Payroll Philanthropy

First, an apology.  We have not maintained our flow of posts to the blog ‘cause, to be honest, we are swamped in charity applications.  As we have explained, federations like us play a major role in the screening of groups that wish to participate in the next year’s CFC.  The application deadline for national and international organizations is approaching fast, so we naturally are fighting the fires right in front of us.

As we work on applications, we talk with a lot of people from a lot of charities. A common question is what happens after the application period is over. When will they hear if they have been admitted, and when will donated funds reach them?

So, since we find ourselves answering these questions time and again, we thought it would be helpful if we explained the CFC calendar.

The first thing people new to the CFC need to wrap their heads around is the impressive length of the Campaign cycle.  As we implied in our heading, it goes on and on and on.

The first phase of the CFC is Admission

As noted, right now, charities are submitting their applications, seeking to be included in the CFC list that federal employees will see in the fall of 2012.  The OPM deadline for national and international groups is customarily the 15^th of January.  For the 2012 cycle, the deadline is slightly later since the 15^th is a Sunday and the 16^th is a federal holiday.

Most national and international groups apply to the CFC through a federation.  Since federations must have time to make sure each member’s material is in order, they naturally set their deadlines in advance of OPM’s.

At the local level, PCFO administrators have their own deadlines for when applications are due in their offices.  The earliest such deadlines are, again, in mid-January.  Some PCFOs have deadlines reaching into the spring. Local federations, like their national and international cousins, will also use deadlines somewhat in advance of the PCFO deadlines to give themselves time to process the paper and work with their members.

Once the deadlines are passed, OPM staff, PCFO administrators and federal volunteers spend much of the winter and spring reviewing applications.

The CFC’s second phase is Solicitation.

If approved (and there is an appeals process for those rejected – this is a government program, after all), groups are included in the CFC Charity Directory. The Directory, sometimes also called the Charity Catalog, is made available to federal employees each fall, starting in September.

PCFOs get to decide when to start their local Campaign; the goal is to finish by November, though many administrators arrange with OPM to go longer than that.

Federal employees are invited to pledge to one or more of the organizations listed in the Directory.  There are kick-off events and other activities designed to promote the Campaign and encourage employees to become involved.

The third phase is Reporting.

Our overview of the CFC timeline has now covered more than a year.  In fact, those carefully checking a calendar will have figured out that a new cycle has also begun – as the CFC invites applications for the 2013 Campaign.

But – staying with our original cycle – as solicitation efforts wind down, the tabulation and reporting of results takes off.  Generally, PCFOs spend much of December, January, and February going through all the pledges and figuring out which charity raised how much.  Sometimes this tabulation continues into March.

Even before the charity-by-charity tabulation is done, the PCFOs will quickly forward pledge information to the relevant federal payroll office.  This way, these payroll offices can begin to withhold pledged funds as early as January.

When they have finished tabulating the results in detail, the PCFOs issue reports that go to charities or their federations.  By the spring of 2013, everyone who participated in the 2012 CFC should know how well they did.

The final phase of the CFC cycle is Payment.

For the 2012 CFC, pledges will begin to convert into donations in January 2013.  The payroll deductions will continue throughout 2013 and into early 2014.

The deducted money goes back to the PCFO that first collected the employee pledge.  Periodically through the year and well into 2014, each PCFO will send money to each benefiting charity or to that charity’s federation. In the latter circumstance, the federation will forward the donations to its own members.

Donations from the 2012 CFC will fall to a trickle by the spring of 2014 – a full two and a half years after charities first applied to that cycle of the program.

Whew. We’re done. Happy holidays!

Our blog, Payroll Philanthropy, is sponsored by the Workplace Giving Alliance, a collaboration of a dozen national and local federations.  We suspect that many readers actually don’t know what a federation is, so we are going to take a moment to explain.

Federations have been around for decades.  As the United Way offers in its own history, federated fundraising appears to have gotten off the ground in the late 1800s.  As OPM writes, charities (led by federations) began to systematically solicit federal employees in government offices in the years after World War II.  In the 1950s, the government sought to regularize these efforts, and in 1961 the CFC was officially born. (See History of Charitable Fundraising within the Federal Service.)

There are national, international and local federations.  As these labels suggest, the first two categories involve organizations whose programs reach across the nation or into another country; local federations serve groups that are active only in a particular community.

