Combined Federal Campaign
September 13, 2004
CFC MEMORANDUM 2004-10
GUIDANCE ON 2005 CFC ELIGIBILITY REQUIREMENTS
FOR NATIONAL/INTERNATIONAL FEDERATIONS AND UNAFFILIATED ORGANIZATIONS
FROM: |
MARA T. PATERMASTER
DIRECTOR
OFFICE OF CFC OPERATIONS |
SUBJECT: |
GUIDANCE ON 2005 CFC ELIGIBILITY REQUIREMENTS
FOR NATIONAL/INTERNATIONAL FEDERATIONS AND UNAFFILIATED ORGANIZATIONS |
Attachment A: Year of Service in Each State or Country;
Standardized Formats; Use of Lists; Visitors to Memorials; Scholarships and Fellowships;
Distribution of Publications; Members' Residence; Web-based Services
Attachment D: Accrual Based Accounting; Separate Schedule
for Combined or Consolidated Audit; Reconciliation
Attachment E: Board Compensation on IRS Form 990; 0% AFR
Attachment F: AFR exceeding 25% Explanation and Formal Plan
Attachment G: Compensated Staff Member Who Also Serves on
Board; Board Members' Terms of Office and Meeting Dates and Locations; Annual Report; Federation
Dues/Fees
This memo clarifies eligibility requirements for participation in the 2005
National/International Combined Federal Campaign (CFC). Information contained in this
document clarifies and reiterates guidance previously issued in CFC Memoranda 2000-7, 2000-10,
2001-2, 2002-10, 2002-13 and 2003-9.
Please note that guidance regarding the requirements for compliance with the CFC's
anti-terrorism certification is not part of this guidance. Anti-terrorism certification
guidance will be issued separately.
OPM encourages representatives of participating charities and prospective applicant
organizations to attend its CFC orientation sessions. These sessions are held annually in the
fall, in Washington DC. CFC Operations staff are always willing to respond to questions
about the application process and to discuss issues identified.
New national/international federations must submit the complete applications of member
charities, including each organization's administrative and fundraising rate. Federations
that participated in the prior year's campaign must submit a complete application for each
new member and each member previously denied participation in the CFC.
Attachment A - Statement of Real Services, Benefits, Assistance or Program Activities
Applicant Must State the Year in which Each Service was provided in Each State or
Country
The CFC regulations at 5 CFR § 950.202(a) require applicants to provide a schedule listing
those states (minimum 15) or the foreign countries (minimum 1) where the program activities
have been provided over the three year period immediately preceding the start of the
campaign application year and a detailed description of those activities. This schedule is
required as Attachment A to the application and must be provided in addition to the annual
report, and other documents or publications that may accompany the application.
The applicant is required to use Attachment A to establish a "clear showing" of actual
services provided. General statements on the Attachment A, such as "over the past three
years" or "during the years 2001-2003" accompanied by a listing of services lack the detail
necessary for OPM to determine whether organizations have met this requirement.
Beginning with the 2005 campaign, Attachment A of the national/international CFC applications
must include the year in which each real service, benefit, assistance or program activity was
provided in each state or foreign country. Failure to provide the year of the service in the
state or country will result in denial of CFC participation.
Suggestions for appropriate Attachment A formats are available at
http://www.opm.gov/cfc/opmmemos/2003/2003-9Att1.asp
and are attached to this Guidance Memorandum.
Use of Standardized Formats and Checklists
An increasing number of applicants rely on the use of standardized formats and
checklists to describe the real services, benefits, assistance, or program activities that
their organizations provided in the past three years. Some applicants use standard
listings of service categories which an organization may "check-off" to indicate the
services provided in each state. Associated with such checklists has been a tendency to
replicate the identical narrative description of services for each of the states in which
the organization is claiming to have provided services. In some cases, the only unique
information provided is a number indicating how many persons the organization claims to
have served in each state.
OPM relies on the integrity of the information in Attachment A to assure federal donors that
the participating charities have met CFC accountability standards. In some instances, the use of
broad descriptions of services, benefits, assistance or program activities and/or
descriptions that replicate the identical information for each state in which service is
claimed does not adequately allow OPM to determine that the real services, benefits,
assistance or program activities were provided or to accurately determine the individuals
or entities who benefited.
Use of standardized formats and the accompanying level of descriptive detail varies among
applicants. OPM will exercise discretion in ascertaining whether a standardized format or
checklist provides sufficient detail to enable a judgment that an applicant has sufficiently
demonstrated its provision of real services.
