Human Resources and Security Specialists should use this tool to determine the correct investigation level for any covered position within the U.S. Federal Government.
Visit this federal site to search for our regulatory notices, proposed and final rules.
See the latest tweets on our Twitter feed, like our Facebook pages, watch our YouTube videos, and page through our Flickr photos.
The content available is no longer being updated and as a result you may encounter hyperlinks which no longer function. You should also bear in mind that this content may contain text and references which are no longer applicable as a result of changes in law, regulation and/or administration.
This memo clarifies eligibility requirements for participation in the 2005 Local Combined Federal Campaign (CFC). Information contained in this document clarifies and reiterates guidance previously issued in CFC Memoranda 2000-7, 2000-10, 2001-2, 2002-10, 2002-13 and 2003-9.
Please note that guidance regarding the requirements for compliance with the CFC's anti-terrorism certification is not part of this guidance. Anti-terrorism certification guidance will be issued separately.
CFC regulation 5 CFR 950.401(j) states that each national or local organization must individually meet all of the eligibility criteria and submit independent documentation. Organizations that submit their parent organization's information in lieu of their own documentation, including the IRS determination letter, IRS Form 990, audited financial statements, or annual report, may be denied participation.
Federation members must submit complete CFC applications to the federation. OPM encourages LFCCs to conduct random sampling of federation members. Federations that certify that a member organization meets the CFC eligibility criteria but are unable to provide the LFCC with a complete application upon request may be sanctioned. OPM strongly recommends that local federations send copies of all new members' applications to their LFCCs, whether or not requested pursuant to 5 CFR 950.304(b).
These regulations also require that federations, PCFO's and other participants in the CFC must retain documents pertinent to the campaign for at least three completed campaign years. Documents requested by OPM must be made available within 10 business days of the request.
CFC regulation 5 CFR 950.204(b)(1)(i) defines substantial local presence as a staffed facility, office or portion of a residence dedicated exclusively to that organization, available to members of the public seeking its services or benefits. It is the responsibility of the applicant, whether it is an unaffiliated organization or a federation, to submit complete and accurate information to the LFCC. This includes the provision of a physical street address, hours of operation, and the organization's dedicated phone number.
Applicants demonstrating eligibility as a local service organization in an adjacent campaign area must include information documenting their substantial presence. This includes a physical street address, hours of operation and a local dedicated phone number. The acceptance of an organization in a local campaign does not automatically qualify it for listing in all adjacent campaigns. The organization must submit complete applications to all adjacent campaigns, including documentation of its substantial local presence in the adjacent campaign area.
It is also the responsibility of the applicant, whether it is an unaffiliated organization or a federation, to submit complete and accurate information to the LFCC. This includes clearly and accurately certifying and labeling evidence of grounds for local eligibility. For example, it is not acceptable to submit an application marked "Local Presence" for an organization that is actually applying as having presence in an adjacent campaign or as a statewide organization.
CFC regulation 5 CFR 950.204(b)(1)(ii) requires an organization certifying statewide presence to demonstrate that it provided or conducted real services, benefits, assistance, or program activities that covered 30% of a state's geographic boundaries or affected either 30% of the targeted population in the state. Attachment A's used to meet this requirement often lack a description of the actual services, fail to define the target population, fail to show the geographic area where actual services have been provided or fail to fully demonstrate that the population served or the geographic area equals 30% or more of the target population or geographic area. Total population statistics by county or claims that services are available to individuals in these counties are generally not adequate evidence of service.
In the case of the 30% geographic area test, applicant organizations must provide service records or other evidence (i.e. visitor statistics, client or membership statistics, project results or clearly outlined maps) that clearly show what portion of the geographic area has been covered relative to the total state geographic area.
In the case of the 30% population test, if an organization services special populations (i.e. persons with HIV or AIDS, adults requiring literacy instruction, non-English speaking children, etc.) the organization should provide evidence that it affects 30% of the eligible or target population. This can be shown by providing an estimate (through population surveys, needs assessment studies, etc.) of the total target population eligible to receive the services together with a demonstration that its services affect 30% of that target population. It is helpful if the applicant demonstrates that it has met the 30% rule by providing a calculation along with its Attachment A, such as:
Whichever eligibility criteria the applicant organization chooses, LFCC's should keep in mind that the burden of proving the criteria is on the applicant organization.
