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CFC spending ‘extremely disturbing,' IG says

Apr. 2, 2012 - 05:28PM   |  
By STEPHEN LOSEY   |   Comments

An audit that uncovered nearly $1.1 million in questionable expenses by the Washington-area Combined Federal Campaign has shaken federal employees' faith in the government's charity drive and prompted a crackdown on spending.

The Office of Personnel Management's inspector general last week released an audit that demanded Global Impact, which runs the National Capital Area CFC, repay $308,820 of the challenged food, entertainment and travel expenses to the account used to distribute money to charities. Global Impact did, but the company's president, Renee Acosta, defended most of the expenditures in an interview on Tuesday with Federal Times and said she plans to appeal to recoup most of that money.

The National Capital Area CFC is the largest in the nation, and last year it collected more than $64 million in pledges from federal employees and military service members.

Another OPM inspector general report, dated Feb. 14, criticized the United Way of Ventura County's management of the California Gold Coast CFC, the fourth-largest campaign in California. That report questioned $114,161, including $92,940 that was not distributed because United Way of Ventura County did not properly allocate or account for those funds during the 2009 campaign.

The report said a full month of CFC deposits was inadvertently left off the United Way of Ventura County's spreadsheet and was not disbursed, which contributed to the $92,940.

The IG said the United Way of Ventura County and the Local Federal Coordinating Committee that helped run the Gold Coast CFC did not cooperate with the investigation. The IG said it never received any response to the audit from the United Way of Ventura County.

The IG recommended sanctioning the United Way of Ventura County and banning it from participating in the CFC in the future. On March 12, OPM Director John Berry sent the United Way of Ventura County President David Smith a letter banning his organization from participating in the next CFC. Berry said the United Way of Ventura County's lack of cooperation with the OIG was a major reason it was debarred.

Smith on April 2 disputed the IG's claim that the United Way of Ventura County did not respond to the audit. He said his organization met with the Local Federal Coordinating Committee and the organization currently running the Gold Coast CFC on Nov. 8 to discuss the findings of the audit and set up a plan to fix those problems.

Smith said the United Way of Ventura County disbursed the $92,940 to charities after the audit identified the problem.

Smith also said the United Way of Ventura County cooperated with IG auditors when they spent about 10 days going through its records.

"We have no interest in not responding to the terms of the audit," Smith said. "We cooperated to the fullest extent."

The United Way of Ventura County responded to Berry's letter March 27, outlining steps it has taken to address the problems identified in the audit. But Smith said his organization will not appeal Berry's decision to bar the United Way of Ventura County from participating in the CFC.

The United Way of Ventura County ran its last Gold Coast CFC in 2010. The organization received less than $5,000 that year out of about $900,000 raised, Smith said. The organization felt it wasn't worth the effort to run the CFC and decided to cut its ties to the campaign.

"We are basically out of the CFC business, and have been since 2010," Smith said. "We didn't feel the value was there."

OPM responds

Responding to the latest IG report, Berry told CFC heads in a Wednesday memo that they have never been allowed to use donated funds for entertainment such as tickets to shows, sporting events or concerts and he banned all meal expenses. Previously, OPM had allowed expenses for meals served in conjunction with official campaign events, such as kickoff rallies, victory celebrations or awards ceremonies, but not for working lunches or other meals "served as a convenience."

"Effective immediately, [Local Federal Coordinating Committees, or LFCCs] are instructed not to approve, and [Principal Combined Fund Organizations, or PCFOs] are directed not to incur any expenses for food, beverages or entertainment, and no such expenses are to be charged against the proceeds of the campaign," Berry wrote.

The largest single expense questioned by the OPM IG in the case of the Washington-area campaign was an $11,315 night out at a Washington Nationals baseball game in 2007. As a kickoff for the 2007 CFC campaign, Global Impact brought more than 600 campaign managers, agency executives on loan to CFC, charity workers and their friends to the game, at which retired Adm. Thad Allen, former Coast Guard commandant and CFC's honorary chairman, threw out the first pitch.

For that, OPM gave the Washington-area CFC an Innovator Award, and cited the Nationals game as an example of its creative strategy.

Acosta said OPM is sending mixed messages by demanding repayment for that event almost five years after lauding it.