Use of Lists (i.e. member listings/affiliated or support group listings)
Providing listings of affiliated support groups and members or a breakdown of attendees, by state,
at an annual conference, in itself, is not a sufficient demonstration of real services, benefits,
assistance or program activities required for national eligibility. In addition, providing the
location of residence of organization members, alone, does not meet the eligibility criteria.
Memorials, Museums, Public Recreation Facilities, etc.
Listing the names and addresses of an organization's members or visitors to a facility does not
satisfy national eligibility criteria. Each applicant must make a clear showing of the actual
services, benefits, assistance, or program activities provided in each state or foreign country.
Scholarships and Fellowships/Mentorships
Organizations that issue student scholarships or sponsor fellowships/mentorships must
indicate the state in which the recipients reside, not the state where the school or
mentor is located.
Distribution of Publications
The dissemination of information and publications, alone, does not meet the national
eligibility criteria.
Web-based Services
National/International CFC applicant organizations which rely substantially on web-based
services must comply with the national eligibility and public accountability standards at
5 CFR § 950.202 and 950.203.
In addition, the Office of CFC Operations requires web-based service
organizations to document proof that a service was actually provided over the website as
a part of their application.
Acceptable supporting documentation shall consist of:
- service logs or other records indicating the geographic distribution
of users and the scope of services received; or
- any two of the following three items:
- Evidence that recipients, including members of the general public, dues paying
members or affiliate organizations, have registered for use of the website;
- Summary reports that document customer feedback, through service satisfaction
or utilization surveys or other mechanisms;
- Documented evidence that recipients of web-based services paid a fee for the
service.
Reports that only reflect the number of hits to a website are not
acceptable evidence of real services on Attachment A.
Attachment D - Audited Financial Statements
Accrual Based Accounting Required
Organizations seeking National/International CFC eligibility are required to account for
their funds in accordance with Generally Accepted Accounting Principles (GAAP), which
requires an accrual based accounting system. Both the IRS Form 990 and the audited
financial statements must be prepared using the accrual method. National/International
CFC eligibility will be denied for organizations using any method of accounting other
than the accrual basis, including the cash basis, modified cash basis, and modified accrual
basis of accounting.
Separate Schedule Required for Combined and Consolidated Audits
Combined and consolidated audits are not accepted unless the applicant's financial
information is reflected in a separate audited combining or consolidating schedule that
breaks out the information for the applicant.
Reconciliation of Audited Revenues and Expenses with IRS Form 990
Organizations applying for National/International CFC participation must submit an annual
audit of fiscal operations as described at 5 C.F.R. § 950.203(a)(2). The audit must cover
the same fiscal period as the IRS Form 990. Reconciliation statements that purport to
reconcile a cash-based IRS Form 990 with an accrual-based audited financial statement will
not be accepted because both must be prepared using the accrual method.
If revenue and expenses on the audit and the IRS Form 990 differ, these amounts must be
reconciled either on the IRS Form 990, Parts IV-A and IV-B, or in an accompanying signed
statement by the certified public accountant who completed the audit. If the CPA who
completed the audit is not available, it is acceptable to use another CPA within the same
firm to provide the reconciliation and signed statement.
Organizations have asked whether a certified public accountant (CPA) must perform the
reconciliation if it is not completed in the IRS Form 990, or whether a financial manager
within their organization can perform the reconciliation. The reconciliation must be
performed in an accompanying signed statement by the CPA who completed the audit if:
- Line 12 (revenues) or Line 17 (expenses) of IRS Form 990 Part I are
different from total revenues or expenses set forth on the audited financial
statements, and Part IV-A and/or Part IV-B are not completed; or
- Line 12 (revenues) or Line 17 (expenses) of IRS Form 990 Part I are
different from total revenues or expenses set forth on the audited financial
statements, and the figure stated on Line a of IRS Form 990 Parts IV-A or
IV-B is different from total revenues or expenses set forth on the audited
financial statements.
The only instance when an organization's management may provide a clarification is
if Line 12 or Line 17 of Part I, or Line a of Parts IV-A and/or IV-B do not equal the
revenues or expenses in the audited financial statements because certain categories of
revenues or expenses on the audited financial statements have to be added together to
equal the totals in the IRS Form 990.
