Charities in Combined Federal Campaign Face Government Review

The Government Accountability Office is examining nonprofit organizations that raise funds through the Combined Federal Campaign — the annual charity drive for federal workers — to see if organizations have failed to pay federal taxes, including payroll taxes.

Meanwhile, the federal government is planning to propose a change in the charity drive’s rules that would eliminate a requirement that participating nonprofit organizations limit their overhead expenses to a specific percentage.

The review by the Government Accountability Office, the investigative arm of Congress, was ordered by the Oversight Subcommittee of the U.S. House of Representatives’ Ways and Means Committee.

Federal employees pledged a record total of $256.8-million to the Combined Federal Campaign in 2004, the most recent year for which donation figures are available.

News of the examination by the Government Accountability Office came in a memorandum sent last week by Mara T. Patermaster, director of the office of CFC Operations, to local committees and organizations that oversee and administer the annual charity campaign.

Ms. Patermaster said that the Government Accountability Office had requested information about each charity — national, international, and local — that receives funds through the Combined Federal Campaign.

The requested information must be quickly provided to the Government Accountability Office — no later than February 24 — and includes charities’ names, contact persons, and employer identification numbers.

Court Case

The federal government’s plan to change the rules on overhead expenses for charities participating in the Combined Federal Campaign follows a tangle in court with a nonprofit organization last year.

Federal rules currently require that participating charities spend no more than 25 percent of their total revenue on administrative and fund-raising expenses, unless the nonprofit organizations can explain why their expenses are reasonable and submit formal plans to reduce them.

Last year, the Make-a-Wish Foundation of America, in Phoenix, won a fight for its national organization to participate in the Combined Federal Campaign.

The U.S. Office of Personnel Mangement — the federal office that oversees the Combined Federal Campaign — had earlier told the organization that it had been spending too much money on overhead costs and did not qualify for the 2005 campaign. (The national Make-a-Wish organization works with 74 separately incorporated local chapters.)

At a court hearing in August, a federal judge urged the Make-a-Wish Foundation and the government to settle the case. In response, the Office of Personnel Management agreed to allow the Make-a-Wish Foundation’s national organization to participate in the 2005 drive.