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###### Office of Personnel Management

          - 5 CFR Part 950

# AGENCY:

Office of Personnel Management.

# ACTION:

Notification.

# SUMMARY:

                        The Office of Personnel Management (OPM) is providing notice that the Acting Director is authorizing a variation from the regulatory public accountability standards to relieve practical difficulties and unnecessary hardships in complying with the strict letter of the regulation. The Acting Director has found that such a variation is within the spirit of the regulations and will ensure the achievement of campaign objectives. Specifically, for an 18-month period, OPM is modifying certain revenue thresholds for the various public accountability standards                               ( print page 102697)                            for charities participating in the Combined Federal Campaign (CFC).                    

# DATES:

The authorization of short-term regulatory variation standards are effective on December 18, 2024.

# FOR FURTHER INFORMATION CONTACT:

                        Keith Willingham, Director, Office of the CFC,                         *keith.willingham@opm.gov,*                         202-606-2564.                    

# SUPPLEMENTARY INFORMATION:

The CFC is the world's largest and most successful annual workplace charity campaign, with 35 CFC campaign zones throughout the country and overseas and raising millions of dollars each year. Pledges made by Federal civilian, retiree, postal, and military donors during the campaign season support non-profit organizations that meet CFC regulations and provide health and human welfare benefits throughout the world.

                    To provide public accountability, OPM generally requires participating charities to undergo a third-party audit of their finances. In a 1995 rulemaking, OPM exempted local charities from the audit requirement if they had annual revenue of less than $100,000. In 2014, OPM eliminated the distinction between “local” and “national” charities and expanded the exemption to all charities with revenue of less than $100,000.                     *See*5 CFR 950.203(a)(2)(i). In that rulemaking, OPM also added a second tier, allowing charities with revenue of $100,000 to under $250,000 to participate without an audit but with a review by an independent certified public accountant instead.                     *See*5 CFR 950.203(a)(2)(ii).                

Participation by charities in the CFC dropped precipitously over the last decade, however. Charities have explained that the audit requirement serves as a barrier to participation. Revenue reported by charities has increased, and more than 75 percent of charities now exceed the current audit threshold of $250,000 in reported revenue. At the same time, costs of audits have risen dramatically and now often exceed the value of donations collected through the CFC. Audit services can now range from $15,000-$30,000. Accordingly, a charity cannot justify the expense of the audit, which yield a net loss to the charity.

The mission of the CFC is to promote and support philanthropy through a program that is employee-focused, cost-efficient, and effective in providing all Federal employees the opportunity to donate. The CFC provides employees with an easy way to contribute to their charities of choice; so, when employees no longer find their favorite charity on the CFC list, they may not give as much or as often. Therefore, to attract more donors to the CFC and to retain and attract a more diverse group of charities, OPM is adjusting the audit requirements in an 18-month pilot program.

OPM's CFC regulations authorize the Director of OPM to “waive any of these [public accountability] standards and certifications upon a showing of extenuating circumstances.” 5 CFR 950.203(e). In addition, the Director may “exercise general supervision over all operations of the CFC and take all necessary steps to ensure the achievement of campaign objectives.” 5 CFR 950.102(c). Recognizing that the financial thresholds have not been adjusted in over ten years (and that the $100,000 threshold is almost 20 years old), OPM finds that immediate steps are warranted to facilitate participation by charities in the CFC.

                    Based on the feedback OPM has received from charities, the Acting Director has found that the current financial thresholds present extenuating circumstances that impair the achievement of campaign objectives as the thresholds have not been adjusted for inflation in over 10 years. Furthermore, the thresholds are inconsistent with the standards applied by other areas of the government. For example, the Office of Management and Budget currently requires audits for organizations that expend $750,000 or more in Federal funds.                     *See*2 CFR part 200, subpart F. Similarly, many similar state programs have raised their audit thresholds to $1,000,000. Because the existing regulatory thresholds are having a negative impact on the effectiveness of the CFC and revised thresholds would provide some necessary financial relief, the Acting Director finds that a limited waiver is appropriate. Specifically, waiving the audit requirement for charities with annual revenue of $1 million or less, and waiving the requirement for an independent review of financial statements for charities with annual revenue above $1 million but that receive less than $750,000 in CFC pledges will help address the extenuating circumstances of the increased revenues received by charities combined with the increased costs of financial auditing and review services without commensurate inflationary adjustments to the regulatory thresholds.                

                    Accordingly, OPM provides notice that, for the 18-month period after December 18, 2024, OPM will waive the regulatory thresholds for audits and/or reviews of financial statements for organizations with annual reported revenue of $1,000,000 or less on its IRS Form 990 or pro forma IRS Form 990 and will waive the regulatory thresholds for audits of financial statements for organizations with annual reported revenue above $1,000,000 and with less than $750,000 coming from CFC. Details are available at                     *https://cfccharities.opm.gov/​app/​#!/​home.*

                    All other organizations (                    *e.g.,*                     an organization with annual reported revenue above $1,000,000 and with $750,000 or more coming from CFC) continue to be required to undergo an annual financial statement audit for CFC purposes. The organization must account for its funds based on generally accepted accounting principles. A copy of the audited financial statements and auditors report must be included with the application.                     *See*5 CFR 950.203(a)(2)).                

## Next Steps

OPM plans to update its regulations governing the CFC (RIN 3206-AO66). OPM will assess the effectiveness of this waiver in terms of encouraging charity participation in CFC and whether there is a resultant increase in employee participation. OPM will also assess the extent to which these pilot programs affect the number of charities participating in CFC and which charities meet these proposed thresholds. OPM charity application reviewers at the local national, and international levels will study the audits and financial reviews submitted with applications to ensure that these thresholds are providing appropriate levels of accountability.

Office of Personnel Management.

Kayyonne Marston,

Federal Register Liaison.

[FR Doc. 2024-29992 Filed 12-17-24; 8:45 am]

BILLING CODE 6325-58-P