[Federal Register Volume 71, Number 125 (Thursday, June 29, 2006)]
[Proposed Rules]
[Pages 37003-37014]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 06-5795]


 ========================================================================
 Proposed Rules
                                                 Federal Register
 ________________________________________________________________________
 
 This section of the FEDERAL REGISTER contains notices to the public of 
 the proposed issuance of rules and regulations. The purpose of these 
 notices is to give interested persons an opportunity to participate in 
 the rule making prior to the adoption of the final rules.
 
 ========================================================================
 

  Federal Register / Vol. 71, No. 125 / Thursday, June 29, 2006 / 
Proposed Rules  

[[Page 37003]]



OFFICE OF PERSONNEL MANAGEMENT

5 CFR Part 950

RIN 3206-AL05


Solicitation of Federal Civilian and Uniformed Service Personnel 
for Contributions to Private Voluntary Organizations--Eligibility and 
Public Accountability Standards

AGENCY: Office of Personnel Management.

ACTION: Proposed rule.

-----------------------------------------------------------------------

SUMMARY: The Office of Personnel Management (OPM) is issuing proposed 
changes in eligibility requirements and public accountability 
standards, and to several other parts of the regulations, for the 
Combined Federal Campaign (CFC). These proposed changes are intended to 
streamline the significant eligibility requirements and public 
accountability standards and other administrative areas to reduce the 
burden on applicant charitable organizations seeking to qualify for the 
CFC, simplify the administrative process of determining whether 
charitable organizations are eligible to participate in the CFC and 
facilitate modernization of the CFC program.

DATES: We will consider comments received by August 14, 2006.

ADDRESSES: You may submit comments, identified by RIN number, by any of 
the following methods:
     Federal eRulemaking Portal: http://www.regulations.gov. 
Follow the instructions for submitting comments.
     E-mail: [email protected]. Include ``RIN 3206-AL05'' in the 
subject line of the message.
     Fax: (202) 606-0902.
     Mail: Mara T. Patermaster, Director, Office of CFC 
Operations, U.S. Office of Personnel Management, Room 5450, 1900 E 
Street, NW., Washington, DC 20415.
     Hand Delivery/Courier: Director, Office of CFC Operations, 
U.S. Office of Personnel Management, Room 5450, 1900 E Street, NW., 
Washington, DC 20415.

FOR FURTHER INFORMATION CONTACT: Mark W. Lambert, Senior Compliance 
Officer for the Office of CFC Operations, by telephone on (202) 606-
2564, by FAX on (202) 606-0902, or by e-mail at [email protected].

SUPPLEMENTARY INFORMATION: The CFC regulations were last revised more 
than 10 years ago. OPM is issuing proposed changes to its regulations 
governing the solicitation of Federal civilian and uniformed services 
personnel at the workplace for contributions to private non-profit 
organizations through the CFC under the authority of Executive Order 
12353 (March 23, 1982). OPM has plenary authority under 5 CFR part 950 
to administer the CFC in compliance with legal standards. Public Law 
(Pub. L.) 100-202 Sec.  101(m), requires OPM to maintain certain 
eligibility criteria for CFC participation by organizations and 
federations as well as public accountability standards similar to those 
that were in effect between 1984 and 1987. These CFC criteria were 
designed to offer donors assurances of the integrity of the program's 
participating charitable organizations. However, assuring compliance 
has created a burdensome application and review process for charitable 
organizations, locally within each campaign for Local Federal 
Coordinating Committees (LFCC) and within OPM. At the time when the CFC 
was established in the 1960s, OPM filled a regulatory void by setting 
standards for evaluating the fiscal accountability and governance of 
charitable organizations. Today, this role is better served by the 
industry, its oversight organizations and the Internal Revenue Service 
Division of Tax Exempt and Government Entities. The changes proposed 
will put more responsibility on the donor to perform research on 
charitable organizations and to utilize industry oversight groups to 
ensure that their donations are being used effectively and efficiently 
by these organizations.
    There are currently 16 core standards of eligibility and public 
accountability and 3 core administrative requirements that a charitable 
organization must satisfy in order to participate in the CFC. These 
appear in the form of certifications in the annual application. Many 
require documentation, such as audited financial statements and an 
annual report to demonstrate compliance. The proposed changes to these 
regulations remove eight of the standards, including the requirement 
that participating organizations' administrative and fundraising 
expenses not exceed 25 percent of its total revenue. As a service to 
donors, OPM will still require the applicant to calculate the 
administrative and fundraising rate (AFR) and report it to donors. Some 
of the remaining standards will be modified to eliminate documented 
proof of compliance. OPM will retain the right to request documented 
evidence of compliance with CFC regulations from any applicant or 
participating organization. Failure to provide evidence of compliance 
that is satisfactory to OPM may result in a denial to participate in 
the CFC or removal from the CFC. OPM will retain eight of the standards 
and three core administrative requirements for applicant organizations. 
The standards and administrative requirements that will be retained are 
as follows:
    1. 5 CFR 950.202(a)--National List Eligibility Requirements--
Certify that it provides or conducts real services, benefits, 
assistance, or program activities, in 15 or more different states or a 
foreign country over the 3 year period immediately preceding the start 
of the year involved. The regulations will be clarified to indicate 
that a detailed schedule is required as part of the application that 
describes activities in each state or foreign country in each year.
    2. 5 CFR 950.202(b)--National List Eligibility Requirements--
Certify that it is recognized by the Internal Revenue Service as tax-
exempt under 26 U.S.C. 501(c)(3) and to which contributions are tax-
deductible pursuant to 26 U.S.C. 170(c)(2). OPM proposes to clarify 
that these organizations must be public charities, not private 
foundations.
    3. 5 CFR 950.203(a)(1)--Public Accountability Standards--Certify 
that the organization is a human health and welfare organization 
providing services, benefits, or assistance to, or conducting 
activities affecting, human health and welfare. No changes are proposed 
to this standard.
    4. 5 CFR 950.203(a)(2)--Public Accountability Standards--Certify 
that it accounts for its funds in accordance with generally accepted 
accounting

