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CFC application fee spurs mixed reaction

Nov. 2, 2012 - 09:09AM   |  
By SEAN REILLY   |   Comments

Charities are giving a mixed reception to a proposal that they pay an application fee to cover the Combined Federal Campaign’s overhead.

“Hopefully, it won’t be a large amount,” said Rosemary Trent, executive director and only full-time U.S. employee of Pueblo a Pueblo, a small nonprofit that provides health and education services in Guatemala and received about $5,500 from the CFC last year.

But at the American Red Cross, which got more than $5 million through pledges, one official thought the approach would reassure contributors that their pledges are being used as intended.

“I think the message to the donor of ‘more of your money going to programs,’ will have a positive impact,” said Bill Campbell, the Red Cross’ manager of workplace giving programs.

The fee recommendation comes from the CFC-50 Commission, created last year by the Office of Personnel Management to come up with ideas for overhauling the campaign a half-century after its creation. In a July report, the commission argued that many potential donors don’t give to CFC because administrative expenses are deducted from the money pledged to charities.

“This becomes an even greater issue as the administrative costs of the campaigns go up,” the report said. Nationwide, those expenses totaled almost $30 million in 2010, a roughly 50 percent increase over the past decade. By having charities foot the bill through an upfront application or participation fee, CFC could assure donors that “100 percent of their donations reach the benefiting organizations,” the report said. That approach would also reduce or eliminate the need of CFC’s fundraising arms to finance campaigns through borrowing, it added.

The 29-member commission, which included federal officials, charity representatives and leaders of watchdog groups, did not suggest a particular amount but acknowledged that a flat fee could cause some smaller charities to drop out of CFC because of the expense and could take some donors with them.

As alternatives, CFC could link fee levels to the amount a charity raised through the campaign or use a tiered system for small, medium and large charities, the commission said.

The recommendation was among two dozen offered by the panel. OPM doesn’t plan to act on most of them before next year at the earliest, Director John Berry said last month.

A random survey of about a dozen charities this month found that some — particularly smaller organizations — were unaware of the potential change but didn’t oppose it out of hand.

“I’m open to all considerations, depending on more information,” said Robert De Leo, executive director of the California-based Polly Klaas Foundation, which works to find missing children.

“We would have to weigh it,” said Stephen Barth, interim executive director of the Foodbank of the Virginia Peninsula. Although Barth said he approves of charities receiving all the money directed to them through CFC pledges, a new fee is “just one less meal that we’re providing for people in the area.”

Officials at several large charities, including the American Cancer Society, Humane Society of the United States and the United Negro College Fund, either declined comment or did not respond to requests for comment.

At EarthShare, a federation of environmental nonprofits, President and CEO Kalman Stein saw the proposed change as “critical” to reversing a 30-year slide in the CFC’s participation rate.

Donors “want 100 percent of their money to go the charity of their choice” and now have more options to give directly without using a workplace campaign, said Stein, who sat on the commission. That development “is something we can’t fight with just a better slogan or campaign brochure.”

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