News and analysis
October 04, 2013

Federal Charity Drive Could Be Hurt by Shutdown

Idit Knaan, for The Chronicle

The shutdown of the federal government is shutting off access that charities get in the last few months of each year to solicit donations from public employees.

Thousands of nonprofits that share the nearly $275-million raised by the federal government’s annual charity drive could receive much less this year if the shutdown keeps public employees out of work for weeks, nonprofit officials say.

The nonprofits that manage the Combined Federal Campaign, which runs through December 15, have already had to cancel dozens of promotional events that were scheduled to take place in coming days at federal offices that are now closed. The longer the shutdown goes on, the less money federal employees may have to give. And if the campaign isn’t extended, charities will have less time to make their pitches for donations.

“We’re possible collateral damage of the Congressional budget fight,” said Kalman Stein, president of EarthShare, the nonprofit that manages the campaign’s largest local drive in Washington, D.C.

Mr. Stein and others also worry that the length of the shutdown may not matter, given the meager raises, previous furloughs, and budget cuts that federal employees have endured for several years. Most workers are likely to return to work lacking the morale needed to motivate them to donate to their favorite causes through the campaign.

“It has been a very discouraging time to be a federal employee,” said Marshall Strauss, chief executive of the Workplace Giving Alliance. “Between cuts, sequestration, and the more severe disruptions that have come from the failure to pass a budget—that has to undermine people’s enthusiasm to give.”

Giving Slides

The campaign has already been struggling to reverse decades of decline in the share of employees who give. In 1967, 85 percent of federal employees gave through the campaign. In 2010, 25 percent. The campaign raised $258-million last year, 8.7 percent less than the $282.6-million raised in 2009.

The Office of Personnel Management, which oversees the 184 local drives that make up the national effort, established a commission two years ago to recommend ways to modernize the charity drive established in 1961. But those recommendations remain in Congressional limbo due to nonprofit opposition to the ideas, especially the proposal to ban gifts of cash, checks, and money orders and to require all gifts to be made online or by electronic payroll deductions.

“We don’t know what type of impact the shutdown will have only because we’ve seen a campaign in decline,” said Thomas Bognanno, president of Community Health Charities, an organization that assists groups like the American Cancer Society and the American Heart Association solicit federal workers in the campaign.

Morale Decline

Government shutdowns have historically occurred when the federal fiscal year ends on September 30 without a new budget. The Combined Federal Campaign begins September 1 and ends December 15, although it has been extended in the past for various reasons, including shutdowns.

Past shutdowns have not led to declines in pledges to the overall campaign, except in 1978, said Steve Delfin, president of America’s Charities, a Chantilly, Va., organization that helps 115 charities solicit through the campaign.

Mr. Delfin believes that is because federal employees do not blame government dysfunction on charities that solicit through the federal workplace-giving campaign.

“Federal employees are under a lot of stress right now,” Mr. Delfin said. “They’re getting treated so poorly, it’s not fair. Yet historically they have been able to disconnect that from the side of them that supports charities.”

He said his organization was already budgeting for a 5-percent decline this year, given historic downward trends. It may be slightly more due to the shutdown.

Mr. Delfin had to cancel an event this week to promote the campaign at the Washington Navy Yard due to the number of employees who have been furloughed there.

Data may show that the campaign has weathered previous shutdowns, experts say, but the partisan rancor surrounding this budget crisis and years of major cuts makes this year different.

“The current atmosphere in Washington is very different than in the past,” said Mr. Bognanno. “The shutdown is much more in the public eye. There is so much more extremism. That has to have an impact on the work-force morale.”

And morale is key to the campaign’s success, said Steve Taylor, senior vice president for public policy for United Way Worldwide.

“Our biggest concern is the impact of the shutdown on the morale of the government employees and the fact that they’re going to be personally, financially impacted by the shutdown,” Mr. Taylor said.

The last thing those employees are going to want to hear when they return to their office is a pitch to donate, he added.

“It’s going to be hard for them to think, 'I just lost two weeks or a month of pay. How am I going to make a donation when I’m figuring out how I’m going to pay the bills?’” Mr. Taylor said.

The same employees who donate to charities such as the United Way will be turning to nonprofits for help if the shutdown extends for weeks or months. The result: Those groups may face increased demand for services at a time when fundraising is sluggish.

“There’s going to be increased demand on charities from the very federal-government employees who donate to them,” Mr. Taylor said.

Unrestricted Donations

Mr. Stein knows this better than most. His group, EarthShare, manages the National Capital Area campaign, the largest in the CFC. Last year 130,000 donors raised $62-million in the Washington, D.C., region. That represents nearly a quarter of the total $258-million raised in 2012.

His group produced a video on its Web site to highlight the passion of federal employees who give every year. But he worries that passion could wear thin.

“There’s no doubt the shutdown takes away from momentum,” Mr. Stein said. “We can’t do anything with furloughed employees and agencies that have shut down. It’s hard to make a prediction because we don’t know how long this shutdown will go on.”

Charities rely on the campaign because the funds they receive are unrestricted, meaning they can used for expenses unrelated to programs.

“It’s the single largest source of unrestricted funding for charities in the country,” he said. “They really need that money to turn on the lights, pay their insurance, and other things that people see as overhead.”

An extension of the campaign beyond December 15 could help charities make up for what is lost during the shutdown. But no one knows whether the Office of Personnel Management will extend the campaign.

“They’re on record saying they’re not going to extend it beyond December 15,” said Mr. Stein. “But they’re furloughed, so you can’t ask them.”

Read more about how the government shutdown is affecting charities.

Send an e-mail to Doug Donovan.