We understand that certain categories of revenues and expenses on the audited
financial statements may have to be added together to equal the total revenues and
expenses that are listed on the IRS Form 990, either on Lines 12 and 17 of Part I or
on Line a of Part IV-A and IV-B. For example, categories of revenues and expenses
such as unrestricted, restricted or changes in temporarily restricted net assets
may have to be added together to equal the amounts in the IRS Form 990. If this is
the case, an appropriate management representative (e.g. officer, director, trustee
or chief financial officer) may provide an explanation of the calculation and
categories that were used in arriving at the totals on the IRS Form 990. This
explanation should accompany the financial documents in the application as it is
originally filed with OPM.
Attachment E - IRS Form 990
Except for smaller organizations that file the IRS Form 990EZ, organizations must
attach a complete IRS Form 990 as part of the CFC application as required by
5 CFR §950.203(a)(3). A complete IRS Form 990 includes all six pages, including a
signature on page six in the box marked "Signature of Officer," all statements referenced
in the Form, and Schedule A. Organizations filing IRS Form 990EZ may submit the
990EZ together with pages 1 and 2 of Form 990 in place of a complete Form 990.
Board Compensation Must be Set Forth in IRS Form 990
Part V of the IRS Form 990 requires the charity to include a "List of officers, directors,
trustees, and key employees (List each one even if not compensated)." An organization's IRS
Form 990 that does not include a list of the officers, Board of Directors, trustees and key
employees, and their compensation, if any, is incomplete and will result in a denial.
0% Administrative and Fundraising Rate
Organizations which do not reflect administrative and fundraising expenses on the IRS Form
990 but show such expenses on the audited financial statement will be denied unless the audited
financial statements specifically state that these services were donated.
Attachment F - Administrative and Fundraising Expenses
Administrative and Fundraising Rate Exceeding 25% Explanation and Formal Plan
The CFC regulations at 5 CFR §950.203(a)(4)(i) require that organizations with administrative
and fundraising rates (AFR) exceeding 25% provide, as Attachment F, an explanation and formal
plan to reduce these expenses below 25%. The explanation must include a full discussion of
the reason(s) that the organization's AFR exceeded 25%. The formal plan for reducing the
AFR must relate to the explanation and must be reasonable under the circumstances. The
formal plan must demonstrate that the organization has established a clear objective(s) as
to how to reduce the AFR, and has taken steps to implement the objective. The plan should
include the time frame during which it is anticipated that an AFR below 25% will be obtained.
The Office of CFC Operations will consider the degree to which the AFR exceeds 25% in
determining whether the plan is reasonable under the circumstances. For organizations that
have participated in the CFC in prior years, the Office of CFC Operations will additionally
consider the organization's AFR during prior campaign years as a factor in determining whether
the formal plan is reasonable under the circumstances.
Attachment G - Annual Report
Compensated Staff Member who Also Serves on Board is Compensated
CFC regulations at 5 CFR §950.203(a)(5) require an organization seeking CFC eligibility to
certify that it is directed by an active and responsible governing body whose members have
no material conflict of interest and a majority of which serve without compensation. The
regulation does not distinguish between compensation as a staff member where that staff
member additionally serves on the Board, and compensation as a Board member in consideration
for performing Board work. OPM interprets its CFC regulation to mean that a paid staff
member who serves on the Board is a compensated member of the Board, even if the staff
member is not being compensated for performing Board work.
Board Members' Terms of Office and Meeting Dates and Locations
Every applicant must provide, as part of Attachment G, its Board members' terms of office
and meeting dates and locations in the previous year. Copies of the organization's bylaws
are not acceptable substitutes for specific terms of office. Further, information on
board members' terms of office and meeting dates and locations must represent the calendar
or fiscal year immediately preceding the campaign year for which the organization is
applying. This information does not have to be part of the applicant's published annual
report, but must be included with the application. In prior years, OPM had requested this
information in support of the certification that the organization is governed by an active
and responsible board. See, CFC Memorandum 2000-10. Commencing with the 2005 CFC, failure
to provide Board members' terms of office as well as Meeting Dates and Locations of Board
Meetings will result in a denial.
Annual Report - Contents Must Describe Activities During Year Covered
Annual reports or their substitutes (as defined in CFC regulations) must include a description
of the organization's services or activities during the year covered by the report and
identify the Board of Directors and chief administrative personnel. OPM will not accept
annual reports that contain only a description of mission and goals or historical
information about services and activities without a defined timeframe.
Disclosure of Federation Dues/Fees in Annual Report
Each Federation is required to include, in its annual report that is made available to the
public, a statement that sets forth details regarding member dues and/or service fee
arrangements with its member organizations. See CFC Memorandum 2002-13.
If you have questions or comments regarding this guidance, please send them by
electronic mail to cfc@opm.gov.
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