Federations

​Our blog, Payroll Philanthropy, is sponsored by the Workplace Giving Alliance, a collaboration of a dozen national and local federations.  We suspect that many readers actually don’t know what a federation is, so we are going to take a moment to explain.

Federations have been around for decades. As the United Way offers in its own history, federated fundraising appears to have gotten off the ground in the late 1800s.  As OPM writes, charities (led by federations) began to systematically solicit federal employees in government offices in the years after World War II.  In the 1950s, the government sought to regularize these efforts, and in 1961 the CFC was officially born. (See History of Charitable Fundraising within the Federal Service.)

There are national, international and local federations.  As these labels suggest, the first two categories involve organizations whose programs reach across the nation or into another country; local federations serve groups that are active only in a particular community.

Through its CFC regulations, the federal government requires that a federation have two essential characteristics:

• A federation must be tax exempt and meet the eligibility criteria that any other organization must meet to participate in the CFC, and

• A federation must represent a minimum of 15 other tax exempt organizations that are themselves eligible to participate in the CFC.

We generalize, but these are the basic tests.  If you actually want to be a federation, we suggest you contact OPM to learn exactly the hurdles you must clear.

Now that we have cleared up the definition (sort of), what do CFC federations do?

• First, a federation screens charities that seek to participate in the CFC, using the eligibility criteria that would be employed if the charity applied to the program directly.

• Second, a federation helps inform its “members” on how well they did in the CFC.  (“Members” are charities that applied through the federation and were ultimately accepted by the CFC.)

• Third, a federation helps transfer donated funds from federal employees to federation members.  If a donors wishes to be acknowledged by the benefiting member charity, the federation also helps pass along the donor’s contact information.

A federation may impose admission criteria beyond those of the CFC – meaning it may restrict its membership to certain types of charities.  An environmental federation, for instance, may decide to work only with environmental organizations.  A federation may also offer its members services beyond those required by the CFC, but such extras are optional.

Though charities are free to apply to the CFC directly, they commonly seek to affiliate with one or another federation.  There seem to be three primary reasons:

• Federations help with admission.  The CFC eligibility rules can be daunting, and federation staff customarily help.
  
• Federations offer increased visibility within the CFC Charity Directory.  The directory is quite lengthy (over 100 pages in many zones), and each federation has a reserved section for itself and its members.  Indeed, most national and many local federations have assumed thematic names and chosen to limit their membership to groups active within that theme – say health.  The goal is to make it easier for potential donors to find groups that they might wish to support.
  
• Federations help with pledge reports and financial transfers.  Charities participating independently receive pledge reports and donated funds directly from local CFC administrators.  Since the government has not standardized these reports or financial transfers, participating charities can be confused if not overwhelmed by the flow of paper. Federations consolidate the paperwork, helping to make sense of it all.

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Federations charge for these services, of course.  That topic will receive its own post soon.