[[Page 37004]]

principles (GAAP) and that an audit of the organization's fiscal 
operations is completed annually by an independent certified public 
accountant in accordance with generally accepted auditing standards 
(GAAS). This standard will be revised to apply only to organizations 
which report $250,000 or more in revenue on the organization's IRS Form 
990. If an organization indicates revenue of less than $250,000 on its 
IRS Form 990, then it will be required to certify that it has controls 
in place to ensure that funds are properly accounted for and that it 
can provide accurate timely financial information to interested 
parties. OPM proposes to raise the revenue threshold amount to reduce 
unnecessary administrative burdens and expenses to otherwise 
financially accountable organizations with smaller budgets. Such 
applicants will no longer be required to submit a copy of a recent 
audit with their application. However, OPM retains the right to request 
a copy of the audit and to sanction or penalize the organization if it 
does not timely produce an acceptable copy.
    5. 5 CFR 950.203(a)(3)--Public Accountability Standards--Provide a 
completed copy of the organization's IRS Form 990, including signature, 
with the application regardless of whether or not the IRS requires the 
organization to file this form. OPM proposes to revise this standard to 
make it a certification. OPM will continue to require a copy of the 
completed IRS Form 990 together with supplemental statements and 
Schedule A to be included with the application. If the organization 
does not file an IRS Form 990, OPM will nonetheless require submission 
of a pro forma IRS Form 990, page 1 only. OPM will no longer routinely 
check to determine whether the IRS Form 990 revenues and expenses 
reported reconcile with the audited financial statements. This 
reconciliation is required to be performed on the IRS Form 990 in Parts 
IV-A and IV-B by the organization. OPM strongly encourages Federal 
donors to utilize the variety of reports and information on 
participating CFC charities which is publicly available, through the 
Internet and other sources, to satisfy themselves regarding the 
financial accountability of any given organization.
    6. 5 CFR 950.203(a)(4)--Public Accountability Standards--Provide a 
computation of the organization's percentage of total support and 
revenue spent on administrative and fundraising. This percentage shall 
be computed from information on the IRS Form 990, submitted pursuant to 
Sec.  950.203(a)(3), by adding the amount spent on ``management and 
general'' (line 14) to ``fundraising'' (line 15) and then dividing the 
sum by ``total revenue'' (line 12). No changes are proposed to this 
standard, but references to specific lines of the IRS Form 990 will be 
removed in anticipation of future changes to the Form.
    7. 5 CFR 950.203(a)(5)--Public Accountability Standards--Certify 
that the organization 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. No changes are proposed 
to this standard.
    8. 5 CFR 950.203(a)(8)--Public Accountability Standards--Certify 
that contributions are effectively used for the announced purposes of 
the charitable organization. No changes are proposed to this standard.
    9. 5 CFR 950.203(a)(12)--Public Accountability Standards--Provide a 
statement that the certifying official is authorized by the 
organization to certify and affirm all statements required for 
inclusion on the national list. No changes are proposed to this 
requirement.
    10. 5 CFR 950.203(a)(13)--Public Accountability Standards--Provide 
a statement in 25 words or less describing the program activities of 
the charitable organization. This will be removed as a standard, but it 
is retained as an administrative requirement in 5 CFR 950.401(g)(2) and 
will be required from each charitable organization completing the CFC 
application.
    11. 5 CFR 950.605--Sanctions Compliance Certification--Each 
federation, federation member and unaffiliated organization applying 
for participation in the CFC must, as a condition of participation, 
complete a certification that it is in compliance with all statutes, 
Executive orders, and regulations restricting or prohibiting U.S. 
persons from engaging in transactions and dealings with countries, 
entities or individuals subject to economic sanctions administered by 
the U.S. Department of the Treasury's Office of Foreign Assets Control 
(OFAC). No changes are proposed to this certification.
    The eight standards that will be removed are:
    1. 5 CFR 950.202(c)--National List Eligibility Requirements--
Certify that the organization has no expenses connected with lobbying 
and attempts to influence voting or legislation at the local, State, or 
Federal level or alternatively, that those expenses would classify the 
organization as a tax-exempt organization under 26 U.S.C. 501(h). OPM 
proposes to remove this standard because it is already a requirement 
for charitable organizations to qualify as a tax-exempt entity under 
section 501(c)(3) of the Internal Revenue Code and to maintain that 
status with the IRS. In addition, some applicant organizations have 
misinterpreted the standard to mean that no lobbying is permitted, 
when, in fact, lobbying is permissible if consistent with Internal 
Revenue Code requirements.
    2. 5 CFR 950.203(a)(4)(i)--Public Accountability Standards--If an 
organization's administrative and fundraising expenses exceed 25 
percent of its total support and revenue, it must certify that its 
actual expenses for administration and fundraising are reasonable under 
all the circumstances presented. It must provide an explanation with 
its application and also include a formal plan to reduce these expenses 
below 25 percent. OPM proposes to remove the 25 percent threshold for 
administrative and fundraising rates because Federal employees 
participating in the CFC should be knowledgeable donors and may consult 
a variety of publicly available reports and publications, many on the 
Internet, to learn about the administrative and fund raising status of 
charities they are considering for their donations. Federal donors also 
can and should review the annual CFC brochure itself which will 
continue to report the administrative and fundraising rate of all 
participating charities to determine whether an organization's 
administrative and fundraising rate is acceptable to that donor. OPM 
encourages Federal donors to be as knowledgeable as possible about the 
organizations which they support.
    3. 5 CFR 950.203(a)(4)(ii)--Public Accountability Standards--The 
Director may reject any application from an organization with 
fundraising and administrative expenses in excess of 25 percent of 
total support and revenue, unless the organization demonstrates to the 
satisfaction of the Director that its actual expenses for those 
purposes and its plan to reduce them are reasonable under the 
circumstances. OPM believes that Federal employees should have an 
opportunity to donate to a wide range of charitable organizations and 
should not be limited in their choice to those charities with 
particular administrative and fundraising rates deemed acceptable to 
OPM, so long as the rate information is available to them to make an 
informed decision. In addition, this requirement conforms to the 
proposed removal of 5 CFR 950.203(a)(4)(i). As in other proposed 
regulatory changes, OPM encourages Federal donors to be

