Skip to page navigation
U.S. flag

An official website of the United States government

Official websites use .gov
A .gov website belongs to an official government organization in the United States.

Secure .gov websites use HTTPS
A lock ( ) or https:// means you’ve safely connected to the .gov website. Share sensitive information only on official, secure websites.

One-Time Payments, CFC Audit Expense Reimbursement, and Administrative Expense Reimbursement

CFC Memorandum 2008-09

November 14, 2008


Based on results of the Agreed-Upon Procedures Reports and Office of Inspector General Audits of Combined Federal Campaigns (CFC), we have noted several accounting areas that require guidance. This memo addresses those areas. The procedures outlined in this memo should be implemented during the 2008 campaign.

One-Time Payments

CFC regulation 5 CFR §950.901(i)(3) permits campaigns to issue one-time payments to organizations that received minimal donations and provides specific procedures for these payments. The Local Federal Coordinating Committee (LFCC) must determine and authorize the amount of the gross pledges the campaign is defining as a minimal donation. For example, an LFCC may determine one-time payments will be made to any organization that received gross pledges of $500 or less. In determining which organizations received minimal donations, the Principle Combined Fund Organization (PCFO) must add designated pledges plus undesignated pledges to arrive at the amount of gross pledges. Gross pledges will be reduced for estimated pledge loss and administrative expenses of the local campaign; however, the sum of the gross pledges determines whether a donation is minimal and subject to a one-time payment. If campaigns have been using a different method for determining the minimal donation amount for one-time payments, then they must correct their determinations starting with the 2008 campaign. The LFCC must document this decision in the minutes of the meeting at which it was determined.

Estimated pledge loss is the average of the actual shrinkage percentage for the three most recently completed campaigns. For the 2008 campaign, the actual shrinkage percentages from the 2005, 2006, and 2007 campaigns will be used to calculate estimated pledge loss.

For example:

Estimated pledge loss for the 2008 campaign is calculated as follows:
Gross Pledges
(Designated plus Undesignated pledges)
200,000 300,000 350,000 850,000
Campaign Receipts 170,000 250,000 310,000 730,000
Pledge Loss 30,000 50,000 40,000 120,000

Estimated Pledge Loss (Average Shrinkage) 120,000/850,000 = 0.1412 or 14.1%

If charity X received $450 in gross pledges for 2008, the estimated pledge loss would be calculated as follows:

Estimated Pledge Loss:      $450.00 x 0.141 = $63.45

The organization's distribution is also reduced by its proportionate share of the estimated expense amount. (Please see the Administrative Expense Reimbursement section below for a definition of estimated expense amount). If charity X's proportionate share of the 2008 estimated expense amount is $25, the one-time payment is calculated as:

$450.00 - $63.45 - $25.00 = $361.55

A one-time payment distribution must be made with the first distribution for the campaign. If the campaign opts not to make one-time payments, all organizations with pledges must receive distributions in each quarterly or monthly distribution. Campaigns are not permitted to hold distributions until the amount reaches a pre-determined "minimum check" amount.

Back to Top

Accounting for Audit Expenses

CFC regulation 5 CFR §950.106(b) states, "The PCFO may only recover campaign expenses from receipts collected for that campaign year." Therefore, the expenses incurred for the audit of a campaign must be paid from funds from the campaign being audited. For example, in 2009 the fall 2007 campaign will be audited. The cost of this audit must be paid from funds for the 2007 campaign.

Because this cost is paid after the close of the campaign, the amount should be accrued and withheld from the last distribution. We encourage campaigns to negotiate a fixed cost agreement with the Independent Public Accountant (IPA) so that the actual amount can be known prior to the close of the campaign. If campaigns are unable to negotiate a fixed cost agreement, an estimated amount should be withheld based on prior experience and discussions with the auditor. Any differences between the final amount and the amount withheld should be handled in the following manner:

  1. If the cost is less than the amount withheld and the difference is less than one percent of the gross pledges for the campaign audited, the amount should be distributed with funds for the campaign currently being distributed (i.e., if the 2007 campaign was audited, the difference should be distributed in 2009 with the next distribution for the 2008 campaign).
  2. If the cost is less than the amount withheld and the difference is more than one percent of the gross pledges for the campaign audited, the audited campaign should be reopened and an additional distribution made to all organizations. The LFCC should include a note in their LFCC compliance assessment report documenting that an additional distribution was made for the previous campaign for over withheld audit fees. It should include a certification that the LFCC reviewed the distribution.
  3. If the cost is more than the amount withheld and the overage is less than one percent of the gross pledges for the campaign audited, the PCFO should provide the LFCC with an explanation for the overage and request authorization from the LFCC to use funds from the current campaign to pay the overage. The LFCC should review the current campaign's budget and determine if the amount budgeted for the future audit of the current campaign should be adjusted.
  4. If the cost is more than the amount withheld and the overage is more than one percent of the gross pledges for the campaign audited, the LFCC should meet with the PCFO and the IPA to determine the reasons for the overage. If the difference was due to issues within the PCFO's control (e.g., inability to provide the IPA with documentation required to complete the steps), the LFCC may either authorize payment from the current campaign or require the PCFO to pay the overage. In either case, the LFCC should require the PCFO to provide the LFCC with a corrective action plan to ensure that the PCFO can obtain an audit for a cost that is within its budget in future campaigns. If the overage was due to issues outside of the PCFO's control (e.g., revised audit standards required the IPA to spend more time than originally expected on the audit), the LFCC should authorize payment of the overage from the current campaign funds and review the current campaign's budget and determine if the budget for the future audit of the current campaign should be adjusted.

Back to Top

Administrative Expense Reimbursement

CFC regulation 5 CFR § 950.106(a) states, "The PCFO shall recover from the gross receipts of the campaign its expenses, approved by the LFCC, reflecting the actual costs of administering the local campaign." This approval of actual expenses by the LFCC is separate from the approval of budget expenses. The LFCC must review actual expenses, authorize full or partial reimbursement, and document this authorization in its meeting minutes.

Because actual expenses are not known until the end of the campaign, which is two years from the beginning of the campaign, LFCCs are encouraged to authorize reimbursement of an estimated expense amount from the first distribution for the campaign. This amount consists of actual expenses to-date and any estimated future expenses (e.g., awards ceremony costs). Prior to the final distribution for the campaign, the PCFO must provide the LFCC with documentation of the actual expenses for approval. The estimated expense amount charged in the first distribution will be adjusted for actual expenses with the final distribution. This adjustment may only be made to distributions for organizations receiving quarterly or monthly payments. No adjustments may be made for organizations that received one-time payments.

The following procedures must be implemented by campaigns for expense reimbursement:

  1. In March of the year following the solicitation (e.g. this would be March 2009 for the 2008 campaign), if the PCFO wishes to receive reimbursement for the estimated expenses at that time, the PCFO must present the LFCC with a detailed report of expenses to-date and estimated future expenses for the campaign solicited the previous fall. The LFCC must review these expenses and document in its meeting minutes that it is authorizing reimbursement of all or a portion of an estimated expense amount with the understanding that final, actual expenses will be reviewed and approved, as appropriate, prior to the final distribution the following February (2010 based on the example noted above). The interim approved amount is the "estimated expense amount" that the PCFO may retain from campaign receipts as an interim expense reimbursement, and is the amount that must be used to determine expenses charged to participating organizations, commencing with the first distribution, until the final adjustment is made.
  2. After reconciliation of campaign receipts and expenses in February of the following year (2010 based on the example in #1 above), the PCFO must present the LFCC with a detailed report of final actual expenses. The LFCC must review the final actual expenses and document its approval, in full or in part, in the LFCC meeting minutes. Upon approval of the final actual expenses, the PCFO must adjust the final distribution to account for the actual expenses. This will result in one of three possible actions:
    1. The PCFO will reimburse the campaign if the PCFO had been over-reimbursed in the interim distribution and the final distribution to each participating organization will be increased;
    2. The PCFO will receive an additional reimbursement if the PCFO had been under-reimbursed in the interim distribution and the final distribution to each participating organization will be decreased; or
    3. There will be no change if the interim approval amount was the same as the final actual amount.

If campaigns have any questions, please contact your OPM Regional Representative at 202/606-2564 or

Back to Top

Control Panel