OPM will exercise discretion in ascertaining whether a standardized format or checklist used to indicate real services, benefits, assistance or program activities contains sufficient descriptive detail to enable a judgment that the applicant has sufficiently demonstrated its provision of real services.
Providing listings of affiliated support groups and members or a breakdown of attendees at an annual conference, in itself, is not a sufficient demonstration of real services, benefits, assistance or program activities required for statewide presence. Also, providing the location of residence of organization members, alone, does not meet the eligibility criteria.
Organizations that apply for statewide presence are not required to demonstrate local presence within the geographic area or provide services affecting the population within the applicable geographic boundaries of the CFC to which it is applying.
Listing the names and addresses of an organization's members or visitors to a facility does not satisfy local, adjacent, or statewide eligibility criteria. Each applicant must make a clear showing of the actual services, benefits, assistance, or program activities provided in each state or foreign country.
Statewide organizations that issue student scholarships or sponsor fellowships/mentorships must indicate the location where the recipients reside, not the location of the school or mentor.
The dissemination of information and publications, alone, does not meet the CFC eligibility criteria.
CFC applicant organizations which rely substantially on web-based services must comply with the local eligibility and public accountability standards at 5 CFR 950.204.
Acceptable supporting documentation shall consist of:
Reports that only reflect the number of hits to a website are not acceptable evidence of real services on Attachment A.
Back to Top
Every CFC applicant must certify that it is recognized by the Internal Revenue Service (IRS) as tax-exempt under 26 U.S.C. 501(c)(3) and to which contributions are tax-deductible pursuant to 26 U.S.C. 170. A copy of the letter from the IRS granting 501(c)(3) tax-exempt status must be included with the application. A local organization that is covered by a central parent organization's tax-exemption must submit an IRS group exemption letter that specifies that all affiliated subordinate organizations under its control are also considered tax-exempt under 26 U.S.C. 501(c)(3). Submission of an IRS letter for the parent organization that is not a group exemption letter is not acceptable and will result in a denial of the local subordinate organization. It is not acceptable to submit a letter from the parent organization stating that its subordinates or affiliates are included in or covered by the IRS exemption. This type of evidence is not considered independent evidence of the IRS's group exemption determination.
Accrual Based Accounting Required For Local Applicants with Total Revenues of $100,000 or More Organizations with revenues of $100,000 or more seeking CFC eligibility are required to account for their funds in accordance with Generally Accepted Accounting Principles (GAAP), which requires an accrual based accounting system. Both the IRS Form 990 and the audited financial statements must be prepared using the accrual method. CFC eligibility will be denied for organizations using any method of accounting other than the accrual basis, including the cash basis, modified cash basis, and modified accrual basis of accounting.
However, local applicants with total revenues less than $100,000 (as reported on line 12 of the IRS Form 990) are not required to provide an audited financial statement with their CFC application. As a result, many prepare their financial disclosure documents on a cash or modified cash basis, which is acceptable. If line 12 on the first page of the IRS Form 990 shows an amount less than $100,000, Box J may be checked to indicate that the Form was prepared using a cash basis or other method. Some applicants may provide an audit even though revenues are less than $100,000. In these cases, the audit is not a requirement and can be viewed as an immaterial part of the application.
Combined and consolidated audits are not accepted unless the applicant's financial information is reflected in a separate audited combining or consolidating schedule that breaks out the information for the applicant.
Local organizations with total revenues of $100,000 or more (as reported on line 12 of the IRS Form 990) applying for CFC participation must submit an annual audit of fiscal operations as described at 5 CFR 950.203(a)(2). The audit must cover the same fiscal period as the IRS Form 990. Reconciliation statements that purport to reconcile a cash-based IRS Form 990 with an accrual-based audited financial statement will not be accepted because both must be prepared using the accrual method.
If revenue and expenses on the audit and the IRS Form 990 differ, these amounts must be reconciled either on the IRS Form 990, Parts IV-A and IV-B, or in an accompanying signed statement by the certified public accountant who completed the audit. If the CPA who completed the audit is not available, it is acceptable to use another CPA within the same firm to provide the reconciliation and signed statement.
Organizations have asked whether a certified public accountant (CPA) must perform the reconciliation if it is not completed in the IRS Form 990, or whether a financial manager within their organization can perform the reconciliation. The reconciliation must be performed in an accompanying signed statement by the CPA who completed the audit if:
The only instance when an organization's management may provide a clarification is if Line 12 or Line 17 of Part I, or Line a of Parts IV-A and/or IV-B do not equal the revenues or expenses in the audited financial statements because certain categories of revenues or expenses on the audited financial statements have to be added together to equal the totals in the IRS Form 990.