[[Page 37005]]

knowledgeable about those charities to which they choose to donate.
    4. 5 CFR 950.203(a)(6)--Public Accountability Standards--Certify 
that the organization's fundraising practices prohibit the sale or 
lease of its CFC contributor lists. This standard applied only when a 
donor authorized the release of his or her contact information to the 
organization. Although this standard is being removed, the requirement 
for a donor to authorize his or her contact information will be 
retained. If a donor does not authorize this release, then his or her 
contact information will be kept confidential by the Principal Combined 
Fund Organization (PCFO) as proprietary information as required by 5 
CFR 950.601(c). OPM believes that once a donor authorizes the release 
of his or her contact information, the use of this information, 
including whether it may be sold or be subject to other commercial 
activity, is an issue between the donor and the charitable organization 
and not one that OPM can track or enforce. OPM looks forward to 
comments on this proposed change to consider steps OPM might take to 
increase potential donor awareness of the possible implications of 
releasing donor information to a charity.
    5. 5 CFR 950.203(a)(7)--Public Accountability Standards--Certify 
that its publicity and promotional activities are based upon its actual 
program and operations, are truthful and non-deceptive, and make no 
exaggerated or misleading claims. OPM believes this standard is 
redundant and is adequately safeguarded by enforcement of other public 
accountability standards.
    6. 5 CFR 950.203(a)(9)--Public Accountability Standards--Certify 
under which governmental entity the charitable organization is 
chartered, incorporated or organized (congressionally chartered or the 
state in which it is registered). OPM believes this information is not 
required to enforce and monitor public accountability, particularly in 
view of appropriate presentation of IRS employer identification 
numbers.
    7. 5 CFR 950.203(a)(10)--Public Accountability Standards--Certify 
that the organization has received no more than 80 percent of its total 
support and revenues from government sources as computed by dividing 
line 1c by line 12 from the IRS Form 990 submitted pursuant to Sec.  
950.203(a)(3). The IRS already requires charitable organizations to 
meet a public support test in order to obtain and maintain its 
501(c)(3) tax-exempt status. Therefore, this standard is duplicative of 
5 CFR 950.202(b).
    8. 5 CFR 950.203(a)(11)--Public Accountability Standards--Certify 
that the organization prepares and makes available to the public upon 
request an annual report that includes a full description of the 
organization's activities and supporting services and identifies its 
directors and chief administrative personnel. The significant 
information sought in the annual report is already certified to or 
obtained from application of other eligibility requirements and public 
accountability standards contained in 5 CFR 950.202(a) and 5 CFR 
950.203(a)(3). In addition, OPM will encourage donors to obtain an 
annual report directly from the charity, if the donor would like to 
seek further information on the charity.
    Corresponding changes will be made to the local list eligibility 
requirements and national and local federation standards contained in 5 
CFR 950.204, 950.301, and 950.303. However, national, international and 
local federations will still be required to submit evidence of 
compliance with the audit, financial, governance and annual report 
requirements. These requirements will be clarified in 5 CFR 
950.301(e)(2) and 950.303(e)(2). Federations provide services to 15 or 
more member organizations. Services include the receipt and 
distribution of funds through the CFC. Because federations handle 
approximately 80 percent of all funds distributed through the CFC, the 
documented evidence of compliance for federations will continue to be 
required.
    In addition to the changes described above, OPM is proposing 35 
other administrative regulatory changes to clarify information and 
processes within the CFC, address areas of concern noted over the years 
by OPM and stakeholders, and to recognize the use of electronic 
technology in the administration of the CFC program. These 
administrative regulatory changes are:
    1. OPM proposes changes throughout many sections of 5 CFR part 950 
to modify references associated with the use of paper-based information 
and processes such that these new terms apply within an electronic CFC 
environment. Examples include the replacement of the term ``brochure'' 
with ``charity list'', ``pledge card'' with ``pledge form'' and 
``campaign materials'' with ``campaign information.''
    2. 5 CFR 950.102(a) limits the solicitation of donors to a six week 
period between September 1 and December 15. OPM proposes to eliminate 
the restriction on the six week period and allow local campaign 
leadership to determine the length of the solicitation that may occur 
between September 1 and December 15.
    3. 5 CFR 950.102(c) states that the Director exercises general 
supervision over all operations of the CFC, and takes all necessary 
steps to ensure the achievement of campaign objectives. OPM proposes to 
clarify and specifically articulate its authority to perform audits and 
investigations of all CFC activities and stakeholders and resolve any 
identified issues resulting from these audits and investigations.
    4. 5 CFR 950.103(f) describes a six week period for soliciting 
donors similar to that described in item (2) above. Corresponding 
changes are proposed.
    5. 5 CFR 950.103(g) defines the types of personnel that can be 
solicited and contribute to the CFC. The regulation states that 
contractor personnel, credit union employees and other persons employed 
on Federal premises, as well as retired Federal employees can 
contribute, but may not be solicited. This has led to much confusion 
about how to approach, but not solicit, these non-Federal employees 
working on Federal premises and retirees. The change proposed removes 
the restriction that these non-Federal employees not be solicited, but 
maintains that they be present on Federal premises to contribute to the 
CFC.
    6. 5 CFR 950.103(h) states that a Federal employee may participate 
in a particular CFC only if that employee's official duty station is 
located within the geographic boundaries of that CFC. OPM proposes to 
allow for contributions to organizations outside of an employee's 
official duty station in the cases of emergencies and disasters as 
defined in 5 CFR 950.102(a) upon approval by OPM's Director. OPM 
proposes to remove geographic restrictions on giving completely upon 
implementation of appropriate technology. Because OPM anticipates 
elimination of these geographic restrictions on giving, local 
eligibility based on adjacency and statewide presence will no longer be 
necessary and are eliminated commencing with implementation of 
electronic technology that removes geographic restrictions on giving as 
announced by the Director. Also see changes proposed to Sec.  
950.204(b)(1).
    7. 5 CFR 950.104(b)(6) encourages local Federal agencies to appoint 
loaned executives to assist in the campaign and grant administrative 
leave to all loaned executives appointed. OPM proposes to correct this 
error and clarify that Federal agencies should not place loaned 
executives on administrative leave since

