Charity Town Hall Meeting

Proposed CFC Regulations

May 23, 2013

Health Foundation of Greater Cincinnati

To educate charity stakeholders on proposed changes to Combined

Federal Campaign (CFC) regulations that may affect

charities throughout the country.

Meeting Purpose

• 2011 – CFC 50 Commission Formed• Purpose was to study the CFC and make

recommendations for: Improving Accountability Increasing Transparency & Accountability Making the CFC More Affordable

• July 2012 – Delivered report with 24 recommendations

• Donor participation• CFC Infrastructure• Standards of accountability & transparency

Background

• April 8 2013 – Proposed Regulations issued for public comment

• Reported intention of proposed regulation changes– Strengthen the integrity of the campaign– Streamline the operations– Increase effectiveness of the program

Background

Direct Impact

• Application Fee – all charities will be charged an up-front, non-refundable application fee at the time the application is submitted to the CFC in order to be eligible for participation in the campaign.– It is not clear how this fee will be determined or

the amount.

Direct Impact

• Streamline Charity Application Process – all charities will be required to submit a full application in the first year. Then charities will only be required to submit a partial application in the second and third year. – It is not clear which supporting documents will be

required in the second and third year as part of the partial application.

Direct Impact

• Streamline Charity Application Process – The eligibility criterion that addresses the need for an audit will change. – Organizations with revenue of at least $100,000

but less than $250,000 will not be required to have audited financial statements prepared.

– Instead, organizations in this range will need to have a financial review performed by a certified public accountant (CPA).

Direct Impact

• Federations – The oversight and governance of federations will increase.– Federations will be required to submit an application for

all member agencies. – Federations will be required to disburse funds to members

on a quarterly basis and required that CFC funds are identified as such when payments that include non-CFC funds are made to member organizations.

– Federations will be prohibited from deducting fees or charges from disbursements made to member organizations.

Indirect Impact

• Changes to Local Governance Structure – The current structure will be eliminated. – There are approximately 180 CFCs across the country.– Local Federal Coordinating Committees (LFCCs) act as

a local board of directors, overseeing the local campaign.

– Principal Combined Fund Organizations (PCFOs) are nonprofit organizations hired by the LFCC to administer the campaign.

Indirect Impact

• New Local Governance Structure – The current structure will be replaced by:– Larger Regions which will be governed by Regional

Coordinating Committees (RCCs). • These larger regions will absorb many smaller

campaigns and will likely cover a multi-state region.• RCCs will be responsible for screening and reviewing all

local charity applications for the region.

Indirect Impact

• New Local Governance Structure – continued:– Regional Coordinating Committees (RCCs) would

hire “Marketing Firms” to administer the campaign locally.

• Not clear if marketing firms must be a nonprofit.• This position may become part-time or seasonal – the

marketing firm may only train volunteers and administer the local campaign during the fall.

Indirect Impact

• New Local Governance Structure – continued:– OPM would create Central Campaign

Administrators (CCAs) – which would centralize the fiscal operations amongst a few nonprofits.

• Collect charity application fees.• Pay operating costs of marketing firms.• Manage national online giving system.• Disburses contributions to charities.

Indirect Impact

• Move to Online Campaign only– Donors could only give online through payroll or

by credit card.– OPM would eliminate all paper pledge forms.– OPM would eliminate all cash and check pledges,

including those made as a part of special events.– Undesignated pledges would be eliminated.

Other Changes

• Implement Universal Giving - where federal employees can give to any approved CFC charity regardless of location.

• Change the Campaign Solicitation Period - The current solicitation period of September 1 to December 15 would be shifted so that solicitation would begin on October 1 and end on January 15.

• Allow new Federal Employees to contribute immediately

Unknown• When will the changes be implemented? • Will the changes be implemented all at once or over a transitional period? • How many regions will the country be divided into?• How many marketing firms the RCC will hire for the larger region?• Must a marketing firm be a nonprofit?• What plan is there, if any, to make up for lost donors due to elimination of paper pledges?

