Applying For Combined Federal Campaign

[ProdigalJim]

Hi All:

Most of the CFC application periods have closed, and I thought I might review some of the most common areas of confusion I encountered helping many squadrons along during this CFC season.

Don't feel bad if you're confused by what it seems to take to be eligible for Combined Federal Campaign federal workplace donations. A lot of squadrons are confused, and so a lot of them don't take advantage. And that's a shame, because each year federal workers across the country designate a small slice of their regular paycheck to support worthy local causes and it adds up to millions of dollars.

One particularly confusing element can be the IRS Form 990. Charities don't file conventional tax returns like you and I do. Instead, they file Form 990s, which outline their finances in excruciating detail. It's for a good reason: you want to be sure that the charity you donate to isn't sending its staff to Tahiti twice a year!

As all of you know, CAP is a federally recognized 501( c )3 non-profit, so it's eligible for donations. From the point of view of the IRS and the U.S. Office of Personnel Management (OPM) -- OPM is in charge of the Combined Federal Campaign -- squadrons (and, for that matter, groups and wings) are "bona fide chapters or affiliates" of the national CAP organization. That means by extension units are also eligible for donations under the 501( c )3 rules. But here's where it gets tricky: for CFC purposes (and ONLY for CFC purposes), a squadron can complete its own skeletal version of a Form 990 describing its financial status as a unit, and submit that form -- called a "pro forma 990" -- to the local Campaign along with the rest of your application paperwork.

And that's a good thing. Why? Because national CAP has expenses that squadrons don't, such as staff, buildings, benefits and overhead, and all of those things go into calculating the "administration and fundraising costs" for a charity listed in the Combined Federal Campaign. Donors are more inclined to give money to organizations with smaller overhead, and if you're a typical squadron, you probably have *zero* costs for staff, benefits and overhead. National Headquarters is incredibly frugal and does a great job doing more with less, but it's to a squadron's advantage to be able to list zero costs.

Unless you're getting direct cash support from NHQ or other sources, or are routinely bringing in annual revenues higher than $100,000, OPM says you can submit a pro forma 990 with your application materials, to reflect the true cost of running your squadron. Remember: you don't have to file the form with the IRS. You DO have to include the form, with the modifications below, in your CFC application.

Here's how to do it.

The IRS Form 990 and its instructions can be found online here:

http://www.irs.gov/pub/irs-pdf/i990.pdf
IRS Form 990

http://www.irs.gov/pub/irs-pdf/f990.pdf
IRS Form 990 (as a PDF)

Of all of the sections listed in the form, you only must complete FIVE. These are the five:

page 1, Items A-M, Part 1 (Summary) lines 1-4 ONLY, Part II (Signature Block);

pages 7-8, Part VII (Compensation sections A);

Page 9, Part VIII (Statement of Revenues);

Page 10, Part IX (Statement of Functional Expenses);

and page 12 only Part XII (Financial Statements and Reporting).
 
In the vast majority of instances, your entries are likely to be zero. "Grants and other assistance to foreign organizations, foreign governments, and foreign individuals." Probably zero. "Benefits paid to or for members." Again, probably zero. And so on. Just do the best you can with the information you have.

Is it worth it? In 2013, there were 149 locally led Combined Federal Campaign efforts throughout the U.S., and together they raised nearly $200 million for 20,000 charities across the country. The average local CFC raised more than $1 million; that's potentially $1 million in your backyard from employees who might be willing to earmark their paycheck donations for your squadron. If you don't participate, you're guaranteed to get zero funds. So why not invest a little time and complete the paperwork for your squadron?

Another confusing element has been the Feds' requirement that local organizations have "an active and responsible governing body, whose members have no conflict of interest and a majority of whom serve without compensation." Remember, per CAP Regulation 173-1 "Financial Procedures and Accounting" para 9(c), all units below Wing level must have a finance committee, "composed of the unit commander as the chairperson, the finance officer, and at least one other senior member." Unless you're doing it wrong, those folks are all unpaid members. So, list the Finance Committee members on your pro forma 990, list their compensation as Zero, and you're done with that requirement. See Part VII, page 7, of this year's application.

Lastly, use the application form for Independent organizations, rather than Federations. It's the most appropriate for CAP units, and presents the most straightforward application and paperwork requirement. There's a really good checklist included with each of the application packages, and you should use the checklist to be sure you haven't missed anything.

Oh and now that we've worked all that out, CFC is dramatically changing the way it will do business with charities for the 2016 campaign. More details when I get 'em...

Jim Mathews
The New CFC Specialist On The NHQ Fundraising Team

[Holding Pattern]

Thank you for this. I'm going to present it to my squadron finance committee ASAP.

[JacobAnn]

Yes, thank you.  This does clear up a lot of confusion.

[arajca]

Jim Mathews
The New CFC Specialist On The NHQ Fundraising Team

Wait a minute! You mean National has actually decided to have someone on staff (paid or volunteer) to help UNITS raise money!? I thought they only worried about raising money for CAP as a whole?

This is the kind of information we in the trenches have been asking for for years! Thank you!

[ProdigalJim]

You're welcome. I've been sharing my business-travel schedule with Skip so that if it turns out I'm going to be somewhere where a squadron wants some in-person chatting I'd make myself available. So far it's been email and phone, though.

[FW]

It is refreshing to have a "CFC Specialist" working with Squadrons at the NHQ level.  It will also be refreshing to have a marketing specialist to help spread the word to Federal Employees; to give to CAP.  In the past, contributions were only made by federal employees who were also members of (or related to) CAP.  For the CFC program to really work, a large increase of contributors are needed.  Members should give directly to CAP unless there is a corporate matching gift program, which I don't think is the case with the CFC. 

Good Luck, Jim.