New regulations published this week by the Office of Personnel Management aim to overhaul the Combined Federal Campaign, in part by eliminating cash donations in favor of online giving and requiring charities to pay fees to cover the administrative costs of the program.
But some charity groups say OPM’s regulations are too focused on wringing more efficiencies out of the annual fundraising drive instead of on re-energizing a workplace-giving program that has seen declining donations in recent years.
Amid governmentwide fiscal pressures and employee furloughs, CFC donations fell by 19 percent last year — from more than $258 million in 2012 to about $209 million, according to statistics compiled by Payroll Philanthropy.
“There are certainly ways to increase efficiency,” Steve Delfin, president and CEO of the America’s Charities federation, told Federal News Radio. “But you don’t have to blow up the whole system administratively to do it.”
Since OPM published draft regulations a year ago, the agency has received a torrent of comments from charities and other stakeholders — the vast majority opposing the agency’s plans.
In the face of that opposition, OPM did make several tweaks to its original proposals. But a bipartisan contingent of House Oversight and Government Reform Committee lawmakers say they want the Office of Management and Budget — which is currently reviewing the new rules — to take another look at the concerns raised by charities.
“Although OPM made some revisions based on the comments it received, CFC stakeholders continue to express concerns,” the April 15 letter to OMB Director Sylvia Burwell stated. “As your office reviews OPM’s recommendations for the final rule, we write to urge that every reasonable consideration be given to the concerns stakeholders have raised.”
The letter was signed by both Committee Chairman Darrell Issa (R-Calif.) and Ranking Member Elijah Cummings (D-Md.).
Concerns over new charity fees
Some charities are concerned about OPM’s plan to cover the administrative costs of the program by charging charities a series of fees to participate.
Currently, administrative fees are deducted from donations, themselves. Typically, about 10 percent of individual donations go toward overhead with the remainder going to the charities, Delfin said.
Under the new rules, however, OPM would charge charities a nonrefundable application fee upfront, a separate listing fee and possibly a third round of fees if the first two were insufficient to cover the actual costs of the program in a given year. The fees would be limited to the previous year’s total budgeted costs divided by the number of participating charities but wouldn’t make exceptions for small charities, which could dampen their participation in the program, critics worry.
Delfin said the new system could actually result in higher administrative costs for charities, because it would require charities to complete multiple invoicing and billing cycles throughout the year as OPM recovered campaign costs.
In general, charities said they’re worried OPM’s planned makeover of the program doesn’t focus enough on how to engage employees, which is the key to boosting participation in the program.
“Efficiency is certainly critical but if at the end of the day you’re 3 percent more efficient but raise 40 percent less money, that’s not a good outcome,” Delfin said.
Phase-out of paper-based giving?
CFC charities are also concerned about OPM’s plans to shift away from paper-based forms of giving. In its proposed rules issued last year, OPM sought to eliminate cash, check and pledge forms — which make up nearly 80 percent of total donations — in favor of online-only donations.
However, in the regulations published this week, OPM scaled back those plans, seeking to phase out only cash donations. Other paper-based processes, such as pledge cards and a print directory of eligible charities would be maintained for at least five years after the new regulations go into effect in 2016.
OPM says eliminating paper pledge cards would save money. Costs associated with paper pledge forms account for more than 9 percent of total CFC costs.
But Delfin questioned the wisdom of eliminating a popular giving option.
“People need to be able to give in a way that’s most convenient for them where they work,” he said. “Some of the largest donors to the CFC are people who don’t sit in front of computers all day,” such as U.S. Postal Service employees, military personnel and Park Service workers.
More broadly, charities are concerned OPM hasn’t focused enough on building the sophisticated online tools necessary for federal employees to search for and browse eligible charities once the agency stops printing the paper-based charity directory.
“The government is taking away the tool that everybody has used for half a century which is the print directory,” said Marshall Strauss, CEO of the Workplace Giving Alliance. “And everybody knows how to search a print directory.”
The CFC’s current online tools are “inadequate,” Strauss said. They’re clunky and often require direct matches of search terms, which makes open-ended browsing of charities difficult.
If OPM doesn’t upgrade its online capabilities before the directory is eliminated, “essentially, the campaign will grind to a halt,” Strauss said.
Will OPM ‘fill in the blanks?’
Still, charities do see some positives in the new rules.
Currently, newly hired federal employees can’t begin participating in the CFC until the next scheduled campaign season. OPM’s revised rules would require that new employees be provided with information about the CFC at orientation and be able to make pledges within 30 days of being hired even if their hiring takes place outside of the normal season.
The new rules also allow the OPM director the flexibility to extend the CFC end date from Dec. 15 until after the holidays.
While charity groups still have strong misgivings about the revised rules, they’re encouraged that OPM Director Katherine Archuleta appears willing to work collaboratively with charities over the long haul to implement the rules.
“We understand that some groups have expressed apprehension over these changes,” Archuleta said in an April 11 blog post announcing the revised rules. “We take these concerns seriously and remain fully committed to working closely with charities and key stakeholders as we implement the final rule.”
Strauss said he hopes OPM pilots CFC changes during the implementation phase before rolling them out nationwide.
“We seem to be facing a complete change in a little under two years,” he said. “I’m hoping the government can fill in some blanks.”