[[Page 37006]]

the CFC activities are to be considered part of the official duties of 
the Federal employee loaned to assist in the CFC.
    8. 5 CFR 950.104(c) states that the LFCC must annually solicit 
applications for the PCFO via public notice. OPM proposes to remove the 
requirement for an annual application and allow LFCC's to enter into 
multi-year agreements, at their discretion. OPM also proposes the 
removal of the requirement to solicit the PCFO applications via a 
public notice and provide the LFCC discretion as to how to announce the 
solicitation as long as it reaches the audience of prospective 
applicants.
    9. 5 CFR 950.106(a) states the amount a PCFO may recover for 
campaign expenses shall not exceed 10 percent of the estimated budget. 
OPM proposes to correct the error in this subsection, which should 
refer to 110 percent of the estimated budget.
    10. 5 CFR 950.109 describes certain conflicts of interest for 
Federal employees who serve as a LFCC member or fundraising 
coordinator. OPM proposes to add to the description a noted instance 
addressed via CFC Memorandum 2002-15.\1\
---------------------------------------------------------------------------

    \1\ OPM issues policy and administrative guidance to campaigns 
through numbered memoranda.
---------------------------------------------------------------------------

    11. 5 CFR 950.201(a)(1) and (2) discuss eligibility for national 
organizations to be included on a national list. OPM proposes adding 
references for international organizations, which must also meet these 
criteria and clarifying the Director's ability to consider corrective 
action regarding any prior violation of regulation or directive, 
sanction, or penalty, as appropriate, prior to determining eligibility.
    12. 5 CFR 950.204(b)(1) is modified to eliminate adjacency and 
statewide presence eligibility requirements commencing with the 
implementation of electronic technology that removes geographic 
restrictions on giving as announced by the Director. Also see changes 
proposed to Sec.  950.103(h). In addition, OPM clarifies this 
subsection to define an adjacent local campaign.
    13. 5 CFR 950.204(b)(2)(iii) is a newly proposed regulation that 
may recognize financial relationships between national organizations 
and their bona fide local affiliates depending on how they are 
structured. The proposed regulation considers two types of structures 
for the national and local affiliated organization relationships. The 
first is when there is a relationship between the national organization 
and local affiliate based on an IRS group tax-exemption determination. 
The second considers a relationship between a national organization and 
local affiliate when there is not an IRS group tax-exemption 
determination. Under both scenarios, the proposed regulation removes 
the requirement for the local affiliate to maintain its own audited 
financial statements, provided its financial activities are included in 
the national organization's audited financial statements. If a local 
affiliate is covered by an IRS group tax-exempt determination, the 
local affiliate may additionally rely on an IRS Form 990 group return 
filed by the national organization on its behalf and submit a pro forma 
IRS Form 990, page 1, prepared for the local affiliate with its own 
information. The pro forma 990 is used by OPM to calculate an 
administrative and fundraising rate.
    14. OPM proposes adding a subsection 5 CFR 950.204(g) that 
clarifies the LFCC's ability to consider corrective action regarding 
any prior violation of regulation or directive, sanction, or penalty, 
as appropriate, prior to determining eligibility of local 
organizations.
    15. 5 CFR 950.301(a) states that the Director may recognize 
national and international federations that conform to eligibility and 
accountability standards. OPM proposes clarifying the Director's 
ability to consider corrective action regarding any prior violation of 
regulation or directive, sanction, or penalty, as appropriate, prior to 
determining eligibility of national and international federations.
    16. 5 CFR 950.301(c) states that an organization may apply for 
inclusion as a national federation to participate in the CFC if the 
applicant has 15 or more member charitable organizations that meet the 
eligibility criteria of Sec. Sec.  950.202 and 950.203. A national 
federation must provide copies of applications for all of its members 
in the initial year that it applies as a federation, but only at OPM's 
request after the initial year. OPM proposes to add clarifying language 
that the federation, itself, does not count among the 15 or more 
members required to receive federation status. OPM proposes to instruct 
federations to provide OPM with applications for any former or new 
member organizations that were not CFC participating members of that 
federation in the previous year's campaign.
    17. 5 CFR 950.301(d) discusses the role of national and 
international federations. OPM will make a terminology change to 
conform to a terminology change proposed in 5 CFR 950.603(a).
    18. 5 CFR 950.301(e)(2) requires national and international 
federations to certify that their financial activities conform to GAAP 
and that they are annually audited by an independent certified public 
accountant in accordance with GAAS. It further requires a copy of the 
audit and that the audit must verify that the federation is honoring 
designations made to each member organization. Finally, the current 
regulation waives the audit requirement for newly created federations 
operating for less than a year. OPM proposes to clarify and simplify 
the language such that it applies all eligibility requirements and 
public accountability standards, contained in 5 CFR 950.202 and 950.203 
and required of independent organizations and federation members, to 
the national and international federations. OPM does not view this as a 
substantive change.
    19. 5 CFR 950.301(e)(2)(iii) requires national and international 
federations to disclose important administrative expense information to 
the CFC and donors in its annual report.
    20. 5 CFR 950.303(a) states that the LFCC must approve local 
federations that conform to eligibility and public accountability 
standards. OPM proposes to clarify the LFCC's ability to consider 
corrective action regarding any prior violation of regulation or 
directive, sanction, or penalty, as appropriate, prior to determining 
eligibility of local federations.
    21. 5 CFR 950.303(c) is the same requirement for local federations 
as that described in item 16 above for 5 CFR 950.301(c). The changes 
described for the national and international federations also are 
proposed for local federations.
    22. 5 CFR 950.303(d) discusses the role of local federations. OPM 
will make a terminology change to conform to a terminology change 
proposed in 5 CFR 950.603(a).
    23. 5 CFR 950.303(e)(2) is the same requirement for local 
federations as that described in item 18 above for 5 CFR 950.301(e)(2). 
The changes described for the national and international federations 
also are proposed for local federations.
    24. 5 CFR 950.303(e)(2)(iii) is the same requirement for local 
federations as that described in item 19 above for 5 CFR 
950.301(e)(2)(iii). The changes described above for national and 
international federations also are proposed for local federations.
    25. 5 CFR 950.401(g)(3) states that each national and international 
federation and charitable organization will be assigned a code number 
by OPM and each local federation and local charitable organization will 
be assigned

