FR 2024-29992

The recent document from the Office of Personnel Management (OPM) outlines a temporary adjustment to the regulations governing the Combined Federal Campaign (CFC), a major workplace charity initiative. Over an 18-month period starting December 18, 2024, OPM intends to relax certain audit requirements for participating charities. Specifically, charities with annual revenues of up to $1 million will experience eased financial audit obligations. The adjustment aims to encourage more charities to participate in the CFC by reducing the financial and administrative burdens associated with the existing audit requirements.

Summary of the Document

The document announces that OPM is authorizing a temporary regulatory variation to relieve hardships for charities complying with the stringent financial audit requirements. The interim change will exempt charities earning up to $1 million from mandatory audits and provide leniency for those exceeding $1 million in annual revenue but collecting less than $750,000 from CFC donations. This move is intended to make it easier for more charities to participate and, in turn, aim to increase donor involvement, particularly from federal employees.

Significant Issues and Concerns

Several concerns arise from this waiver of financial audit requirements:

• Reduced Oversight: By exempting charities with revenues up to $1 million from financial audits, there is a heightened risk of diminished financial oversight. Such lack of scrutiny could potentially lead to misuse or inefficient allocation of funds.

• Transparency and Accountability: Without a detailed plan on how financial transparency and accountability will be maintained for those exempted, there is uncertainty about how the public can be assured that donated funds are appropriately managed.

• Vague Language and Ambiguity: Terms like "extenuating circumstances" lack clear definition, potentially leading to inconsistent application and gaps in compliance.

• Impact Measurement: Although the aim is to boost participation, the document does not thoroughly explain how the success of these changes will be measured or what contingency plans are in place if the intended outcomes are not achieved.

Broader Public Impact

The public, particularly federal employees who participate in the CFC, might benefit from an increase in the number and diversity of charities available for donation. This may encourage more widespread giving and foster a culture of philanthropy in the federal workforce. However, without sufficient oversight and accountability, there could be a risk that donations do not reach credible or impactful charities.

Impact on Specific Stakeholders

• Charities: Smaller charities with limited budgets could find it easier to participate in the CFC without the financial burden of audits. This regulatory relief could allow them to redirect resources to their primary missions rather than compliance costs.

• Donors: Federal employees, retirees, and other donors might have more choices and motivation to contribute, knowing that their donations are directly supporting a broader range of philanthropic organizations without being hindered by onerous administrative requirements.

• Regulatory and Accounting Professionals: The decrease in required audits might negatively affect accountants and auditors specializing in nonprofit financial reviews. Additionally, if the program does not provide adequate alternatives for financial accountability, regulatory bodies may have to contend with increased scrutiny or criticism from the public.

In conclusion, while OPM's initiative could potentially create a more inclusive and widely supported charitable fundraising environment within the federal community, essential safeguards and clarity are necessary to ensure robust financial stewardship and confidence in the management of charitable donations.

The document under discussion revolves around adjustments to financial requirements and thresholds for charities participating in the Combined Federal Campaign (CFC), a large-scale charity initiative. The changes, effective for 18 months from December 18, 2024, focus on financial audit requirements intended to aid charities' participation and alleviate the burdens placed on them by current compliance costs.

The Office of Personnel Management (OPM) is temporarily waiving the audit requirement for charities with annual revenue of $1,000,000 or less and exempting charities with revenue above this amount but with less than $750,000 in donations from the CFC from mandatory audits. This decision is grounded in the recognition that financial thresholds have not been adjusted for many years. OPM indicates that a significant number of charities now have revenues exceeding the previous audit threshold of $250,000, and the costs associated with financial audits have escalated to between $15,000 and $30,000, which can outweigh the financial benefits these charities receive from CFC donations.

However, this adjustment raises several concerns. Notably, the waiver for charities with revenue up to $1,000,000 might reduce the overall financial oversight, potentially increasing the risk of misuse of funds. While the intent is to encourage more charities to participate by reducing compliance costs, the exemption could lead to lapses in financial accountability.

For charities exceeding $1,000,000 in revenue but receiving less than $750,000 through CFC, the exemption from audit requirements could result in reduced adherence to financial standards. This change assumes that raising the audit thresholds will inherently boost charity and donor participation, yet the document lacks detailed evidence or a plan on how this impact will be measured.

The OPM regulations permit this kind of waiver under "extenuating circumstances," yet this term remains vague without any specific definition in the document, leaving room for varied interpretations and possible inconsistent application of the waiver. This ambiguity also relates to the broader issue of how financial transparency will be maintained if the audits are not mandatory—an area the document does not sufficiently address.

The pilot program does not mention how it will maintain oversight or accountability for charities now exempt from audits, nor does it elaborate on alternative measures that will ensure financial standards are upheld. Furthermore, there is no mention of contingency plans if the initiative does not yield the intended outcomes of increased charity participation or employee donations.

In conclusion, while the financial references in the document aim to ease participation barriers for charities in the CFC by adjusting outdated audit thresholds, they also introduce potential risks associated with diminished financial oversight and transparency. The implications of these changes and their monitoring will require careful review to safeguard against possible misuse of funds and to ensure continued public trust in the CFC process.