Several charities have told us that they are receiving significantly less of the donations pledged to them during the 2016 campaign. One charity reported receiving just 57% of their pledged amount, far less than normal. Why is this?
Charities have never received all the CFC donations they are pledged, for two reasons.
- One is that the cost of running the CFC (and of CFC federations) is deducted from the money pledged to charities.
- The second is employees stopping their pledges, either because they left the government or could no longer afford their pledges.
While there is always a turnover in employees during changes in administrations, this year’s increase in the amount subtracted from charities’ pledges seems to be caused mainly by increased campaign costs.
One reason for this increase was less money being raised. The CFC was down 6% in 2016, a decline of more than $10 million. But the costs of running the 2016 campaign stayed about the same. This leads to a higher cost percentage. The CFC’s recently released 2016 statistics did not include a figure for total costs, thus we don’t know the overall cost percentage. In 2015, it was 13%.
Similarly, the percentage deducted to pay federations’ costs also went up, at least for most federations. These costs reduce a charity’s pledges by 5-10% more.
But the big spike this year appears to be one-time costs associated with the transition to a new way of running the CFC.
While local CFC federations such as United Ways are no longer running this year’s CFC, they are still responsible for distributing last year’s money. Plus, they are responsible for auditing the local campaigns and keeping several years of records, according to CFC Deputy Director Anthony DeCristofaro. All these expenses must be anticipated and paid out of this year’s campaign proceeds.
DeCristofaro said he doesn’t know how much these costs total, in part because the amount is determined by each of last year’s 125 local campaigns.
The percentage that each campaign deducts has always varied widely. For example, the DC CFC’s cost percentage was 9.5% in 2015, not 13%. If a charity gets all or most of its donations from a lower cost campaign like DC’s, the percentage deducted from its checks will be lower. It’s complicated!
The fact that charities are receiving less of their 2016 donations is made harder by the fact that charities must now pay up-front fees to apply and participate in this year’s campaign.
All this should be better next year.
The up-front fees will pay at least some of the CFC’s and federations’ costs. Unfortunately, there will still be a “distribution fee,” but it should be considerably lower than this year’s percentage. This will be true mainly because the CFC’s costs should decrease markedly, for two reasons.
- Accounting and distribution costs should be much less because it will all be done centrally, through the Central Campaign Administrator, not locally by 125 separate campaigns.
- The cost of running the campaign itself should also be considerably lower, since there will be staff involved in just 37 regional campaigns, not 125 local campaigns.