[[Page 37007]]

code numbers by the LFCC. OPM proposes to modify this regulation to 
facilitate alternative mechanisms by which OPM may assign charity 
codes.
    26. 5 CFR 950.601 provides a process for authorizing the release of 
donor names and addresses and for the transmittal of this information 
to charities to which the donors designated. OPM proposes changing the 
terms ``names and address'' to ``information.'' This change enables OPM 
to allow other donor information to be released, such as contribution 
amount and home email address. Donors have indicated that they would 
like the option to release additional information such as the amount 
contributed to charities, along with their names and addresses. OPM 
looks forward to comments on this proposed change to assure itself that 
we are changing the regulation in a manner consistent with Federal 
donor views.
    27. 5 CFR 950.604 specifies that federations, PCFO's and other 
participants shall retain documents pertinent to the campaign for three 
campaign years. OPM proposes to clarify that three campaign years is 
actually three completed campaign periods and is not based on calendar 
years.
    28. 5 CFR 950.801(a)(1) specifies that during a 30 calendar day 
period between January and March, as determined by the Director, OPM 
will accept applications from organizations seeking to be listed on the 
national and international list. OPM proposes to modify this section to 
remove the defined period of a 30-calendar day period between January 
and March and replace it with a period determined by the Director. OPM 
will create, maintain, and issue a calendar of events each year to 
define the applicable period. Initially, OPM will provide for a 
specific 60-calendar day period between December and February as the 
period during which OPM will accept applications.
    29. 5 CFR 950.801(a)(2) states that within 35 calendar days of the 
closing of the receipt of applications, the Director will notify each 
national and international applicant of the results of the application 
review. OPM proposes to remove the defined 35 day requirement and will 
publish an anticipated date for notification on the calendar of events 
that OPM will maintain.
    30. 5 CFR 950.801(a)(3) states that the LFCC must select the PCFO 
no later than March 15. OPM proposes to remove the reference to March 
15 and state that the LFCC must select the PCFO no later than a date to 
be determined by OPM. OPM will provide the date in its calendar of 
events and initially set the date as February 15 to allow campaigns to 
begin early planning for the upcoming campaign.
    31. 5 CFR 950.801(a)(4) requires the Director to issue a national 
and international list of eligible organizations by June 30. OPM 
proposes to remove the specific date and state by a date determined by 
the Director.
    32. 5 CFR 950.801(b) requires the Director to annually issue a 
timetable for accepting and processing national and international 
applications. OPM proposes to modify this section to specify that the 
Director will create, maintain and issue a calendar of events with 
specific dates that include the accepting and processing of national 
and international applications as well as other significant CFC dates.
    33. 5 CFR 950.901(f)(1) requires the remittance check sent by 
payroll offices to the PCFO each pay period to be accompanied by a 
statement identifying the agency, the dates of the pay period and the 
total number of employee deductions. OPM proposes to add the pay period 
number to the information required to be on this statement. PCFOs often 
have trouble determining when they have received the complete number 
(12 or 26 pay periods) of employee deductions from payroll offices. 
Adding the pay period number will assist PCFOs with this determination.
    34. 5 CFR 950.901(i)(1) and (i)(2) each contain dates for the PCFO 
to notify charitable organizations of the amount of pledged 
contributions (no later than February 15) and to begin its periodic 
distributions to charitable organizations. OPM proposes to remove the 
specific dates referenced in the regulation and state that these 
actions will occur no later than a date determined by OPM. OPM will 
publish the dates in its calendar of events. Initially, OPM will extend 
the notification date to March 15. OPM proposes to remove the 
requirement for monthly payments and allow all campaigns to make 
quarterly payments beginning no later than April 1.
    35. 5 CFR 950.105(e), 950.302(c), 950.302(d), 950.304(c), 
950.304(d), 950.403, and 950.603 all provide for certain penalties and 
sanctions for federations, unaffiliated organizations, and PCFOs. OPM 
proposes to clarify and combine these penalties and sanctions into 5 
CFR 950.603 and remove the other references from the regulations.
    In an effort to develop eligibility and public accountability 
standards and administrative processes that serve both the public 
interests and meets the needs of the stakeholder community, including 
CFC charitable organization applicants and Federal donors, comments are 
now being solicited for consideration prior to the 2007 CFC and 
subsequent Campaigns.
    Comments are invited on what issues, if any, are presented by the 
approach proposed by OPM for the 2007 and subsequent campaigns in light 
of the current CFC eligibility and public accountability standards in 5 
CFR 950.201, 950.202, 950.203, 950.204, 950.301 and 950.303 and other 
current administrative terms and processes discussed throughout 5 CFR 
part 950. Comments on proposed regulatory changes that affect the 
potential use of donor information, such as that in section 
950.203(a)(6), and the expansion of donor information to include home 
email address, such as in 950.601, especially are encouraged. OPM also 
seeks comments from charitable organizations participating in the 
Combined Federal Campaign as well as from Federal donors. It is noted 
that some CFC application and reporting forms may need to be revised as 
a result of these proposed regulatory changes. Any such changes will be 
publicly announced prior to an applicant charity's need to use such 
forms.

Waiver of 60-Day Comment Period for Proposed Rulemaking

    Pursuant to 5 U.S.C. 553(b)(3)(B), I find that good cause exists to 
waive the 60-day comment period for general notice of proposed 
rulemaking. Limiting the comment period for the proposed regulations to 
45 days will enable OPM to issue final regulations in 2006, 
sufficiently in advance of the 2007 CFC to enable charitable 
organizations and the Government to benefit from the streamlined 
eligibility and public accountability requirements for purposes of the 
2007 CFC. A longer comment period may result in significant additional 
costs to the Government as well as for national and international 
organizations and federations, caused by potential confusion over what 
regulations are in effect during the earliest stage at which charities 
begin to put together their CFC applications. While the CFC begins in 
the fall of the campaign year, charities, especially those that apply 
through a federation, begin the application process late in the year 
preceding the campaign. Any confusion over which CFC regulations are in 
effect at the time organizations are preparing their applications for 
the CFC could result in frustration with the application process as 
well as denials of applications, appeals, potential litigation, and bad 
will toward the CFC itself.

[[Page 37008]]

Regulatory Flexibility Act

    I certify that this regulation will not have a significant economic 
impact on a substantial number of small entities. Charitable 
organizations applying to the CFC have an existing, independent 
obligation to comply with the eligibility and public accountability 
standards contained in current CFC regulations. Streamlining these 
standards will be less burdensome.