Unknown• How will federal employees without computer access pledge online?• How will charity application fees be determined and what will the fees be?• How lenient will RCCs be regarding charity application errors/correction opportunities?• Are RCCs prepared for the increased number of charity applications they will receive for the larger regions?

Unknown• How will RCCs afford the hundreds of hours to work with local charities for approval during the application period?• How will CCAs plan for and respond to calls/questions/concerns from federal employees and charities?

Potential Impact

WHO KNOWS ???– Campaign could experience more success in the

future.– Campaign could experience the same success in

the future.– Campaign could experience less success in the

future.

Potential Impact

• Potential Impact of New Local Governance Structure :– Local ownership of the campaign may be reduced.– “Personal Touch” to donors, volunteers and

charities may be lost. • How will federal employees be asked to give? • How will volunteers be trained and supported? • How many local charities will successfully apply?• How many charities will be invited to participate in local fundraising

events?

Indirect Impact

• Potential Impact of Online Campaign only– The Ohio River Valley CFC captured $403,302 in online

pledges in 2012, which is 36% to total pledges of $1,112,963.

– The remaining $709,661 was captured through the traditional paper pledges, which was 64% of total pledges.

– The Ohio River Valley CFC captured $141,837 in cash and check pledges in 2012, with more than $94,000 captured through special events.

– Overall, the campaign could lose over 60% of total contributions in the first year.

Possible Outcomes• Using the Following Estimate …..

Gov’t sets nationwide CFC budget at $15M Charge to charities is the same Based upon 20,000 unique charities Application fee = $750

• Most charities which received less than the application fee will decline to apply the following year. In the Ohio River Valley CFC, that would mean that 167 local charitable organizations would drop out if the application fee was $750.

Possible Outcomes• Some charities will likely add a cushion to ensure

they actually earn some money above the application fee. If charities set their “safe” amount at, say, $1,000, then 194 local charitable organizations would drop out of the Ohio River Valley CFC.

• The more charities that drop out, the higher the fee will be for the remaining charities. This means that even more charities could decline to apply to participate in the second year of the application fee.

Possible Outcomes• Only 278 local charitable organizations received

designations in the 2012 campaign out of the 387 eligible local charities in the Ohio River Valley CFC.

• Under the best case scenario, 59% of the local eligible charities may not apply for participation in the CFC based upon the results of the 2012 Ohio River Valley CFC.

• The impact of less charities participating in the campaign may lead to further declines in participation.

Affect on CharitiesRange from 100s to 1000s dollars for each

charity’s application feeApplication fees for 2 years before knowing

results of first year designationsSome PCFOs report 60%-80% of charity

applications have errors which may affect eligibility.

Affect on CharitiesFewer giving methods for donors may mean fewer

donors.o Donors will no longer be allowed to give by paper pledge

forms and no longer allowed to give through cash and check.Fewer giving options in terms of eligible charities

may mean fewer donors.o Despite more giving options as a result of universal giving,

when local giving options decrease, donors will choose to support those charities privately.

If less money is raised, then charities may drop out and the charities remaining will have to cover more of the expense burden.

Affect on Charities

The Ohio River Valley CFC raised $398,779 in 2012 for local charities.

In light of the proposed regulations, it is estimated that total contributions in the area could decrease by 60% or more.

If overall contributions decrease by 60%, local charities could also see a 60% decrease in designations – a loss of nearly $240,000.

Call to ActionPossible Action Points

• Submit a comment or response from the organization – possibly board members, volunteers and recipients of your programs as well• Complete survey on application fees – at http://survey.constantcontact.com/survey/a07e7f3y9j9hg5icpfp/start

• Lobby Congress to advocate on your behalf

•Deadline is June 7th for all Comments

Call to ActionWays to Offer Public comment:

•Visit the following website: http://www.regulations.gov/#!submitComment;D=OPM-2013-0006-0001

•Mail: Keith Willingham, Director, Combined Federal Campaign, U.S. Office of Personnel Management, Room 6484A, 1900 E Street, NW., Washington, DC 20415.•E-mail: cfc@opm.gov. Include “RIN 3206-AM68” in the subject line of the message.•Fax: (202) 606-5056 Attn: Keith Willingham.

Questions ????

Thank you!