Through its CFC regulations, the federal government requires that a federation have two essential characteristics:

• A federation must be tax exempt and meet the eligibility criteria that any other organization must meet to participate in the CFC, and

• A federation must represent a minimum of 15 other tax exempt organizations that are themselves eligible to participate in the CFC.

We generalize, but these are the basic tests.  If you actually want to be a federation, we suggest you contact OPM to learn exactly the hurdles you must clear.

Now that we have cleared up the definition (sort of), what do CFC federations do?

• First, a federation screens charities that seek to participate in the CFC, using the eligibility criteria that would be employed if the charity applied to the program directly.

• Second, a federation helps inform its “members” on how well they did in the CFC.  (“Members” are charities that applied through the federation and were ultimately accepted by the CFC.)

• Third, a federation helps transfer donated funds from federal employees to federation members.  If a donors wishes to be acknowledged by the benefiting member charity, the federation also helps pass along the donor’s contact information.

A federation may impose admission criteria beyond those of the CFC – meaning it may restrict its membership to certain types of charities.  An environmental federation, for instance, may decide to work only with environmental organizations.  A federation may also offer its members services beyond those required by the CFC, but such extras are optional.

Though charities are free to apply to the CFC directly, they commonly seek to affiliate with one or another federation.  There seem to be three primary reasons:

Federations help with admission.  The CFC eligibility rules can be daunting, and federation staff customarily help.

Federations offer increased visibility within the CFC Charity Directory.  The directory is quite lengthy (over 100 pages in many zones), and each federation has a reserved section for itself and its members.  Indeed, most national and many local federations have assumed thematic names and chosen to limit their membership to groups active within that theme – say health.  The goal is to make it easier for potential donors to find groups that they might wish to support.

Federations help with pledge reports and financial transfers.  Charities participating independently receive pledge reports and donated funds directly from local CFC administrators.  Since the government has not standardized these reports or financial transfers, participating charities can be confused if not overwhelmed by the flow of paper. Federations consolidate the paperwork, helping to make sense of it all.

Federations charge for these services, of course.  That topic will receive its own post soon.

Related links

History, United Way

History of Charitable Fundraising within the Federal Service

As we dive further and further into the CFC’s operation, we want to be sure that everyone has a basic grounding in its administrative structure.  So, for those relatively new to our little world, we focus now on organizations that allow it to work.  Naturally, if you know all this, skip this post, have a cup of coffee and wait for our next essay.

As we noted in an earlier post, the CFC is administered in zones.  There are about 200 of them.  Here is a map.

2010 CFC National Map

Each CFC zone has two administrative entities: a PCFO and an LFCC.

Government regulation assigns the day-to-day responsibility of running each CFC zone to a community-based organization called a PCFO – Principal Combined Fund Organization. As you can see on the map, some PCFOs manage extensive portions of the country involving more than one state. Others manage more densely populated areas that cover a part of only one state. There is also a PCFO assigned to run the CFC overseas, reaching the many employees who are working in other countries.

Each PCFO screens the applications of local charities that wish to participate in its CFC zone. It also organizes federal volunteers who represent the Campaign in the local offices of government agencies, mounts kick-off events to promote the Campaign, prints the CFC directory for distribution to federal employees in its zone, distributes and collects pledge cards, tabulates pledge results, and helps to transfer donated funds from employee paychecks to the benefiting organizations.

Each PCFO is itself 501(c)(3) tax exempt. The PCFO must be audited annually and be governed by a board of directors.

Local federal volunteers oversee the PCFO in each zone of the CFC. These volunteers are organized as a local committee – the formal name is the Local Federal Coordinating Committee, or LFCC. The LFCC chooses the organization that will serve as PCFO, signs an agreement that authorizes the PCFO to operate within the CFC, approves an annual PCFO budget, and determines which local charity applicants meet CFC eligibility criteria.

Regulating all of this from Washington DC is the Office of CFC Operations (OCFCO) within the U.S. Office of Personnel Management (OPM).

There, you’re an expert.

The CFC was born half a century ago, decades before digital technologies began transforming society.

The government agency that regulates the CFC – the Office of Personnel Management (OPM) – writes that the CFC was launched formally in 1961 when President John Kennedy issued an executive order aimed at sorting out the growing efforts by charities to solicit federal employees in the workplace. Early steps involved determining which organizations would be allowed to solicit, designating certain periods when solicitation would be permitted, and establishing guidelines for conducting the campaigns.