Executive Order 12866, Regulatory Review

    This rule has been reviewed by the Office of Management and Budget 
in accordance with Executive Order 12866.

List of Subjects in 5 CFR part 950

    Administrative practice and procedures, Charitable contributions, 
Government employees, Military personnel, Nonprofit organizations and 
Reporting and recordkeeping requirements.

    U.S. Office of Personnel Management.
Linda M. Springer,
Director.
    Accordingly, OPM is proposing to amend 5 CFR part 950 as follows:

PART 950--SOLICITATION OF FEDERAL CIVILIAN AND UNIFORMED SERVICE 
PERSONNEL FOR CONTRIBUTIONS TO PRIVATE VOLUNTARY ORGANIZATIONS

    1. The authority citation for part 950 continues to read as 
follows:

    Authority: E.O. 12353 (March 23, 1982), 47 FR 12785 (March 25, 
1982), 3 CFR, 1982 Comp., p. 139. E.O. 12404 (February 10, 1983), 48 
FR 6685 (February 15, 1983), Pub. L. 100-202, and Pub. L. 102-393 (5 
U.S.C. 1101 Note).

    2. Amend part 950 as follows:
    a. Remove the words ``brochure'' and ``brochures'' and add in their 
place ``Charity List'' and ``Charity Lists'', respectively, wherever 
they appear;
    b. Remove the words ``card'' and ``cards'' and add in their place 
``form'' and ``forms'', respectively, wherever they appear; and
    c. Remove the words ``materials'', ``pamphlet'', and ``pamphlets'' 
and add in their place ``information'' wherever they appear.
    3. In Sec.  950.101 remove the definition of Campaign Year and add 
the definitions of Campaign Period, Charity List, and Independent 
Organization in alphabetical order and in the definition of 
International General Designation Option remove the word ``campaign'' 
to read as follows:


Sec.  950.101  Definitions.

* * * * *
    Campaign Period means generally a 24 month period beginning with 
the selection of the Principal Combined Fund Organizations (PCFO) or 
renewal of the PCFO's agreement and ending with final disbursements to 
charitable organizations.
* * * * *
    Charity List means the official list of charities approved by OPM 
for inclusion in the CFC within a given geographic solicitation area.
* * * * *
    Independent Organization means a charitable organization that is 
not a member of a Federation for the purposes of the Combined Federal 
Campaign.
* * * * *
    4. In Sec.  950.102 amend paragraph (a) by removing the text ``6 
week'' from the second sentence, and amend paragraph (c) by adding two 
sentences at the end of the paragraph to read as follows:


Sec.  950.102  Scope of the Combined Federal Campaign.

* * * * *
    (c) * * * OPM has the authority to audit, investigate, and report 
on the administration of any campaign, the organization that 
administers the campaign, and any national, international and local 
federation, federation member or independent organization that 
participates in the campaign for compliance with these regulations. The 
Director resolves any issues reported and determines sanctions or 
penalties, as warranted under Sec.  950.603.
    5. In Sec.  950.103, revise paragraphs (f), (g) and (h) to read as 
follows:


Sec.  950.103  Establishing a local campaign.

* * * * *
    (f) Each year the LFCC must establish the time period to solicit 
employees. The solicitation may not begin before September 1 and in no 
event will it extend beyond December 15 of each year.
    (g) Current Federal civilian and active duty military employees may 
be solicited for contributions using payroll deduction, checks, money 
orders, or cash, or by electronic means, including credit cards, as 
approved by the Director. Contractor personnel, credit union employees 
and other persons present on Federal premises, as well as retired 
Federal employees, may make single contributions to the CFC through 
checks, money orders, or cash, or by electronic means, including credit 
cards, as approved by the Director.
    (h) A Federal employee whose official duty station is outside the 
geographic boundaries of an established CFC may not be solicited in 
that CFC. A Federal employee may participate in a particular CFC only 
if that employee's official duty station is located within the 
geographic boundaries of that CFC. This restriction is discontinued 
upon implementation of electronic technology that removes geographic 
restrictions on giving as announced by the Director. At the discretion 
of the Director, and upon showing of extraordinary circumstances, 
Federal employees may contribute in support of victims in cases of 
emergencies and disasters defined in Sec.  950.102(a) outside the 
geographic boundaries of their participating CFC. Such contributions 
can be check, money order, or cash or by electronic means, including 
credit cards, as approved by the Director, but shall not be made 
through payroll deduction.
    6. Amend Sec.  950.104 as follows:
    a. In paragraphs (b)(4) and (b)(5), remove the word ``local''; and
    b. Revise paragraphs (b)(6) and (c) to read as follows:
    The amendments to Sec.  950.104 read as follows:


Sec.  950.104  Local Federal Coordinating Committee responsibilities.

* * * * *
    (b) * * *
    (6) Encouraging local Federal agencies to appoint loaned executives 
to assist in the campaign. CFC loaned executives' time should be 
charged to regular working hours. It is not appropriate to place a CFC 
loaned executive on administrative leave, leave without pay, or annual 
leave. Federal loaned executives are prohibited from working on non-CFC 
fundraising activities during duty hours.
* * * * *
    (c) The LFCC must select a PCFO to act as its fiscal agent and 
campaign coordinator on the basis of presentations made to the local 
committee as described in Sec.  950.105(c). The LFCC may, at its 
discretion select a PCFO for up to three campaign periods, subject to 
renewal each year following a review of performance as defined in Sec.  
950.105. The LFCC must consider the capacity of the organization to 
perform an efficient and effective campaign and its history of public 
accountability, use of funds, truthfulness and accuracy in 
solicitations, and sound governance and fiscal management practices as 
the primary factors in selecting a PCFO. The LFCC must solicit 
applications on a competitive basis for the PCFO no later than a date 
to be determined by OPM and, if it exercises discretion to enter into a 
multi-year arrangement, upon completion of the multi-year term. The 
LFCC shall solicit applications via outreach activities including: 
Public

[[Page 37009]]

notice in newspapers, postings on Web sites, advertising in trade 
journals, dissemination among participating CFC organizations and 
federations, and/or outreach through local or state nonprofit 
associations and training centers, among others. The PCFO application 
period must be open a minimum of 21 calendar days. Costs incurred for 
soliciting applications must be added to the PCFO budget as an 
administrative cost.


