Charity Choices

A Resource for Donors

How will the new CFC rules change the Campaign?

    

The new rules for the Combined Federal Campaign will cause major changes in the CFC, especially how the campaign is run and paid for.  The extent of these changes is one reason that the new rules, made final in 2014, don't actually go into effect until 2017.  Here is a summary of the changes:

  • Charities will need to pay an up-front application fee and then, if accepted, a “listing fee.”  These fees will pay most of the CFC’s costs (as opposed to a percentage being deducted from each charity’s donations).  The addition of a listing fee seems like a big change from the proposed rules, which called for only a nonrefundable application fee.  
  • There is still uncertainty about how much the fees will be.  The projection offered by OPM ($240 per charity) assumed a 350% decrease in the cost of running the CFC, from $27 million to $6 million.  That seems both quite unrealistic and unwise – you can really raise more money while cutting your fund-raising and administrative budget by $21 million?
  • OPM’s projected per charity fee is so low because it will charge all charities the same amount – small local charities getting a few hundred dollars will pay the same as large national charities getting hundreds of thousands of dollars.  Currently, the amount paid by charities depends on how much they raise in the CFC.  Under the new rules, because there are so many more local charities, collectively they will pay about 89% of the CFC’s costs while they receive only about 36% of CFC donations.  Currently, national charities pay most of the costs since they receive most of the donations.
  • As a result of this new fee structure, the rules should help charities that raise a lot in the CFC. Charities that get only a few donations will be hurt.  (According to OPM, 20% of the charities in the CFC receive no donations.) Many small charities will probably drop out of the CFC, which would increase the fee for the remaining charities (though it would also reduce campaign costs). 
  • The way local campaigns are run will be changed significantly.  Principal Combined Fund Organizations, which have been running local campaigns, are being eliminated.  Most but not all PCFOs were local United Ways. 
  • “Outreach Coordinators” will take on the job of running the local campaigns.  They are defined as “an individual or an entity” that will market the local campaign, arrange CFC events and “educate charities and donors regarding the program.” 
  • The outreach coordinators will be hired by Local Federal Coordinating Committees, which are being retained.  The LFCCs are groups of local federal agency managers and military officers who oversee each local campaign (currently there are 163 local campaigns). The proposed rules would have eliminated “LFCCs” in favor of regional committees. 
  • Donations will be collected and distributed by “Central Campaign Administrators,” or CCAs.  The rules say that there could be one or several CCAs.  We have heard that OPM may create five regional CCAs.  Currently, the money is collected and distributed by each PCFO.  OPM believes this change will end duplication of effort and save money.
  • CFC donors will continue to be able to make donations by check or money order, though no longer by cash.  The proposed rules had banned all three forms of giving, in favor of electronic giving. Processing cash donations is expensive, as OPM points out, but a lot of money is still given this way – at least several million dollars (perhaps as much as $20 million).  About half of cash donations are made at CFC events.  Hopefully people will remember to bring their checkbooks to those events. 
  • CFC donors will continue to be able to make donations using paper pledge cards, and local CFCs can continue to produce printed charity lists…at least for the next five years.  The proposed rules had banned paper in favor of electronic pledge forms and charity lists.  It appears that OPM plans to halt the printing of pledge forms and charity lists after five years, though this isn’t stated in the rules themselves or in OPM’s introduction to the rules, just in a “Fact Sheet” issued by OPM.   
  • Federations will no longer be allowed to deduct a percentage from their members’ CFC donations to cover their costs.  Instead, they will have to bill their member charities separately.  The idea with this change (as well as paying campaign costs through fees rather than through deductions from donations) is that the CFC will be able to tell donors that all or nearly all their money goes to the charities, not to pay the CFC’s overhead costs.  Federations will also be required to distribute donations to member charities every three months.  Most federations already do this. 
  • Charities will no longer have to do a full application every year.  Instead, they will do a full application every three years, with a simpler, updated application in the other two years. 
  • Small charities (budgets under $250,000) will no longer be required to have an audit to participate in the CFC.
  • In relation to eligibility, very little changes.  However, OPM did make a small but significant change to a part of the eligibility rules that emphasized direct services over other ways of doing charitable work (public education, advocacy, etc.).  It stated that any reference in the rules to “services” means “services, benefits, assistance or program activities.”  In other words, you can do things other than providing direct services such as feeding the hungry and housing the homeless.  This broader language was critical when the CFC was opened up to many more charities in the 1980s.
  • However, the final rules still limit the ability of charities doing media and public policy work to qualify.  For example, a charity must show that a research paper has been used by the beneficiaries of its work.  In other words, if your charity focuses on homelessness, you will need to document that the homeless have read and used your report that documents the extent of homelessness in your community.  

(NOTE: In relation to eligibility, the rules simply incorporate 2006 OPM memos that laid out eligibility guidelines.  In other words, the rules don’t really change eligibility.  They simply give more force to these 2006 guidelines.)

  • The final rules make a few changes in how donors can give.  There will now be immediate eligibility for new employees; they won’t have to wait until the next campaign starts.  When a disaster happens, there will be a mechanism for collecting money through the CFC.  And when people give, they will now have to choose a charity; undesignated pledges will no longer be allowed. 
  • CFC donors will now be able to support local charities outside of the area where they work.  In other words, a member of the military who is stationed in North Carolina will be able to support a charity in his or her home town.

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