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Earlier this month, OPM issued a regulation that I believe will build on the more than 50-year success of the Combined Federal Campaign. It will revitalize the program to make it even better, both for the charities that participate and for our Federal employees.
I understand that change can be difficult, especially when changes are made to a system that has been in place for a long time. But, I believe that the improvements we announced on April 11, 2014 will strengthen and invigorate this vital program for the next half century. The rule was the product of a process that we can be proud of: a bipartisan commission, headed by one Republican and one Democrat.
Federal employees asked for change to the CFC system. They wanted lower overhead costs. They wanted more of their money to go directly to the charities they support.
Let me give you a hypothetical example of how the CFC operates currently: A DC-area Federal employee donates $1 to a medical research charity. But this $1 first goes to the CFC of the National Capital Area, operated by a nonprofit group selected by local employees to administer the campaign. The National Capital Area CFC takes 9 cents on the dollar to cover its costs to promote the giving campaign and to process contributions. So, the research charity now is receiving 91 cents. Then, because the charity belongs to one of the many federations in the CFC, another deduction -- as much as 25 cents on the dollar -- goes to the federation to cover its administrative costs. (It’s not clear how large a share goes to the federations, which do not always disclose that information.) That leaves the charity with as little as 66 cents of the employee’s original dollar.
Under the rule change, closer to 99 cents will make it to the medical research charity. That’s because the charity will pay only a set fee to OPM’s CFC program to cover the expense of participating in the campaign. These are estimates from our CFC program office, which has spent countless hours analyzing the potential effects of the rule.
Charities receive hundreds of millions of dollars each year by participating in the campaign. The rule change will ensure that Federal employees are able to maximize their contributions and know that the greatest possible share is helping people. It will facilitate transparency and improve accountability. It will make it easier to donate and quicker for charities to acknowledge contributions, and it will offer greater options for giving. Also, both donors and charities will benefit from a central website that will be a robust online presence making it easy to search for and donate to preferred organizations.
The current system limits small local charities both geographically and technologically. They can receive CFC funds only from Federal employees in the area where they are located. With the changes, they will have access to potential donors nationally and from Federal givers around the globe.
OPM recently released CFC results for 2013. What these numbers show is a continued decline in donations, from $258 million in 2012 to $210 million. It is clear that change is needed in order to sustain, modernize and improve the program. I believe that these reforms offer that opportunity.
Some charities have argued that the new application fees may disproportionately affect smaller charities and make it more difficult for them to participate in the Federal giving campaign. But, 20 percent of charities that are listed currently receive no donations, yet they still incur the administrative costs associated with being listed. I believe that the charities that do value participation in the CFC will be willing to pay the fee in order to have access to our generous Federal workforce. As I have personally told many of the charities expressing concern, I am open to discussing the fee structure.
Another purpose of this reform is to better use technology to lower costs and free campaign workers from paperwork so they can focus on making the CFC campaign thrive and connect Federal employees to charities locally, nationally and internationally. Electronic pledging and donation procedures will do just that.
Most Federal donors pay for their CFC pledges through payroll deductions, not by cash or check. Less than 10 percent of donations were made with cash in 2012. Most cash and check donations came from agency bake sales, book sales and other events held to generate interest in the campaign. Federal agencies put a lot of effort into organizing events, yet the undesignated cash that result from them makes up a very small percentage -- 2 to 3 percent -- of CFC funds raised. Checks will still be accepted and so will debit card payments. They will just be processed electronically.
With pledges made solely online, campaign workers will no longer manually re-enter the information from pledge forms. Time will be saved. Errors will also be reduced with a seamless digital process. Money will be saved by eliminating paper pledge forms, which currently account for more than 9 percent of total CFC costs. Eliminating the cost of processing paper in the CFC supports “green” initiatives and achieves the Administration’s goal of cutting down on waste.
We remain fully committed to working closely with charities and key stakeholders as we implement the final rule. I want to thank the dedicated Federal employees who, year in and year out, contribute to this program worldwide. And I also want to thank the volunteers who each year make the CFC campaign a success. The CFC is the Federal employees’ workplace-giving program, run by and for Feds. This new rule will ensure its success for years to come.
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