In the wake of new figures showing a sharp plunge in employee participation in a federally sponsored charity campaign, the Obama administration is strongly defending new rules on the donation process that charity leaders fear could make things worse.

That defense has been called misleading and “disingenuous.”

Federal employee participation in the Combined Federal Campaign (CFC) fell 22.9 percent last year, even more than the 18.8 percent fall in contributions, according to figures released by the Office of Personnel Management. Almost 200,000 fewer federal employees donated to the campaign in 2013, a decrease from 848,150 in 2012 to 650,142.

“The CFC continued to face challenges with the sustaining of pay freezes and furloughs due to sequestration,” Keith Willingham, OPM’s CFC director, said in a memo to his boss, OPM Director Katherine Archuleta.

“In 2013, these challenges culminated with a lapse in Federal allocations leading to the shutdown which occurred at a time during which most local campaigns were set to kick off,” he added. “The impact is evident in the dramatic decline in participation.”

The amount raised in 2013 was $209,660,540, down from $258,253,361 in 2012. That 18.8 percent drop had been projected this month by the Payroll Philanthropy blog.

In a blog article Archuleta posted on Friday, she defended CFC regulations that have been criticized by charity leaders and questioned by a bipartisan group of House members. They worry the rules that took effect this month could result in a further decline in donors and donations. An April 15 letter to the administration from the Republican chairmen and top Democrats on the House Oversight and Government Reform Committee and its subcommittee on the federal workforce raised “substantial concerns” about sections of the new regulations. The elected officials cited the nonrefundable charity application fee, the elimination of cash contributions, and changes to charity support organizations.

“I understand that change can be difficult, especially when changes are made to a system that has been in place for a long time,” Archuleta wrote in her blog. “But, I believe that the improvements we announced on April 11, 2014 will strengthen and invigorate this vital program for the next half century.”

Her blog was headlined: “A Path to Modernize the CFC.” Under the new rules, she said charities will receive about 99 cents of every dollar donated, instead of as little as 66 cents.

“Federal employees asked for change to the CFC system,” she wrote. “They wanted lower overhead costs. They wanted more of their money to go directly to the charities they support.”

But her statement that more money, “closer to 99 cents” of every dollar, will go to charities is deceiving, according to leaders of major charitable organizations. While charities will get more money upfront under the new rules, they will have to pay fees from those donations. The previous regulations subtracted the fees before the donations were sent to the charities. The net result for charities, according to charity officials, will be about the same.

Thomas G. Bognanno, president and chief executive of Alexandria-based Community Health Charities of America, called Archuleta’s 99 cents assertion “disingenuous.”

“All OPM is doing is shifting the costs for the campaign to the charities and federations and giving the impression that the campaign can be operated effectively on a 1% margin,” he said by e-mail. “Sophisticated donors I suspect know that this is a bit of a shell game and shifting the costs after the contributions have been distributed to the charity does not make the costs go away.”

Steve Delfin, president and CEO of America’s Charities, said OPM is making “a false argument and one that is designed to simply tell the donor more goes to charity when in fact the cost to charities for this is exactly the same or perhaps more as a result of the rules [changes].”

An OPM spokeswoman said the changes will result in reduced fees and “far lower administrative costs for charities.”

Willingham, OPM’s CFC director, said in an interview that despite the fall in participation and contributions, federal employees are “still very benevolent” in the face of furloughs and the three-year freeze on their basic pay rates that ended last year.”

“You’re talking about raising over $200 million in a three- or four-month period on the heels of a government shutdown. . . . You just have a lot of goodwill from federal employees to participate in this program,” he said.

That’s true, but this controversy over the new regulations does nothing to help boost the charity campaign, whose vitality at the moment is spiraling downward, just like federal employee morale.

OPM, Bognanno said, is not addressing “the elephant in the room which is that the campaign is declining largely due to lack of modern employee engagement strategies, especially among younger federal employees.”

Donors want to feel connected to the causes and charities, and that feeling is lacking with the CFC, he added.

“The connection between the donor and the charity in the CFC is not there,” he said, “and some of these rule changes further distance the federal worker from the campaign and from the charities that benefit.”

Twitter: @JoeDavidsonWP

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