• About CFC  

• Cost of Donation

OPM proposes lifting cap on charities’ administrative costs

ELISE CASTELLI

A plan to eliminate the cap on how much charities spend on administrative and fund-raising expenses is one of several proposed changes to the Combined Federal Campaign that concern some of the participating charities.

Currently, no organization within CFC can spend more than 25 percent of its revenue on administrative and fund-raising expenses. The Office of Personnel Management, which administers the government’s annual charity drive, proposes leaving it up to donors to use public reports to vet charities, according to the June 29 Federal Register.

Thomas Bognanno, chief executive officer of Community Health Charities, said this change will undermine donor confidence in the campaign.

With the potential onslaught of thousands of newly eligible charities, donors could wind up giving to campaigns with similar sounding names but higher overhead costs, he said. Community Health Charities represents 48 major organizations, including the American Cancer Society, American Heart Association, American Lung Association and March of Dimes.

Rather than removing all caps on fund usage, Bognanno said he has recommended OPM follow the Better Business Bureau standard of no more than 35 percent toward administrative and fund-raising costs.

Don Sodo, president of America’s Charities, representing the Christopher Reeve Foundation, Feed the Children and Junior Achievement, among others, agreed. Sodo said the move sends “the wrong message to federal employees” who have relied on OPM to vet charities under this rule ensuring only charities that “deliver the highest percentage of funds to programs” are admitted.

Removing the cap on administrative costs is among eight eligibility standards OPM wants to eliminate in its first overhaul of CFC guidelines in a decade. OPM is reviewing comments it received on the proposed changes and expects to finalize the guidelines for the 2007 campaign, according to the Federal Register. The changes will not affect the charity drive under way through Dec. 15.

Bognanno said his organization does support administrative changes that will streamline administration for the charities, but some of the reforms could hurt instead of help.

“If some of the proposed changes occur, our organization could lose $4 million to $8 million a year,” Bognanno said. In 2005, civilian employees, postal workers and military members pledged a record-setting $268.5 million to CFC, up $11.5 million from the preceding year.

Another area of concern for Bognanno is the proposal to limit where certain national organizations with local chapters, like the American Heart Association, are listed in CFC brochures. Under one of the proposed changes, charities with chapters that are not separately incorporated would no longer be allowed to list under both the national brochure and the separate local brochures.

Charities like the American Heart Association would have to choose to be listed under their national headquarters address.

For Roger Wolfe, Community Health Charities Virginia president, the removal of some charities from the local listings could mean confusion for donors who want to give at home. “If a donor . . . looks in the local brochure and their favorite charity is not there, they are going to think it is not listed,” he said.

OPM also proposed eliminating a provision that prohibits charities from selling or releasing names of CFC donors. According to the Federal Register, this regulation is unenforceable, but according to Scott Shirai, director of the Denver CFC, many charities abide by it anyway.

Shirai said the regulation goes a long way toward protecting donors who might want to let the charity know where the donation has come from, but not others beyond the organization. The change could have a chilling effect on donations, he said.

OPM declined to comment directly on the impact of the changes because they are reviewing feedback from the comment period that ended in August, spokesman Edmund Byrnes said in an e-mail.

“Our goal is to create a balanced approach to meet current and foreseeable future needs within the CFC and continue the tradition of accountability in the CFC,” said Byrnes. “We will continue to do that by providing federal donors with assurances that the charities that participate in the CFC have met eligibility criteria and are fiscally accountable.”