities have asked for this change for many years.  Many long-time CFC donors have been retiring. 

            We'll be writing a lot about the CFC's changes over the next few months.  For now here are the main points CFC charities should know:

  • To apply for next year's CFC, charities will have to pay an application/participation fee. 

The amount still hasn't been determined.  The CFC office says the details should be known by late November and posted on its website (opm.gov/cfc).  The rules call for all charities - national and local, big and small - to pay the same fee. The fee is supposed to pay all CFC costs.  Charities will no longer have a percentage deducted from their donations to pay for the CFC's expenses, which will be a big savings for many CFC charities. 

 If you take the 2015 cost of running the CFC ($22.2 million) and divide that by the number of national and local charities in the CFC (24,000), you come up with $925.  But many charities - especially local charities - don't raise this much in CFC donations.  They may drop out. 

However, at the same time, the CFC plans to greatly lower the CFC's costs, mainly by running campaigns regionally rather than locally, centralizing the way donations are collected and processed, and getting more donors to pledge online.  So the amount of the upfront fee is very uncertain.

In addition, CFC federations will have to charge their members a fee rather than pay for their services through a percentage deducted from their members’ CFC donations.

  • Charities will apply online next year. 

The CFC is currently testing the online application process.  It promises to unveil the new application in November.  The application process is scheduled to start December 1 and end January 30 (for national organizations).  That is later than normal.  These dates are tentative.

  • Charities only need to submit a full application once every three years. 

Smaller charities (budgets below $250,000) won't have to submit an audit.

  • The way donations are collected, processed and distributed will be centralized. 

One Central Campaign Administrator (CCA) will do all this.  In the past it was done by the local organizations that ran each local campaign.  The hope is that this new system will significantly lower costs while getting donations to charities more quickly. 

A CCA has been chosen, a nonprofit called the Give Back Foundation.  Its director, Stephen Paletta, made a presentation at the CFC national meeting in April.  It appears that charities will be able to see exactly how much money has been pledged to them during the campaign. 

The CCA will also be developing the "platform" that employees use to make pledges. Paletta says this platform will do much more than simply give employees a way to make an online pledge.  "It will make people feel special about who they are.  They'll talk about it to their colleagues and friends.  That's how you get people to participate."

  • The way local campaigns are run will be changed dramatically starting next year. 

The local "Principal Combined Fund Organizations" (mostly local United Ways) will no longer run the campaigns.  Instead, the campaigns will be managed regionally.  The CFC has divided the country into 39 regions (vs. 135 local CFC campaigns in 2015).  Each will have an "outreach coordinator" who will organize and manage the campaign in its region.  The CFC has not yet selected the outreach coordinators.