Nonprofit Groups Seek Congress's Help in Opposing Change to the Federal Charity Drive

Some nonprofit coalitions that raise money in the federal government's annual charity drive are urging Congress to force a federal agency to back away from two controversial actions.

The coalitions said in a letter to lawmakers they worry that changes by the U.S. Office of Personnel Management weakens the integrity of the Combined Federal Campaign in the eyes of federal donors and might eventually cause them to reduce their contributions.

The government drive is important to many charities: More than $268-million was donated to charities nationwide through the 2005 drive, the most recent year for which figures are available.

At issue is a decision by the Office of Personnel Management to drop its requirement that charities must spend no more than 25 percent of their total revenue on administrative and fund-raising expenses to qualify for the Combined Federal Campaign.

The agency has said the move stemmed in part from concerns about lawsuits filed in the past over the requirement and from the overall administrative burden on government staff members who determined if organizations met it.

The government noted that a "significant majority" of comments it had received on the issue of overhead expenses had opposed the idea of eliminating the requirement, which covers charities applying for the fall 2007 campaign.

Also at issue is a December announcement by the Office of Personnel Management that it would, by March 30, assign to participating charities "new, unique" code numbers that are used by federal donors to make their pledges to specific organizations.

The agency said the change is needed to help the government promote future "electronic-giving technology" and to eventually make it easier for federal donors to contribute to local charities across the country, not in just the region where they work.

Thomas G. Bognanno, president of Community Health Charities of America, a federation whose national and local members raised $29.2-million in the 2005 Combined Federal Campaign, said in a letter to key members of the House of Representatives that the steps taken by the Office of Personnel Management "will severely hurt" nonprofit groups.

Even though contributions to the campaign have been increasing each year, the percentage of federal workers who give each year is slipping, he said. "Participation in the CFC has been eroding," he said. "I fear OPM's actions will accelerate this disturbing trend."

Adding to the frustration, Mr. Bognanno said, "is the fact that OPM has not worked collaboratively with these federations even though the charities they represent are long-time participants in the CFC."

Mr. Bognanno addressed his letter to U.S. Reps. Henry A. Waxman, the California Democrat who chairs the House Committee on Oversight and Government Reform, and Thomas M. Davis III, of Virgina, the senior-ranking Republican on the committee.

Mr. Bognanno said his letter had been approved by other major nonprofit coalitions — including America's Charities, Earth Share, and Global Impact — and that he has been meeting with Congressional staff members about the issues.

Mr. Bognanno asked the Office of Personnel Management in December to meet with his federation and others to discuss the changes.

Linda M. Springer, director of the Office of Personnel Management, said in a letter to Mr. Bognanno last week that she appreciated his interest meeting to discuss both matters. But she made clear a meeting was not needed. Making any changes, she said, "would be disruptive to the CFC and would affect the integrity of the CFC."

Overhead Costs

Mr. Bognanno told members of Congress in his letter that the government's decision to eliminate the 25-percent requirement on overhead expenses will cause "accountability" to suffer.

The requirement has been a "distinguishing feature" of the Combined Federal Campaign for many years and "gives federal donors confidence that their gifts will be used for services, not overhead," said Mr. Bognanno.

"Removing this important measure of accountability weakens the program's integrity and will likely reduce overall donations, as well as the number of federal employees who give."

He added: "It will also bring into the program thousands of additional charities that are currently ineligible because they do not meet basic requirements that ensure donations go to services."

After filing a request with the government under the Freedom of Information Act, Mr. Bognanno obtained a 59-page summary of the comments the federal agency had received on the issue last year in response to a draft of the rules. The government did not identify the organizations that submitted the comments.

"All of us want to know from OPM: Why did you do this in the first place? And why won't you talk to the federations of charities about it, when most of them are opposed to it?" said Mr. Bognanno in an interview. "We like this fund-raising standard because most of us are in the business of building relationships with donors and it is comforting for the donor to know that we're OK to give to," he said. "Unless the government intends to compensate charities for any potential loss of donations, or unless it wants to get into the business of doing what charities do in this country, then perhaps it should be more sensitive to what the world of philanthropy is saying."

Mr. Bognanno said Congress might need to pass legislation to roll back the change as a last resort.

The lawmakers contacted by Mr. Bognanno have not said whether they will take action.

In her letter to Mr. Bognanno last week, Ms. Springer of the Office of Personnel Management said that her agency wasn't going to change its ruling on the overhead rates.

"Any changes to the administrative and fund-raising-rate regulation at this juncture would be highly disruptive to the application process, would require a new rule-making process, and will not be considered," she said.

Mr. Bognanno suggested the government consider adopting the standards of the Better Business Bureau's Wise Giving Alliance, including one that requires that charities spend no more than 35 percent of contributions on fund raising.

He said his federation has always been supportive of the government's handling of the Combined Federal Campaign. He added with a laugh: "You have got to go pretty far to get charities angry when you have taken away a standard as opposed to imposing one."

Identifying Charities

Mr. Bognanno said that his federation and others understand the need for the government to modernize its operation of the Combined Federal Campaign, and that such a change necessitates altering its approach to assigning code numbers to charities.

But, in his letter to the Congressmen, Mr. Bognanno said that changing the codes in the way the government intends "creates donor confusion and leads to reduced donations."

Mr. Bognanno said that his organization and the other charity federations have sought to work with the Office of Personnel Management to seek a compromise in the way the coding would be changed.

In her letter to Mr. Bognanno, Ms. Springer of the Office of Personnel Management said that the government had carefully considered "a variety of coding options" and decided to assign new code numbers randomly in a way "that treats all participating charities equally and minimizes confusion."

"While there may be donors that do identify national/international charities by the codes used in prior years' CFCs, OPM found no specific evidence that donors focus on a charity's code in selecting the charity to which they will make a contribution," wrote Ms. Springer.

Mr. Bognanno told the Congressmen that in 2004 the government changed the codes for 112 charities participating in the Combined Federal Campaign of the National Capital Area and that overall contributions from federal workers to those charities dropped by almost 25 percent.

Donors to the Combined Federal Campaign "use these codes year after year when making contributions," said Mr. Bognanno. "Workplace campaigns in the private sector also use these codes."

What's more, Mr. Bognanno said, the government's announcement that it will assign new code numbers comes too late in the season because many organizations have already produced marketing materials for the fall 2007 campaign using the current code numbers.

"There is no time to react," he said.

In her letter to Mr. Bognanno, Ms. Springer said that the government's timing of the changes in code numbers "allows adequate time, in advance of the CFC commencing September 1, 2007, for changes in marketing materials for national, international, and local charities and federations."

Mr. Bognanno said he hopes members of Congress will persuade the Office of Personnel Management to postpone the coding changes for a year and to work with his and other organizations on a compromise.

"Give us time and let us work with you is all we ask of OPM," he said.

Checking Out Charities

Mr. Bognanno was also critical of the Office of Personnel Management for its recent statement that the government is putting more responsibility on donors to perform research about charities and to turn to watchdog groups for help in choosing organizations to support.

"They are just saying 'buyer beware,'" said Mr. Bognanno. "But not every federal employee is in an office in Washington, D.C.," with access to outside advice, he said. "Some are in the military, some are deployed overseas. The government is saying to that employee, Do your own research, take the time to look up on a Web site to see if this is a legitimate charity you want to give to. But why would you do that to a federal employee? Why not just have a standard?"