Sec.  950.105  [Amended]

    7. Amend Sec.  950.105 as follows:
    a. In paragraph (b), remove the word ``printed'' in the second 
sentence and add in its place the word ``developed'';
    b. In paragraph (d)(3), remove the word ``address'' and add in its 
place ``contact information'';
    c. In paragraph (d)(6), add a comma and the text ``contact 
information and contribution amounts'' after the word ``names'';
    d. In paragraph (d)(10), remove the word ``reprinting'' and add in 
its place ``reproduction and/or reissuing'' and remove the number 
``10'' and add in its place ``110''; and
    e. Remove paragraph (e).


Sec.  950.106  [Amended]

    8. In Sec.  950.106, amend paragraph (a) by removing the number 
``10'' and adding in its place ``110.''


Sec.  950.109  [Amended]

    9. In Sec.  950.109, amend the first sentence by adding the text 
``serve in any official capacity in any organization that serves as the 
PCFO of the local CFC, or'' before the word ``participate''.
    10. Amend Sec.  950.201 as follows:
    a. Revise the section heading;
    b. In paragraph (a)(1), add the text ``and international'' after 
the word ``national''; and
    c. Revise paragraphs (a)(2) through (b) to read as follows:


Sec.  950.201  National and International list eligibility.

    (a) * * *
    (2) Determine which organizations among those that apply qualify to 
be part of the national and international lists and then provide these 
lists of qualified organizations to all local campaigns. In order to 
determine whether an organization may participate in the campaign, the 
Director may request evidence of corrective action regarding any prior 
violation of regulation or directive, sanction, or penalty, as 
appropriate. The Director retains the ultimate authority to decide 
whether the organization has demonstrated, to the Director's 
satisfaction, that the organization has taken appropriate corrective 
action. Failure to demonstrate satisfactory corrective action or to 
respond to the Director's request for information within 10 calendar 
days of the date of the request may result in a determination that the 
organization will not be included in the national and international 
list.
    (b) These lists of national and international charities shall be 
included in all local Charity Lists in accordance with these 
regulations. These lists will include each organization's CFC code. 
These CFC codes must be faithfully reproduced in the local Charity 
Lists.
* * * * *
    11. Revise Sec.  950.202 to read as follows:


Sec.  950.202  National and International list eligibility 
requirements.

    (a) Certify that it provides or conducts real services, benefits, 
assistance, or program activities, in 15 or more different states or a 
foreign country over the 3 year period immediately preceding the start 
of the year involved. This requirement cannot be met on the sole basis 
of services provided through an ``800'' telephone number or by 
disseminating information and publications via the U.S. Postal Service, 
the Internet, or a combination thereof. A schedule listing a detailed 
description of the services in each state (minimum 15) or foreign 
countries (minimum 1), including the year of service, must be included 
with the application. The schedule must make a clear showing of 
national or international presence. Broad descriptions of services and 
identical repetitive narratives will be disregarded at the discretion 
of OPM if they do not allow OPM to adequately determine that real 
services were provided or to accurately determine the individuals or 
entities who benefited. Providing listings of affiliated groups does 
not sufficiently demonstrate provision of real services by the 
applicant. Location of residence of organization members or location of 
residence of visitors to a facility does not substantiate provision of 
services in the location of residence. However, organizations that 
issue student scholarships or fellowships must indicate the state in 
which the recipient resides, not the state of the school or place of 
fellowship. Mere dissemination of information does not demonstrate 
provision of real services. While it is not expected that an 
organization maintain an office in each state or foreign country, a 
clear showing must be made of the actual services, benefits, assistance 
or activities provided in each state or foreign country. De minimus 
services, benefits, assistance, or other program activities in any 
State or foreign country will not be accepted as a basis for 
qualification as a national or international organization.
    (b) Certify that it is an organization recognized by the Internal 
Revenue Service as tax exempt under 26 U.S.C. 501(c)(3) to which 
contributions are deductible under 26 U.S.C. 170(c)(2) and that the 
organization is further classified as a public charity under 26 U.S.C. 
509(a). A copy of the letter(s) from the Internal Revenue Service 
granting tax exempt and public charity status must be included in the 
organization's application.
    12. Amend Sec.  950.203 as follows:
    a. Remove paragraphs (a)(6), (a)(7), (a)(9) through (a)(11), and 
(a)(13) and redesignate paragraph (a)(8) as (a)(6) and paragraph 
(a)(12) as (a)(7), respectively;
    b. In paragraph (a), add the text ``or international'' after the 
word ``national'' in the first sentence;
    c. In paragraph (a)(1), remove the second sentence;
    d. Revise paragraphs (a)(2) through (a)(4) ;
    e. In the newly redesignated paragraph (a)(7), add the text ``or 
international'' after the word ``national''.
    The amendments to Sec.  950.203 read as follows:


Sec.  950.203  Public accountability standards.

    (a) * * *
    (2) Certify that the organization:
    (i)(A) Indicates total revenue of $250,000 or more on its most 
recent IRS Form 990 or pro forma IRS Form 990 submitted to the CFC, if 
it is not required by the IRS to file an IRS Form 990, covering a 
period not more than 18 months prior to the January of the campaign 
year to which the organization is applying;
    (B) Accounts for its funds on an accrual basis (cash, modified 
cash, modified accrual and any other methods of accounting are not 
acceptable) in accordance with generally accepted accounting 
principles; and
    (C) Has an audit of its fiscal operations completed annually by an 
independent certified public accountant in accordance with generally 
accepted auditing standards; or
    (ii)(A) Reports total revenue of less than $250,000 on its most 
recent IRS Form 990 covering a period not more than 18 months prior to 
the January of the campaign year to which the organization is applying; 
and
    (B)Has controls in place to insure funds are properly accounted for 
and that it can provide accurate timely financial information to 
interested parties.
    (3) Certify that it prepares and submits to the IRS a complete copy 
of

