We now know that total pledges in the 2017 CFC were $101 million, down nearly 40 percent from 2016. This was reported Friday in the Chronicle of Philanthropy.
OPM’s recent announcement of the third and final fee for the 2017 CFC was every bit as disappointing. It is stunningly high: 16.5 percent.
We do not yet have a full description from OPM regarding the amount of money it will have collected to operate the 2017 campaign, but it is now clear that fears regarding OPM’s restructuring of the campaign were well founded. There are fewer charities, fewer donors, lower pledges, and inadequate administrative systems.
Last year, the government implemented its three-fee system. Charities paid the first fee when they applied to the 2017 campaign and the second fee once they were admitted. The government stated there would be a third fee once it learned the results of the campaign and figured out if the first two fees had been enough to cover all the administrative costs. The first two fees were non-refundable and reflected each applicant’s income as reported on the Form 990. The third would be a percentage of pledges.
In addition to the new fees, the government swept away the local administrative system that had been in place for years. In its place, the government created a Central Campaign Administrator which was charged with handling most back office functions including the receipt of applications, the handling of pledges, and the distributions of funds. The Central Campaign Administrator also took charge of online search, a critical dimension of the new campaign as print directories began to disappear. To complement the Central Campaign Administrator, the government created regional “Outreach Coordinators” to publicize the campaign and encourage employees to participate.
Many of us were worried that upfront, non-refundable fees would drive thousands of charities from the campaign. As it played out, more than half of the groups that participated in the 2016 CFC elected to walk away once they saw the advance fees for 2017.
Many of us worried that the loss of many long-serving local administrators (paid and volunteer) would undercut the pledge process. And indeed, efforts to engage federal employees fell short in many parts of the country, with predictable results.
Finally, many of us hoped that the new Central Campaign Administrator would get online search right. They knew what was required to help potential donors find desired charities through the new online portal, but the portal’s search function failed stunningly – delivering wildly unhelpful results. Some donors no doubt walked away. OPM reports few employee complaints about search, but charities complained mightily after trying and failing to get the system to return their own organization’s listing.
The results have been painful – for those who have worked at the campaign for years and for those who have supported this once prestigious program. Most important, the results have been painful for thousands of charities whose good work across the country has been undermined by the loss of tens of millions of charitable dollars.
Now, with the extent of the bad news clear, we must look forward. What is to be done?
The government has announced its advance fees for the 2018 CFC, and it is likely there is little room for OPM to lower these. More charities, of course, will bolt for the exits. The government is also locked into a three-year contract with the Central Campaign Administrator that includes the upcoming campaign. But two adjustments to the operation of the CFC are possible right now:
OPM has steered us to a place where administrative costs of the CFC have spiked as a percentage of the funds raised. Under the old system, costs averaged about 12 percent of the funds raised. Now, we are seeing costs that will be above 20 percent – perhaps as high as 25 percent.
Obviously, the CFC cannot last long with an administrative overhead this high.
That overhead can and will drop if both donors and charities can be persuaded to return to the campaign. The changes are within reach. Let us hope that OPM acts.
We do not yet have a full description from OPM regarding the amount of money it will have collected to operate the 2017 campaign, but it is now clear that fears regarding OPM’s restructuring of the campaign were well founded. There are fewer charities, fewer donors, lower pledges, and inadequate administrative systems.
Last year, the government implemented its three-fee system. Charities paid the first fee when they applied to the 2017 campaign and the second fee once they were admitted. The government stated there would be a third fee once it learned the results of the campaign and figured out if the first two fees had been enough to cover all the administrative costs. The first two fees were non-refundable and reflected each applicant’s income as reported on the Form 990. The third would be a percentage of pledges.
In addition to the new fees, the government swept away the local administrative system that had been in place for years. In its place, the government created a Central Campaign Administrator which was charged with handling most back office functions including the receipt of applications, the handling of pledges, and the distributions of funds. The Central Campaign Administrator also took charge of online search, a critical dimension of the new campaign as print directories began to disappear. To complement the Central Campaign Administrator, the government created regional “Outreach Coordinators” to publicize the campaign and encourage employees to participate.
Many of us were worried that upfront, non-refundable fees would drive thousands of charities from the campaign. As it played out, more than half of the groups that participated in the 2016 CFC elected to walk away once they saw the advance fees for 2017.
Many of us worried that the loss of many long-serving local administrators (paid and volunteer) would undercut the pledge process. And indeed, efforts to engage federal employees fell short in many parts of the country, with predictable results.
Finally, many of us hoped that the new Central Campaign Administrator would get online search right. They knew what was required to help potential donors find desired charities through the new online portal, but the portal’s search function failed stunningly – delivering wildly unhelpful results. Some donors no doubt walked away. OPM reports few employee complaints about search, but charities complained mightily after trying and failing to get the system to return their own organization’s listing.
The results have been painful – for those who have worked at the campaign for years and for those who have supported this once prestigious program. Most important, the results have been painful for thousands of charities whose good work across the country has been undermined by the loss of tens of millions of charitable dollars.
Now, with the extent of the bad news clear, we must look forward. What is to be done?
The government has announced its advance fees for the 2018 CFC, and it is likely there is little room for OPM to lower these. More charities, of course, will bolt for the exits. The government is also locked into a three-year contract with the Central Campaign Administrator that includes the upcoming campaign. But two adjustments to the operation of the CFC are possible right now:
- The government can do a better job selecting the companies that provide marketing and outreach services at the community level. The Outreach Coordinators work on one-year contracts, and there is evidence that some of them performed poorly in 2017. The renewal of these arrangements is underway. Perhaps, going forward, it is not too much to ask OPM to incorporate into its selection of Outreach Coordinators a sense of how they performed in 2017.
- The government can make clear to the two companies that together serve as the Central Campaign Administrator that their contract will not be extended beyond the 2018 CFC unless they meet campaign deadlines and deliver an online search system that works.
OPM has steered us to a place where administrative costs of the CFC have spiked as a percentage of the funds raised. Under the old system, costs averaged about 12 percent of the funds raised. Now, we are seeing costs that will be above 20 percent – perhaps as high as 25 percent.
Obviously, the CFC cannot last long with an administrative overhead this high.
That overhead can and will drop if both donors and charities can be persuaded to return to the campaign. The changes are within reach. Let us hope that OPM acts.
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