"We believed we were following the rules," Acosta said.

OPM said an awards committee of regional campaign executives made the award decision and that OPM did not know that charity funds paid for the baseball game until the IG's audit.

The IG report also questioned $1,500 the charity spent to hire Howard University's jazz band to play at a 2007 leadership conference, and $1,159 for a nighttime tour of Washington for loaned executives, who are federal employees who spend part of their time raising charity money.

Nearly a third of the money OPM demanded be repaid or $102,503 over three years went to buy meals for loaned executives and National Capital Area CFC staff during routine CFC business. Global Impact told the auditor that the meals were appropriate because the staff would get more done by working while they ate.

The IG's office strongly disagreed.

"The OIG finds this approach to the administration of a campaign extremely disturbing and suspects that most donors would as well," the report said.

Acosta called the criticism "second guessing," and said that Global Impact kept the cost of the meals under the government's own per diem limits.

Global Impact won't challenge some $5,000 in expenses it agreed were inappropriate, such as $680 spent on chair massages in 2007 and 2008. But it is disputing much of the $308,820 it repaid.

Acosta said Global Impact stands by its management of the Washington-area CFC, and said that auditors are improperly criticizing legitimate expenses.

The report also said Global Impact spent more than $764,000 on training and conferences, design and marketing services, luncheons and software that could have been put to better use, although auditors did not demand those funds be repaid.

Employees react

Even though the audit focused only on the Washington-area charity, the controversy is echoing across the country.

One Atlanta federal employee named Brian, who asked that his last name and agency not be printed because he was not authorized to speak to the media, said he is considering not donating to the CFC for the first time in his nearly 12-year federal career. He fears other campaigns may similarly be misusing donated funds.

"When there's one rotten apple in the barrel, there tends to be 10 more," Brian said. "I want to see a nationwide investigation on how much of that is going on. It's highly unlikely that happened in only one place. Maybe I'm just too cynical, but that's my thought."

Brian said he has been a "generous donor" to the CFC each year, and gives to the Society for the Prevention of Cruelty to Animals, as well as local AIDS and meals-on-wheels charities. But this year, Brian is considering skipping the CFC and cutting those charities a check directly, even though it's easier to have the CFC deduct a small amount from each paycheck.

"Why would I give them money to entertain themselves?" Brian said. "This is charitable giving. This is not for their comfort or amusement. The idea that they are going to baseball games and taking tours around D.C. is outrageous."

Leslie Henderson, an information technology specialist for the Veterans Affairs Department in Austin, Texas, said the report confirms his suspicions about poor money management in the CFC. Henderson said he grew dissatisfied in recent years with the lack of transparency in the CFC, and worried that too much donated money was going to run the campaign instead of actually funding charities. So in recent years he stopped donating to the CFC and began giving directly to charities such as the American Red Cross and the American Heart Association.

"I've been concerned about this for a while," Henderson said. "Tickets for 600 people? That's not legitimate in my mind. Meals are not legitimate in my mind. I'm concerned that it's endemic."

But at least one Federal Times reader found the controversial expenses underwhelming.

"$11,315 for 600 [at the baseball game] is less than $20 a person," said one commenter who identified himself as Steve Chaw. "I'm not a fan of the CFC in general, but this is hardly earth-shattering."

Investigation continues

OPM has not fired Global Impact for the questionable expenses. But in a statement on Tuesday, Berry said Global Impact must continue cooperating with the OIG's audit and must put additional controls and policies in place as a condition of continuing to serve as the campaign's manager.

For example, Global Impact will be required to submit future expenses for additional reviews to make sure they are actual expenses not estimated or accrued and are for proper CFC purposes and not for meals or entertainment.

Berry also said OPM will set up a new task force, headed by the watchdog group Charity Navigator, to review Global Impact's expenditures.

"As the federal agency responsible for overseeing the CFC across the nation and around the world, OPM is committed to ensuring that charitable contributions made by federal employees and service members are properly administered, with the maximum amount reaching charities," Berry said. "Any failure to abide by OPM regulations regarding the handling of charitable contributions is unacceptable."

But not all campaigns are troubled. Another audit conducted by the OIG, dated Jan. 6, found no problems with the Community Shares of Mid Ohio CFC.

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