The federal government’s annual charity drive — widely thought to be the biggest in the world — is in the midst of its greatest decline in memory. We are now facing the prospect that a campaign that has connected millions of federal donors and thousands of charities for more than half a century may die.
Perhaps the drive — known officially as the Combined Federal Campaign — can be saved. But the current reality is that thousands of charities are deciding to leave the program, uncounted others are paying into the program more than they actually raise, and millions of federal employees are finding alternative ways to support charitable work.
This did not have to be, and the end of the CFC is not ordained. However, if the federal government’s annual workplace-giving drive is to go forward, government officials will need to revisit key policy decisions — and government contractors will have to deliver on services for which they are being paid millions of dollars.
Federal employees have been and continue to be generous. Threatened by government shutdowns, furloughs, pay freezes, and other disruptions to their careers, they have continued to donate through the CFC, year after year. But new ways of giving have taken their toll, and the CFC has been slow to adapt. And governmental decisions and plain bureaucratic screwups have undermined the spirit of community that animates the CFC as it animates philanthropic programs everywhere.
After all, workplace giving is more than a technique or technology for raising funds. It is a means for people to come together for a shared purpose. At a time when our society feels like it is spinning apart, those places that bring us together are more important than ever before. The workplace, like the church or school or neighborhood park, is one of those core building blocks of society.
The CFC is administered by the U.S. Office of Personnel Management. It began more than half a century ago, during the Kennedy administration. Over the years, more than $8 billion has been raised. The CFC became the model followed by states and municipalities as they sought to engage their own employees and support charities in their communities, across the United States, and overseas.
At its peak, only eight years ago, the CFC raised more than $280 million in its annual appeal. Pledging is underway for the 2017 campaign for a few more days, but the evidence is mounting that the total will fall below $100 million. Even more distressing, fewer than one in 10 federal employees will participate.
What Went Wrong
Workplace giving became part of the fabric of American philanthropy in the early and mid-20th century. Along with giving at churches and responding to appeals through the mail, it was an important way for average families to contribute to the philanthropy that distinguished America. Other nations came to envy American generosity, and they have long sought to copy our methods and emulate our successes. The CFC has been part of this story for decades.
So what went wrong? And what can we do to fix the problems?
The federal drive has been in difficulty for more than a decade. Even as pledge totals have risen, levels of participation have dropped. The Office of Personnel Management gathered a panel of government staff, charity representatives, and others in 2011 to see what could be done.
The CFC-50 Commission (of which I was a member) issued its report in 2012. Our shared aim was to strengthen the program, streamline back-office functions, employ more up-to-date technology, and engage more federal employees.
Eventually, in 2014, the federal government published new regulations designed to reshape the program. As the CFC world moved from discussions of changing things for the better to the process of carrying out the changes, however, the campaign’s problems only grew. Some examples:
Upfront fees. In its new regulations, OPM abandoned the longstanding system through which CFC administrative costs were deducted from campaign proceeds.
Workplace campaigns traditionally withhold funds from donations to cover administrative costs; the CFC was no different. But the Office of Personnel Management decided it wanted to tell donors that 100 percent of their money went to charities — so it asked nonprofits to pay administrative costs upfront before they had any idea how much they would raise. Government employees know that it costs money to raise money, so this new rhetoric was bound to fail. OPM persisted nonetheless.
Worse, the new fees tilted strongly against charities that raise the least in the drive, introducing the risk that many groups would pay more than they earned in donations. And so they now are.
Dropping local expertise. The government swept away the nationwide network of community-based administrators — including experienced fundraisers in big cities and small — in favor of more distant personnel and online systems. Institutional memory was profoundly eroded along with decades-long personal relationships for marketing and solicitation. The sense of community that lies at the heart of charity was undermined
Failed technology. The government created a new central campaign administrator to streamline back-office functions such as tallying pledges and transferring funds from donors to charities. These systems truly needed improvement. But when the central administrator created online portals to handle charity applications and donor pledges, problems rapidly emerged. Schedules started to slip, and technical glitches degraded the experience for donors.