We understand that certain categories of revenues and expenses on the audited financial statements may have to be added together to equal the total revenues and expenses that are listed on the IRS Form 990, either on Lines 12 and 17 of Part I or on Line a of Part IV-A and IV-B. For example, categories of revenues and expenses such as unrestricted, restricted or changes in temporarily restricted net assets may have to be added together to equal the amounts in the IRS Form 990. If this is the case, an appropriate management representative (e.g. officer, director, trustee or chief financial officer) may provide an explanation of the calculation and categories that were used in arriving at the totals on the IRS Form 990. This explanation should accompany the financial documents in the application as it is originally filed with the LFCC.
Except for smaller organizations that file the IRS Form 990EZ, organizations must attach a complete IRS Form 990 as part of the CFC application as required by 5 CFR 950.203(a)(3). A complete IRS Form 990 includes all six pages, including a signature on page six in the box marked "Signature of Officer," all statements referenced in the Form, and Schedule A. Organizations filing IRS Form 990EZ may submit the 990EZ together with pages 1 and 2 of Form 990 in place of a complete Form 990.
Part V of the IRS Form 990 requires the charity to include a "List of officers, directors, trustees, and key employees (List each one even if not compensated)." An organization's IRS Form 990 that does not include a list of the officers, Board of Directors, trustees and key employees, and their compensation, if any, is incomplete and will result in a denial.
Organizations which do not reflect administrative and fundraising expenses on the IRS Form 990 but show such expenses on the audited financial statement will be denied unless the audited financial statements specifically state that these services were donated.
The CFC regulations at 5 CFR 950.203(a)(4)(i) require that organizations with administrative and fundraising rates (AFR) exceeding 25% provide, as Attachment F, an explanation and formal plan to reduce these expenses below 25%. The explanation must include a full discussion of the reason(s) that the organization's AFR exceeded 25%. The formal plan for reducing the AFR must relate to the explanation and must be reasonable under the circumstances. The formal plan must demonstrate that the organization has established a clear objective(s) as to how to reduce the AFR, and has taken steps to implement the objective. The plan should include the time frame during which it is anticipated that an AFR below 25% will be obtained.
The LFCC and OPM will consider the degree to which the AFR exceeds 25% in determining whether the plan is reasonable under the circumstances. For organizations that have participated in the CFC in prior years, the LFCC and OPM will additionally consider the organization's AFR during prior campaign years as a factor in determining whether the formal plan is reasonable under the circumstances.
CFC regulation 5 CFR 950.203(a)(5) requires an organization seeking CFC eligibility to certify that it is directed by an active and responsible governing body whose members have no material conflict of interest and a majority of which serve without compensation. The regulation does not distinguish between compensation as a staff member where that staff member additionally serves on the Board, and compensation as a Board member in consideration for performing Board work. OPM interprets its CFC regulation to mean that a paid staff member who serves on the Board is a compensated member of the Board, even if the staff member is not being compensated for performing Board work.
Every applicant must provide, as part of Attachment G, its Board members' terms of office and meeting dates and locations in the previous year. Copies of the organization's bylaws are not acceptable substitutes for specific terms of office. Further, information on board members' terms of office and meeting dates and locations must represent the calendar or fiscal year immediately preceding the campaign year for which the organization is applying. This information does not have to be part of the applicant's published annual report, but must be included with the application. In prior years, OPM had requested this information in support of the certification that the organization is governed by an active and responsible board. See CFC Memorandum 2000-10. Commencing with the 2005 CFC, failure to provide Board members' terms of office as well as Meeting Dates and Locations of Board Meetings will result in a denial.
Annual reports or their substitutes (as defined in CFC regulation) must include a description of the organization's services or activities during the year covered by the report and identify the Board of Directors and chief administrative personnel. OPM will not accept annual reports that contain only a description of mission and goals or historical information about services and activities without a defined timeframe.
Each Federation is required to include, in its annual report that is made available to the public, a statement that sets forth details regarding member dues and/or service fee arrangements with its member organizations. See CFC Memorandum 2002-13.
If you have questions or comments regarding this guidance, please send them by electronic mail to: email@example.com.