Watchdog: Follow the Money

Charity drive employees, contractors fight reforms meant to reduce waste

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Watchdog,OPM,Waste and Fraud,Luke Rosiak,Follow the Money,Nonprofits,Combined Federal Campaign

Office of Personnel Management officials thought their reform proposals for the government's overhead-laden annual federal charity drive, which has seen participation rates drop every year, were common-sense and necessary.

Acknowledging that “there are some very serious challenges that the program has in the modern day,” Office of the Combined Federal Campaign director Keith Willingham said the changes would get rid of $10 million in unnecessary or duplicative overhead and direct that money to the charities for which it was intended.

But then hundreds of federal employees and contractors working on the CFC program angrily protested. Last month, the Office of Personnel Management, which runs CFC, made concessions on some elements of the proposed reform and is proceeding gingerly with the core of it.

Hundreds of workers — OPM said it doesn’t even know how many — are currently paid to do nothing but administer charity drives in each of 163 separate localities across the country.

Charity Without Sacrifice

A three-part series by the Washington Examiner.

Part One: Nonprofits, feds used money intended for poor to live all-expenses-paid

Part Two: Feds' version of 'workplace giving' means getting paid for charity --- and often barely breaking even

Today: OPM backtracks on employee charity drive efficiencies after employee outcry

Click here to see a summary of the series and find more resources.

Willingham, who has already successfully overseen a reduction in the numbers, wanted to move faster, moving from 163 boards of federal employees known as Local Federal Coordinating Committees, to a handful of regional ones.

Under the federal rule-making process, agencies must solicit public comments before enacting regulatory changes. They also must give serious consideration to comments that are submitted.

In the CFC case, that meant essentially asking federal workers detailed to work on the charity drive whether they like being exempted from their regular duties. And it meant asking CFC contractors, who collect and disburse the $200 million that federal employees donate annually, keeping a significant cut for their troubles, whether they liked being paid.

More than 1,300 comments poured in shortly after OPM published its reform proposals, and they were almost uniformly critical.

“OPM received 643 comments regarding local governance structure, of which 615 comments (95.7%) were opposed,” OPM wrote in its final rule, published April 17.

In response to the backlash, OPM abandoned its plan for “regional” committees.

When the rules kick in in 2016, OPM will also move from a system where each local board hires its own contractor to one in which only a handful of contractors will process the money, noting that “the cost of the CFC is driven up significantly by having numerous [contractors] engaged in similar back-office functions.”

Global Impact, which has held two of CFC's most lucrative contracts and which OPM's inspector general found used over $1 million in donations on unnecessary luxuries like massages for its workers instead, hired lobbyists to protect its revenue source.

But OPM held firm, though it did revise its plans to give the remaining contractors a larger role in handling the money.

Though there would be between one and five contractors handling the money, there would still be 163 boards, and those boards could still hire firms to do marketing and coordinating.

But there should be far less incentive for bloat, because the core of the reforms, which stand in the final rule, shift the CFC from a model where organizations take a percentage off the top to one where they are paid a fixed amount up front.

That was also the part contractors hated the most.

“The issue of administrative costs was the most hotly contested topic in the public comment, receiving 966 comments (the most of any proposed regulation) of which 911 comments (94.3%) expressed concern,” OPM officials wrote.

Supporters of the status quo lauded managers like “Chet Boutelle, of the Defense Finance and Accounting Service,” who hosted fun events like taco sales and, “based on his belief that the experience gained by working on the CFC is a win-win for everyone,” increased the number of taxpayer-funded “Loaned Executives” from his agency to three.

He might be relieved to learn that according to Willingham, the reforms will not ban some drivers of bloat, including taxpayer-funded loaned executives and training conferences.

“I currently serve on my LFCC... I am deeply concerned about changing the scope and management of the CFC, particularly moving toward a regional system,” a postal employee wrote. Such a move might require him to spend more time delivering mail.

An official of the United Way, which has received huge sums serving as a CFC middleman, took to Congress, testifying that eliminating contractors "denies federal workers the high level of customer service they expect and deserve."

Willingham said that United Way “has some organizations that will be struggling as a [streamlined contractor] or federation, so they’re sensing a shift to their business paradigm.”

Federations--nonprofits that take a cut of the proceeds as a service fee and distribute the rest to others, after the contractor has already done the same--will still exist, even when contractors in their current form don’t, but they will face increased financial transparency.

"Some federations are fighting it tooth and nail," an OPM spokesperson said. A delegation of federation leaders flew to Washington last week to give OPM a piece of their minds.

Some nonprofits that get what’s left of CFC donations after others take their cuts said the money they receive is better than nothing, and efficiency was not a big concern for them.

The United Negro College Fund, for example, commented that it "is concerned that the proposed regulatory changes are aimed too much at minimizing expenses and administrative burdens and too little at maximizing local charitable giving.”

As Hero Dogs Inc., put it, “The system is not 'THAT' broken.”

Many of the commenting employees decried the changes because they could take parties, awards ceremonies and events out of work time.

“We are concerned that the proposed rule as a whole will essentially turn the CFC into a massive direct email type of campaign involving an agency kick-off email containing a donation website link, followed every couple of weeks throughout the campaign by a reminder email,” wrote one aghast federal employee.

Another lamented a proposal to move from a printed book listing charities to online because it might require her to use off-the-clock time to peruse them.

"For my office, I cannot sit online and look at the listings of the charities. I do sit in the break room and read the book. I don’t do this at home and would never take this home and use that time," she wrote.

OPM wanted to save money by eliminating paper booklets of charities and make all giving online or through paycheck donations. But “comments cited the fact that many federal employees do not have workplace access to the internet… With this in mind,” OPM will continue to print booklets and process checks.

Buried deep in the 1,300 scathing comments, a few federal workers put their own desires aside.

“The younger workers have myriad other ways to donate that don’t require a bureaucracy. They can and do text a donation to a cause du jour in less time than I can get a coffee,” one wrote.

Another wrote: “Neither is it necessary to involve an 'intermediary' agency in the matter, such as United Way, etc, since donor pledges can be sent directly ... without diminishing the gift by the retainage, overhead, or processing cost.”

A third wrote that the CFC raises money at “great federal agency expense, much of it hidden from view. ... Loaned executives are not available to contribute to the agencies’ mission, the agency must either temporarily reassign others to cover for this loss or bring in temporary employees."

The employee continued, saying, "it is unimaginable that while the federal government is planning to furlough federal employees because we cannot pay their salaries, we are also planning the 2013 CFC events.”

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