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Watchdog: Follow the Money

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

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

Many private sector companies host annual charity drives at the end of the year where employees are encouraged to remember those less fortunate.

So does the federal government, but its version adds so many layers of overhead while paying civil servants to do charity full-time, that in some regions, the programs — known as the Combined Federal Campaign — may cost more than they raise.

Last year, for example, the Big Sky CFC in Montana spent $44,000 to raise $70,000, an overhead rate of 63 percent, according to new data from the U.S. Office of Personnel Management, which oversees the CFC.

In New Orleans, in a city where some are still suffering from Hurricane Katrina, the contractor running the program took 23 percent off the top of $1.2 million raised, leaving $943,000. But that's not taking into account the fact that there were seven full-time federal workers doing nothing but work on the New Orleans campaign, and their salaries aren't included since they're paid for by taxpayers, not taken out of donations.

New OPM data includes overhead rates for each of 163 CFCs, and the published figure is usually lower than these two, but all the calculations are virtually meaningless because they are missing that major expense, a Washington Examiner investigation found.

Across the country, federal employees are pulled from their duties and detailed to work out of a nonprofit contractor's office full-time, at no cost to the contractor, while taxpayers continue to pay their salaries.

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

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

Part Three: Charity drive employees, contractors fight reforms meant to reduce waste

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

Those "loaned executives" spend six months administering the federal workplace charity drive that runs from Sept. 1 to Dec. 15. Their hefty salaries and benefits are a real cost that is not even tracked by OPM, but one that radically changes the viability of the fundraising drives and can even tip them into the red.

The D.C. chapter of the CFC alone has 29 such full-time detailees, on top of 12 non-governmental workers who are on the contractor's staff and are paid out of donations.

Loaned executives include well-paid bureaucrats like Yolanda Dangerfield, who gets $111,000 a year from the Centers for Disease Control and Prevention in Atlanta. She has spent much of at least 13 consecutive years working for the charity drive instead of at CDC.

OPM hailed one CFC leader from Cleveland for boosting contributions from his agency by $40,000 after adding multiple loaned executives. But he likely didn't increase the net haul at all when the salaries are included: Ronald Woods, a postal employee currently serving as a loaned executive to the Cleveland CFC, for example, makes $85,000 plus benefits, federal records show. The campaign netted $1.9 million with 10 loaned executives and five contractor staff last year.

Charities may keep quiet because, in the Montana instance, they still got some 37 percent of the money contributed by federal workers, which is better than nothing.

But with Uncle Sam subsidizing what is often actually a much higher overhead rate by paying for all the loaned employees who then aren't available to assist with agencies' mission, taxpayers might have been better off scrapping CFC and wiring money from the U.S. Treasury directly to charities.

Such a taxpayer subsidy contrasts sharply with the goal of the CFC, which is “to lessen the burdens of government and of local communities in meeting needs of human health and welfare” by encouraging government workers to give to their favorite charities.

The CFC has been in a tailspin across the country for years. Administrative costs have risen, while the percentage of the 2.3 million employee federal workforce who actually donate has fallen.

In the just-completed 2013 campaign, a smaller portion of federal employees gave through the CFC than in any year in the program's 50-year history, the OPM data show.

In 1965, 80 percent of federal workers gave some portion of their compensation to the needy through the CFC. In 2013, only 16 percent gave anything at all.

In dollar terms, even without adjusting for inflation, donations have fallen for five straight years. Employees pledged $210 million last year, down sharply from previous years, such as the $269 million given in 2005.

In 1961, to encourage public servants to think about, as then-President John F. Kennedy put it, what they could do for their country, the Office of Personnel Management -- then known as the Civil Service Commission -- established what would become the Office of the Combined Federal Campaign.

Now beneath it are 163 panels of federal employees in various geographical areas, known as Local Federal Coordinating Committees.

Their job is to select and oversee a contractor, which creates a catalog listing approved charities, processes donations earmarked for them, and then distributes the money. The LFCC then staffs the contractor with "loaned executives."

Hundreds of CFC workers travel to "training" conferences each year, which in recent years have been held in New Orleans, Las Vegas, and Orlando, even though OPM has said that "much of the training and certification processes can be presented in a web-based format." All the LFCC members also travel to Washington once a year.

Additional “keyworkers” are assigned to hold events during the workday within federal buildings and encourage employees to give.

Beneath the contractor are “federations” in which one nonprofit receives contributions on behalf of others, takes a cut and distributes it to its final destination as designated by the federal employee donor, such as the Red Cross or the American Lung Association.

Officials point out that contractors try to keep overhead to around 10 percent, which they note is less than many functioning nonprofits’ administrative costs.

They don't point out that it is an extra layer added on top of the destination nonprofits, which still have their own overhead, and that federations form yet another layer that takes an additional cut.

Federations' overhead rates were not immediately available, and the Workplace Giving Alliance, a nonprofit that studies and promotes workplace charity, said finding out their cost was "murky at best."

Nor do officials advertise that the costs of the loaned executives aren't included in any overhead calculations, even though labor is typically the largest cost for any organization.

OPM can't even say how many federal employees work full-time on the charity drive, or what are the costs of their salaries and benefits for the period they're detailed to CFC.

That makes the true cost of the CFC a mystery. But as one gauge of how the cost of even a few federal employees' time adds up, the six employees of OPM's national CFC office accrue $858,000 in payroll expenses annually.

Even with those omissions, last year, Calhoun and Kalamazoo County, Mich. CFC had overhead of 41 percent before any loaned executives, and the Mid-Michigan CFC had overhead of 37 percent.

The Rochester, N.Y., chapter’s CFC contractor had overhead of 31 percent in 2009. In Utica, N.Y., it was 46 percent. CFC was until recently even more of a bureaucracy, with 400 chapters, but half of those, including these two, have since been merged.

"Despite a decade of consolidation of campaign offices by OPM and the advent of online pledging... the expense data released for the 2010 campaign showed that costs were at the highest dollar figure ever–with budgets totaling almost $30 million," officials wrote recently, a figure that includes only contractors' cut of the proceeds, not taxpayers' costs.

Last year, the Coastal Carolina CFC netted $1.4 million with seven Loaned Executives. Its head, Jamie McKanna, told OPM his "executives" are military men awaiting other orders, and thus not needed elsewhere — raising the question of how it is that so many employees at other agencies can be diverted from the duties they were hired for and apparently not be missed.

In a statement to the Examiner, OPM said that a longstanding Executive Order "allows for the temporary assignment of agency employees to work directly with voluntary organizations in conducting the combined campaign within the federal service. The CFC is a benefit of federal employment."

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Author:

Luke Rosiak

Senior Watchdog Reporter/Data Editor
The Washington Examiner