OPM Chief Defends Charity Campaign

Rushing to address concerns that charities seeking donations in the federal workplace will no longer be held accountable, President Bush's chief civil service adviser said yesterday that the charities "are receiving appropriate scrutiny."

The Combined Federal Campaign, the nation's largest workplace charity drive, "remains a program that federal employees can support with confidence," Linda M. Springer, director of the Office of Personnel Management, said in a statement.

For the annual charity drive that begins this fall, the OPM has dropped a requirement that charities spend no more than 25 percent of their revenue on fundraising and other overhead expenses. The elimination of that rule, which was reported in yesterday's column, has drawn protests from nonprofit groups and caused Sen. Charles E. Grassley (R-Iowa) to say last week that the OPM's decision could undermine the program's reputation and discourage federal employees from making charitable donations.

Yesterday, Grassley said he was not satisfied with the OPM's response. "It's disappointing that my points about accountability from charities to donors apparently fell on deaf ears," adding that it "raises my concerns" that the campaign, known as the CFC, "is in trouble."

Federal employees and military personnel pledged $268.5 million to the Combined Federal Campaign in 2005, the latest tally available. The drive is hugely important in the Washington area, where charities received $57.6 million from federal employees in 2005.

About 20,000 charities participate in the campaign, through about 280 local workplace campaigns nationwide. Donations go to help the needy and the sick, to support public broadcasting stations and to help advance goals of environmental and social policy groups.

The OPM dropped the 25 percent overhead limit in November, saying that enforcing the requirement had become a burden on agency staff, in part because of lawsuits from charities that failed to qualify. Leaders of charities have expressed frustration that the OPM has shown little interest in addressing their concerns -- about 92 percent of comments received by the OPM on the policy change were in opposition.

In her statement yesterday, Springer said charities that seek federal employee donations must meet Internal Revenue Service requirements for tax exemptions. National and international charities and those with more than $250,000 in revenue also must submit a copy of their most recent audited annual financial statement to the OPM and meet other screening requirements, she said.

Springer said the OPM will publish information about how much charities divert from donations to fundraising and administrative expenses in the CFC's annual catalog, "allowing federal employees to make informed decisions about how they contribute their money."

Publishing overhead rates will permit employees "to draw distinctions between the charities and their operational practices," she said.

Springer noted that in past years numerous groups participated in the charity drive with overhead rates in excess of 25 percent on condition that they submit a plan to reduce their overhead costs.

But Grassley, who has been conducting a wide-ranging review of nonprofit practices, said "there are too many bad apples trying to take advantage of charities' tax-exempt status. It's a disservice to the many legitimate charities to have OPM put them on an equal footing with any Tom, Dick and Harry who files a Form 990 with the IRS. OPM should do a little more scrutiny to make donating easier for federal employees, and to make sure federal employees' donations are well used."

Stephen F. Ristow, executive vice president of Global Impact, which represents U.S.-based international charities, said many military personnel deployed overseas, postal workers and other federal employees could find it difficult to compare charities because they do not always have access to the OPM catalog or the Internet.

The OPM policy change, he said, "is going to make a significant number of donors wary of the CFC, and that is not good for the program."

Grassley said he intends to talk with senators and House members "to see what steps we can take, including legislation, to ensure the long-term strength of the CFC program."

Stephen Barr's e-mail address isbarrs@washpost.com.