Many charities are looking for ways to increase their levels of funding. One way to do this is to participate in the Combined Federal Campaign (the “CFC” or the “Campaign”). Participation means that a charity can tap into the Federal government's workforce for contributions....
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The Campaign is the annual fund-raising drive conducted by Federal employees. In 2003, Federal employees and military personnel raised $237 million through the Campaign. The CFC is essentially a public-sector version of the United Way. It has been in existence for about forty years.
The CFC is the only authorized solicitation of employees in the Federal workplace on behalf of charitable organizations (except for certain emergency/disaster relief campaigns responding to specific events). The Campaign operates at both the national and local level, with the Director of the Office of Personal and Management (or his designee) overseeing the overall campaign, and Local Federal Coordinating Committees (LFCC) conducting the Campaign in local communities. Charitable organizations must apply to participate in the Campaign, with charities given the option of applying at the national or local level.
A campaign may be conducted during a 6 week period, as determined by the LFCC, from September 1 through December 15 at every Federal agency in the campaign community in accordance regulations under Title 5, Chapter 950 of the Federal Code of Regulations. Current Federal civilian and active duty military employees may be solicited for contributions using payroll deduction, checks, money orders or cash. Contractor personnel, credit union employees and other persons employed on Federal premises, as well as retired Federal employees, may make single contributions to the CFC through check or money order. These non-Federal employees may not be solicited, but are to be provided the opportunity to participate in the CFC.
Charities can participate individually in the Campaign or through federations of charities. A federation is a group of otherwise eligible organizations created to supply common fundraising, administrative, and management services to its constituent members. The procedures for forming a federation and applying are set out in the regulations. In the long-run, charities participating in a federation will avoid paperwork.
Charities or federations are required to submit annual applications to participate in the Campaign. Before a charity can participate at the national level in the Federal campaign, it must satisfy each of the following requirements, among others:
(a) Be a Section 501(c)(3) organization
(b) Have provided or conducted real services, benefits, assistance, or program activities, in 15 or more different states or a foreign country over the 3 year period immediately preceding the start of the Campaign year
(c) Have no expenses connected with lobbying and attempts to influence voting or legislation at the local, State, or Federal level or alternatively, that those expenses would classify the organization as a tax exempt organization under Section 501(h) of the Internal Revenue Code
(d) Be is a human health and welfare organization providing services, benefits, or assistance to, or conducting activities affecting, human health and welfare.
(e) Account for its funds in accordance with generally accepted accounting principles and undergo an annual audit of the organization's operations by an independent certified public accountant in accordance with generally accepted auditing standards. Such audit must show expenses by function.
(f) Provide a completed copy of the organization's IRS Form 990, including signature, with the application regardless of whether or not the IRS requires the organization to file this form.
(g) Provide a computation of the organization's percentage of total support and revenue spent on administrative and fundraising.
(h) If an organization's administrative and fundraising expenses exceed 25 percent of its total support and revenue, it must certify that its actual expenses for administration and fundraising are reasonable under all the circumstances presented.
(i) Be directed by an active and responsible governing body whose members have no material conflict of interest and, a majority of which serve without compensation.
(j) Prohibit the sale or lease of its CFC contributor lists.
(k) Makes available to the public upon request an annual report that includes a full description of the organization's activities and supporting services and identifies its directors and chief administrative personnel.
As an alternative to satisfying the national eligibility standards, an organization can seek eligibility to participate in a local LFCC campaign by submitting an application to the appropriate LFCC. The eligibility requirements are similar to ones for participation at the national level, but are relaxed with respect to audits, the size, and the history of the organization. Specifically, applicants at the local level are not required to have provided services or benefits in 15 states or a foreign country over the prior 3 years, and local applicants with annual revenue less than $100,000 are not required to be audited in accordance with generally accepted auditing standards and, hence, are not required to submit an audit report.
OBSERVATIONS: Everyone is always looking for ways to improve governance and the effectiveness of charitable organizations. The eligibility requirements for participation in the Campaign provide another set of requirements that regulators can use for a model. What we find somewhat troublesome is the repeated calls for new laws to improve governance. While the Campaign eligibility requirements are voluntary in the sense that a charity is not required to participate in the Campaign, thousands of charitable organizations do participate in the Campaign, and consequently, must comply with the requirements. At some point, don’t the tax rules, state regulatory registration, reporting and regulatory schemes, financial accounting rules, GAO audit guidelines, and any number of regulations become duplicative? In other words, do we need more legislation? In any event, if you have a new organization, you should consider tapping into this source for potential funding.
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THE FOREGOING IS NOT AND SHOULD NOT BE TAKEN AS LEGAL ADVICE. IF LEGAL ADVICE IS REQUIRED, THE NON-PROFIT OR OTHER PARTY IN QUESTION SHOULD SEEK THE ADVICE OF QUALIFIED LEGAL COUNSEL.
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