The worst technical problem — too big, really, to qualify as a glitch — was a badly designed search function in the donor portal. Quite simply, the government and the new Central Campaign Administrator botched the essential task of providing donors a competent online search function.
For years, of course, donors had searched for charities they wished to support by reviewing a printed directory of eligible organizations. The book had a table of contents in the front and an alphabetical index in the back. Donors could also employ that most basic of search techniques: flipping through the pages.
All of that was swept away in favor of a new online search system. And it failed. Here is what federal employees have had to put up with:
- Donors searching for “art” would receive candidate groups with “earth” in their name since “art” is found within “earth.” Similarly, donors searching for “cat” would receive results including “education.” In effect, the system would simply search for whatever string of characters you typed.
- The CFC system would also search only charity names. The system ignored the descriptions of each charity’s work that everyone had provided during the application process. The rich information that could help employees decide on the charities they might wish to support was not made available to those employees.
- The CFC search function tied to an IRS set of data that did not use punctuation in charity names. We all know groups that use a comma or colon or apostrophe in their name, but the IRS decided some time ago to simplify its use of English. When OPM linked the new CFC search function to the IRS data, donors were once again thwarted. Even the best-known charity names could not be found.
Faced with the embarrassment of a search system that would, simply, not search, the government and central administrator scrambled to fix the most egregious failings. More time was lost; more potential donors just gave up.
Making things more costly. To create the new central administrator and regional marketing teams, the government turned to its complex acquisition procedures. This made sense in the abstract, but the awkwardness and rigidity of government procurement slowed everything down — and ironically drove up costs.
The CFC now costs about $19 million or $20 million a year to operate. The government hoped to bring down costs through centralization and streamlining. But the government’s procurement procedures and its safeguards against unauthorized access to online systems have prevented any serious savings.
So after years of turmoil, we see charities and donors fleeing the campaign — and the total pledges plummeting.
The government asked charities to pay in advance for a “product” the charities thought they knew well. When the product was delivered, it was vastly inferior to what had been implicitly promised by years of experience. Ordinary consumers faced with such a circumstance would demand their money back. They might even turn to a government agency for help.
If the CFC is to have a future, the government must:
- Back away from its flat, nonrefundable fees and return to the traditional percentage-based fees. Flat fees have their purpose: They discourage charities that raise little or no money from entering the campaign. But the government’s high fees have wreaked havoc. In fact, sooner or later the government will be forced to cut the upfront fees considerably and withhold more funds proportionately from charity donations for a very basic reason: The number of charities in the CFC is dropping fast.
- Delay the application deadline (which is now the end of January) so that charities can know their final results for the 2017 campaign before they must pay to participate in the 2018 campaign.
- Deliver on its technical promises. Charities and donors alike are going into the government’s “store” to buy a service. Give us something that works. For example, make online search work. If the government needs help understanding what this looks like, it can visit the site of Home Depot or Barnes & Noble or Amazon. No need to replicate Google. Just help donors sift through a limited number of choices.
- Announce improvements now for the 2018 campaign. Tell us what we are buying before we are required to pay again.
- Give us our money back. Charities around the country paid millions to fund the 2017 drive. We did it in the belief that the CFC would in fact operate. As we claw our way to the finish line, with donors and charities alike fleeing for the exit, perhaps it is time to repay some of those fees.
The government reminds us from time to time that the Combined Federal Campaign is not a fundraising program but an employee-benefit program. It should bear in mind the well-recognized benefit of bringing employees together to do something good. Workplace giving is about more than how much money can be collected. It is place where each of us can say to our colleagues and friends: This is important to me. Please help.
It would be nice to give the CFC the future it deserves. Those of us lucky enough to be involved with this venerable campaign remain eager to help the government grapple with challenges ahead.
Marshall Strauss is chief executive of the Workplace Giving Alliance, a family of federations that participate in the federal government’s Combined Federal Campaign. He is a founding board member and treasurer of the Combined Federal Campaign Foundation.