Update: Rule Changes for the Combined Federal Campaign Have Been Issued
The final rule change to the Combined Federal Campaign (CFC) was published the Federal Register on April 17, 2014. The good news is that largely as a result of our and other stakeholder efforts, including member charity, the changes will not take effect until the 2016 campaign. Therefore, it is business as usual for the upcoming 2014 and 2015 campaigns. As you know, America’s Charities has been working for over two years to fight certain proposed changes that we believe would harm the campaign. You can access the complete history and other background information on our website, www.charities.org/savethecfc.
While some changes that we believe are most detrimental to the campaign remain in the final rule, we are encouraged by OPM’s stated intention to collaborate with stakeholders like America’s Charities during the implementation phase. The fact that the rule will not take effect until 2016 is also encouraging. We view it as a positive sign that OPM is acknowledging our advice (and that of Congress) to be deliberate and thoughtful about significant changes, including testing to ensure they “do no harm”.
OPM Final Rule
While we are encouraged by OPM’s words regarding additional input and extended implementation, we remain troubled and concerned that they have not made significant adjustments to certain provisions within the new rules that are most important to charities. Since the new rule was published earlier this week, there’s been significant negative reaction by the charitable sector as well as members of Congress. America’s Charities has been proactive in this reaction while also being respectful and cognizant of the fact that we have to work with OPM. However, first and foremost, it is our role to protect your interests which, on occasion, requires us to be vocal and specific. You will see that in the media coverage from this past week (links are embedded at the bottom of this communication).
Here is a summary of some key provisions of the final regulations as posted in the Federal Register and summary points on our views and actions:
Charities applying to the CFC will have to pay an up-front, non-refundable application fee. The cost is uncertain for the first year of the campaign. The final rule provides a formula on how the fee will be calculated beginning in year two. In addition to this application fee, once approved, charities will be assessed a second fee, a listing fee. If the application fee and listing fee are not sufficient to cover campaign costs, a third fee, a distribution fee, will be assessed. We will continue to fight implementation of this rule for the following reasons:
It places unnecessary additional administrative burden on participating charities and their federations for the purpose of disconnecting the cost of the campaign (about 10%) from the act of giving. As you know, under the current system, funds to manage the campaign are taken out of the funds raised before the remaining funds are forwarded to the charities and their federations.
Under the new rules OPM will require federations to forward 100% of the funds directly to you, and then we will have to invoice you for fees for our services. If you currently choose to have your membership fee payments deducted from distributions, we will no longer be able to do so with CFC funds beginning with 2016 membership. OPM will also be invoicing you through a yet to be determined system for the various fees noted above.
Why is OPM doing this? So they can say to the donor more of their contribution goes directly to charity. Donors will not be told that the cost for running the campaign will be born by charities. We feel this lacks transparency and adds unnecessary administrative burden on the charities in order to be less than truthful to federal employees. This view is also shared by Art Taylor, CEO of the Better Business Bureau, who also served on the CFC50 Commission and is the preeminent expert on such matters. He has testified before Congress and has informed OPM that this is a bad idea and will lead to more costs. OPM did not heed his expert advice.
The campaign structure has changed. Local Federal Coordinating Committees (LFCCs) will remain in place. The final rule does not provide clarity on the number of LFCC’s or campaign “zones” that it expects to retain. However, the LFCC will no longer select and oversee the local campaign manager, the Principal Combined Fund Organization (PCFO), which has been eliminated in favor of one or more Central Campaign Administrators (CCAs), who will create the campaign website and distribute campaign funds. The role of the PCFO has been restructured to that of an Outreach Coordinator, who may be hired by the LFCC, to conduct campaign marketing, educational, and promotional activities.
We continue to have major concerns about this change as it has the potential to remove many of the local aspects of the campaign so vital to actually raising awareness and funds. It also places those responsibilities in the hands of fewer people hired directly by OPM and reporting to OPM. Most PCFOs (Principal Combined Fund Organizations who contract with the government to manage the campaign at the local market level) are local United Ways. In fact some $140 million CFC dollars run through their books, all of which they will lose under the new rule. As a result, United Way of America has become much more active in their push against this change. In fact, they are currently urging Congress to strike the rule change. United Way has urged Congress to generate a request to the Office of Management and Budget (OMB, who oversees the OPM rule change process) to revisit the final rule from members of the House Subcommittee on Federal Workforce, US Postal Service, and the Census. The letter was signed by Committee Chair Darrell Issa and Ranking Member Elijah Cummings and others in a rare bi-partisan statement.
Additionally, the new rules state that in order to serve in the reorganized PCFO/CCA role you have to be a 501(c)3 charity that does not participate in the CFC. That eliminates all the organizations with qualifications and experience to serve in this role, including local United Ways and other federations who are in the CFC. Additionally, the rules say that if an organization does not step up and qualify to run a campaign, there will be no campaign. We plan to continue working to change this rule or determine if OPM has a vision that we are not aware of regarding who might serve in this role.
One time cash gifts have been eliminated. However, giving by check will be retained and processed electronically. While more of the local CFC campaigns have been moving towards online processes, OPM has recognized the importance of keeping traditional giving methods. In the draft rule that leaked in January, the traditional giving methods, such as paper pledge forms and charity lists would be retained for the first five years of rule implementation. The final rule is silent on this implementation period, leading one to surmise these processes will be retained indefinitely. However, the final rule is contradictory to the fact sheet released by OPM last week that still references the five year period. More clarification is needed on this point and we will update once known.
America’s Charities will continue to press for the ability for Federal employees to give through the method most convenient to them. Members of the Congressional Subcommittee, noted above that heard testimony last summer on the proposed changes, urged OPM not to restrict giving options.
We remain very concerned about OPM’s planned additional reliance on technology. Our position is that in workplace giving, technology is a tool, not a strategy. In campaigns we’ve seen, both in the public and private sectors, where employers go to a totally on-line campaign, fundraising results suffer dramatically.
Other changes include altering the annual campaign period to occur anytime, as determined by OPM, between September 1st and January 15th each year, streamlining the application process to include a full set of application materials once every three years, increased oversight requirements for federations, providing immediate CFC campaign eligibility for new hires, and implementing a disaster relief program.
As stated in our Federal Register response and in meetings with Congressional staff, OMB, and OPM, it was our position that certain provisions of the proposed rule would have a negative impact on giving in the CFC. From review of the final rule, our view remains unchanged on most of the new provisions. The rule continues to focus primarily on efficiency and reducing the burden on the federal government to run the campaign, while lacking focus on fundraising and engagement. While efficiency is important, other factors must be taken into account.
We are currently evaluating any next steps but remain encouraged about the timeframes for implementation as well as the possibility to work with OPM during the implementation process of these rules to restore the CFC back to health. We will continue to do this in close collaboration with many other parties representing the philanthropic sector including Independent Sector, United Way, Community Health Charities, EarthShare, Global Impact, Neighbor-to-Nation and many others.
We will keep you posted on any updates and, as we have done previously, may reach out for your assistance in our efforts.
President & CEO, America's Charities