Controversial CFC Regs Approved by OPM; Both Parties Protest

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April 17, 2014; Federal Times

After the reports on this year’s campaign, with donations plummeting a record 19 percent, it was only a matter of time before Congress got involved to question exactly what might be going on with the Office of Personnel Management’s oversight of the Combined Federal Campaign (CFC) and with OPM’s proposed regulations to make things better.

Last week, in a very rare demonstration of bipartisan action, especially one involving Darrell Issa (R-CA) and Elijah Cummings (D-MD), the two—along with Blake Farenthold (R-TX), Stephen Lynch (D-MA), and David Reichert (R-WA)—wrote to the Office of Management and Budget, which now has to approve the OPM rules, suggesting that parts of OPM’s proposed regulations could actually make the CFC worse. It might be hard to imagine that the CFC might get worse, or to believe that Issa and Cummings, last seen in a very public contretemps over Lois Lerner, could be brought into partnership, but that is the skill of this OPM.

“Charities and watchdog groups agree that the charity application fees may disproportionately affect smaller charities and make it more difficult for them to participate in the CFC,” the legislators wrote on April 17th. “As a result, although the rule was intended to increase donor participation, it could have the opposite effect.” A key issue regarding donor participation is the proposed requirement that all CFC donations be pledged online; about 10 percent of CFC donations in 2012, for example, were made by cash, check, or money order.

Asking for OMB oversight and intervention suggests that the legislators don’t harbor a lot of confidence in the current leadership of OPM. That hasn’t deterred OPM, which says it is proceeding with the publication of its final regulations that would purportedly “streamline campaign operations to make the program more effective and cost-efficient,” in the press release words of OPM director Katherine Archuleta.

A moment of irony popped out of an Archuleta blog posting. “We understand that some groups have expressed apprehension over these changes,” she wrote. “We take these concerns seriously and remain fully committed to working closely with charities and key stakeholders as we implement the final rule.”

Some groups? Unless we’ve missed something, we have seen reams of criticism of the proposed regs from CFC experts and CFC participating charities. Even the United Way, as unlikely to rock political boats of any nonprofit, has bemoaned OPM’s new CFC regulations. Does anyone but OPM like the proposed fee structure? Does anyone but OPM like eliminating donations that aren’t made online? Does anyone like the plans for the increasing centralization of CFC campaigns? By OPM’s count, an amazing 84 percent of the comments it received on the draft regulations were in opposition, but that obviously wasn’t enough to get it to pull the regs for a major overhaul.

If you unpack this story, there are several distressing elements:

  1. Despite an overwhelmingly negative reception to the proposed regulations from the CFC stakeholders, OPM has dismissed their concerns and proposed to plunge ahead anyway. While regulation-making shouldn’t necessarily be subject to who writes the most comments on proposed regulations pro or con, OPM’s stance in this case, a blanket rejection of concerns about the most contentious provisions, is a stunning slap in the face to CFC charities. Archuleta has agreed to talk to the protesting charities, but the process to date is hardly an example of the kind of openness and receptivity to input that the Obama administration pledged to pursue at the beginning.
  2. Notwithstanding OPM press releases and other statements, the overriding impression of the regulation is not that they will generate more donations or help maintain or attract charities to participate in the CFC. They are the kind of regulations that reflect the public agency administrator’s desires for increased control, decreased complexity, and more fee payments from the participating charities to offset likely federal budget constraints. If you think donations decreased this past year, wait until you see the impact of increased centralization and decreased attention and responsibility from the regional Principal Combined Fund Organizations (PCFOs) and Local Federal Coordinating Committees (LFCCs). Undoubtedly, part of the attack on PCFOs and LFCCs is a result of the 2012 audit findings on inappropriate expenditures in the Combined Federal Campaigns of the National Capital Area (CFCNCA) for 2007 through 2010, focusing on the role of Global Impact as the PCFO. In parsing the IG report and Global Impact’s even longer response, OPM’s culpability in being asleep at the switch cannot be ignored, and won’t be corrected by shooting PCFOs as generic problems. OPM has its own problems that appear likely to persist, regulations or no.
  3. While it is a pleasant surprise that the behemoth United Way has joined its smaller competitors such as America’s Charities in questioning these regulations, due to the combined effects of the fee structure and management centralization the regulations appear likely to restrict the participation of smaller charities if they do go through. Some smaller charities may participate as members of federations, but even there the changes might adversely affect that avenue of access. The idea of the Combined Federal Campaign was to present an organized, coherent mechanism for charities to reach out to federal employees, including military personnel, for workplace donations. One would swear that the regulations reveal that OPM—perhaps reflecting the intentions of its bosses in the White House—acts much like institutional philanthropy, interested in limiting the cacophony of too many small nonprofits competing for charitable dollars. Is the administration’s real intent simply to do what much of philanthropy is doing: focus on “scale” and reduce or eliminate the purported inefficiencies of smaller organizations?

Archuleta may in fact meet with protesting CFC charities, but she hasn’t budged on the regulations to date. So the answer will likely be up to Sylvia Mathews Burwell, the director of the Office of Management and Budget, who had to deal with both sides of a CFC-like equation when, prior to joining the Obama Administration, she led the Wal-Mart Foundation. But Burwell is on her way to Health and Human Services and faces a barrage of Republican questions on the Affordable Care Act during her likely contentious confirmation hearings, making it unlikely that she is going to be devoting much time or energy to the CFC debacle. So who will pay attention to the precarious state of the Combined Federal Campaign? – Rick Cohen

  • Judith

    Thanks to Rick Cohen and NPQ for keeping up with this issue. Who else in the nonprofit world so closely follows the arcane world of the CFC?

  • Jan Masaoka

    Thank you, Rick and NPQ, for this article. Our national leadership organizations seem to be AWOL on this issue, which is a low-profile issue but has huge impact on their members and chapters. Independent Sector, American Cancer, YMCA and others should be getting out their big guns.
    It’s also a lesson about these other government and quasi-government funding programs: if we don’t create a bit of a community among the recipients, there is no community to respond to cuts.
    Jan Masaoka, California Association of Nonprofits