Over the years, the CFC has grown tremendously. The number of charities admitted to the program, the number of employees pledging, and the amount being raised have all vastly increased.

The CFC’s administrative structure has also grown over the decades.  Today, the CFC is administered across the country and overseas in hundreds of zones – each one called a “campaign.”  Here is a map of these zones or campaigns as published by OPM:

2010 CFC National Map

We’ll discuss the administrative systems of the CFC in a later post, but suffice to say that the complex structure that has grown up since the 60s is now facing the challenges of a new age, the digital age. And federal employees are naturally asking: Why do I need the CFC at all?

Over the decades, federal employees have been wonderfully generous, donating about $7 billion to thousands of eligible charities. The system has clearly worked.  The CFC has screened charities and ensured that donations pledged to specific groups reached the intended beneficiaries.  The program’s success has placed the CFC in the forefront of American philanthropy.

But the Internet, proliferating systems of electronic payment, and other technologies are leading many to question the future value of the CFC.

As we wrote in the inaugural post, we believe in the CFC.  We believe in its almost magical ability to allow individuals of even modest means to become what we call payroll philanthropists.

We believe, moreover, that philanthropy has a special power when it is combined with community.  At a time when technology dismantles institutions, the workplace remains one of those places where we come together and share purpose. The CFC is embedded in the workplace and allows employees to act as donors in the context of their community.

To observe the obvious, digital technologies are here to stay, and the CFC will have to adapt.  We suggest, however, that we do more than adjust.  Let us rather embrace these technologies as a new way for the CFC to engage employees and allow them, as donors, to discover and support America’s extraordinary charities, large and small.

Related links
U.S. Office of Personnel Management (OPM)
Combined Federal Campaign
History of Charitable Fundraising Within the Federal Service

Welcome to the Payroll Philanthropy blog, where we believe workplace giving is a great idea. We also believe that the implementation of this idea, like an aging machine, has become a bit rusty over the decades, and now it doesn’t run as well as it should. We want to change that.

We call this blog Payroll Philanthropy because that’s how we think of workplace giving. The payroll deduction, through which most workplace donations are made, allows even people with modest resources to become philanthropists. These payroll philanthropists are stunningly generous, and people who earn less often give proportionately more.

This blog is sponsored by the Workplace Giving Alliance, a group of federations that participate in the U.S. government’s Combined Federal Campaign and other public sector workplace fund drives. If you don’t know what a federation does in the CFC, you’re not alone. And one of the things we’ll be doing here is helping people understand how the CFC operates and, in the process, explaining the role of federations. We’ll also explain PCFOs and LFCCs and other alphabet-soup entities that are vital parts of the CFC machinery.

But mostly we’ll focus on donors, because the CFC is really their campaign. That’s not just a nice sentiment. Donors actually pay for CFC operations. Campaign operations are funded out of donations to the campaign. That’s a fact we will keep firmly in mind in all our discussions.

We want to see a CFC that honors the generous intentions of payroll philanthropists. That means getting every possible dollar to its intended goal – a designated charity. CFC operations are vast and complicated, with lots of “middle men” and many opportunities for inefficiency. (Even so, it’s a good deal for charities, which say it’s a lower-cost way to raise money than any other means available to them.)

We want more people to understand how the CFC works, in all its counter-intuitive complexity. We believe this is the first step toward transparency, which will lead to greater efficiency and to more donor dollars reaching charities. So a large part of our effort here will be aimed at explaining CFC machinery.

In addition, we have collected information about donor choices in the CFC. Until now, nationwide data on CFC pledging has been available only via the government’s form 1417, on which local CFC administrators report their aggregate results to the national CFC office. The 1417s do not break down results for individual charities. Our report, A Million Donors Choose, presents this individual charity information for the first time. An interim report is available now, with an update due in December. In this blog, we’ll periodically look in detail at various aspects of the report.

If you’re interested in the CFC, or in workplace giving in general, we hope you’ll visit us often, maybe even subscribe. We’ll have something new a couple of times a week. And do let us know what you think. Those who care about workplace giving may constitute a fairly small universe, but we can be pretty passionate about it. Let’s have a conversation.