The New CFC Regulations Affect Your Cash Flow

Many of our member charities are noticing discrepancies in their monthly distributions from their CFC federations that can't be explained by changes in their gross pledges compared to previous years.  Namely, less money is coming in the door than expected  Why?

The answer is in the new CFC regulations.  Under the previous regulations, local CFC campaigns with revenues of $1,000,000 or more were required to make monthly distributions of gifts received.   Under the new regulations, campaigns of any size may opt to distribute on a quarterly rather than on a monthly basis.  The important word here is "opt."  Campaigns are not required to announce in advance whether they have chosen monthly or quarterly distribution schedules.  And when the new regulations went into effect this spring, not a single campaign did so.  In fact, most campaigns didn't decide until May 1 or later which schededule they would adopt.  Compounding the problem, in the short term, the two largest CFCs -- DC and Overseas -- botched their first distributions for the Fall 2006 campaign, resulting in lower distribution amounts than would otherwise have been available.

It doesn't take a rocket scientist to figure out that paying out a lump sum at the end of three months versus paying out monthly is going to raise bad news cash flow issues for CFC charities.  But don't blame your CFC federation.  Federations have no say in the matter.  They can't control how fast the campaigns send the money to them.  All they can do is get the money they do get in out to you as fast and accurately as possible.  And Independent Charities of America and its sister CFC federations do an excellent job of that, as OPM's Office of CFC Operations has publicly noted in praise.

Uneven cash flow from workplace campaigns is a problem that's going to get worse over time.  Corporate campaigns and many municipal campaigns are already on a quarterly schedule.  I expect the majority of local CFCs that haven't already done so to eventually switch from montly to quarterly distributions.  It's just an economic reality that it costs money to transmit money; it's cheaper for the campaigns to do it quarterly.

We have always counseled our member charities to not rely on CFC or other workplace income for liquidity because of the wild swings that can happen in workplace revenue from year to year.  With quarterly payments a reality, heeding this advise is more important than ever.