[[Page 37010]]

the organization's IRS Form 990 or that it is not required to prepare 
and submit an IRS Form 990 to the IRS. Provide a completed copy of the 
organization's most recent IRS Form 990 submitted to the IRS, including 
signature, supplemental statements and Schedule A, with the 
application, or if not required to file an IRS Form 990, provide a pro 
forma IRS Form 990 page 1 only. IRS Forms 990EZ, 990PF, and comparable 
forms are not acceptable substitutes.
    (4) Provide a computation of the organization's percentage of total 
support and revenue spent on administrative and fundraising. This 
percentage shall be computed from information on the IRS Form 990 
submitted pursuant to Sec.  950.203(a)(3).
* * * * *
    13. Amend Sec.  950.204 as follows:
    a. In paragraphs (a) and (b), remove the word ``local'';
    b. Revise paragraph (b)(1);
    c. Remove paragraph (b)(2)(ii) and redesignate paragraph 
(b)(2)(iii) as (b)(2)(ii);
    d. Add new paragraphs (b)(2)(iii) and (b)(2)(iv);
    e. In paragraph (f), remove the word ``print'' from the first 
sentence and add in its place ``produce'' and remove the word 
``campaign'' from the first sentence; and
    f. Add new paragraph (g).
    The amendments to Sec.  950.204 read as follows:


Sec.  950.204  Local list eligibility.

* * * * *
    (b) * * *
    (1) An organization must demonstrate to the satisfaction of the 
LFCC, that it has a substantial local presence in the geographical area 
covered by the local campaign, a substantial local presence in the 
geographical area covered by an adjacent local campaign, or substantial 
statewide presence. Eligibility to participate in an adjoining campaign 
on the basis of adjacency or statewide presence is discontinued upon 
implementation of electronic technology that removes geographic 
restrictions on giving as announced by the Director.
    (i) Substantial local presence is defined as a staffed facility, 
office or portion of a residence dedicated exclusively to that 
organization, available to members of the public seeking its services 
or benefits. The facility must be open at least 15 hours a week and 
have a telephone dedicated exclusively to the organization. The office 
may be staffed by volunteers. Substantial local presence cannot be met 
on the basis of services provided solely through an ``800'' telephone 
number or the U.S. Postal Service or a combination thereof.
    (ii) An adjacent local campaign is defined as a local campaign 
whose geographic border touches the geographic border of another local 
campaign. Participation in a local campaign via an adjacency 
determination does not grant the organization a substantial local 
presence in the adjacent local campaign and participating via adjacency 
cannot be used to establish adjacency to local campaigns bordering the 
adjacent campaign area. In addition, an organization must first be 
determined eligible to participate in the local campaign area where it 
has a substantial local presence before it may be determined eligible 
to participate in an adjacent local campaign. An organization cannot 
otherwise qualify as an eligible organization in an adjacent local 
campaign.
    (iii) Substantial statewide presence is defined as providing or 
conducting real services, benefits, assistance or program activities 
over the 3 year period immediately preceding the start of the 
application year covering 30 percent of a state's geographic boundaries 
or providing or conducting real services, benefits, assistance or 
program activities affecting 30 percent of a state's population. 
Substantial statewide presence cannot be met on the basis of services 
provided solely through an ``800'' telephone number or the U.S. Postal 
Service or a combination thereof. This subsection is eliminated upon 
implementation of electronic technology that removes geographic 
restrictions on giving as announced by the Director.
* * * * *
    (2) * * *
    (iii) A local charitable organization covered by a 26 U.S.C. 
501(c)(3) group exemption that can demonstrate it provides services as 
a separately incorporated local bona fide chapter or affiliate in good 
standing of a national tax-exempt organization under 26 U.S.C. 
501(c)(3) does not need to maintain its own independent IRS 
determination letter, audited financial statements and IRS Form 990 for 
CFC purposes. These local charitable organizations must provide a 
certification signed by either the Chief Executive Officer (CEO) or CEO 
equivalent of the national organization stating that the local 
charitable organization is covered under the national organization's 
tax-exempt status and financial accountability and reporting controls, 
and that the local organization's financial activities are included in 
the national organization's audited financial statements. The local 
charitable organization must provide a copy of the national 
organization's IRS group tax-exemption determination, including the 
most recent IRS approval of subordinates covered by the group 
exemption, a copy of the IRS letter assigning the local charitable 
organization an Employer Identification Number (EIN) and a copy of its 
IRS Form 990 filed with the IRS. If the organization is covered by a 
group return on IRS Form 990 filed by the national organization, the 
local organization must provide a copy of the complete group return on 
IRS Form 990 along with a pro forma IRS Form 990 (page 1) prepared for 
the local charitable organization for CFC purposes only. In either 
case, the IRS Form 990 must cover a period ending not more than 18 
months prior to the January of the campaign year to which the 
organization is applying. The local charitable organization must 
certify and demonstrate that it independently meets all other 
applicable local eligibility requirements and public accountability 
standards included in Sec. Sec.  950.204(b)(1) and 950.204(b)(2).
    (iv) A local charitable organization that can demonstrate it 
provides services as a separately incorporated local bona fide chapter 
or affiliate in good standing of a national tax-exempt organization 
under 26 U.S.C. 501(c)(3), but is not covered by a 26 U.S.C. 501(c)(3) 
group exemption does not need to maintain its own independent audited 
financial statements for CFC purposes. These local charitable 
organizations must provide a certification signed by either the Chief 
Executive Officer (CEO) or CEO equivalent of the national organization 
stating that the local charitable organization operates as a bona-fide 
chapter or affiliate in good standing of the national organization and 
is subject to the financial accountability and reporting controls of 
the national organization, and that the local organization's financial 
activities are included in the national organization's audited 
financial statements. Upon certification, the local organization must 
provide a copy of an IRS tax-exemption determination letter that 
includes appropriate taxpayer identification information obtained from 
the IRS and a completed copy of its Form 990 filed with the IRS. The 
local charitable organization must certify and demonstrate that it 
independently meets all other applicable local eligibility requirements 
and public accountability standards included in Sec. Sec.  
950.204(b)(1) and 950.204(b)(2).
* * * * *

[[Page 37011]]

    (g) In order to determine whether an organization may participate 
in the campaign, the LFCC may request evidence of corrective action 
regarding any prior violation of regulation or directive, sanction, or 
penalty, as appropriate. The LFCC will decide whether the organization 
has demonstrated, to the LFCC's satisfaction, that the organization has 
taken appropriate corrective action. Failure to demonstrate 
satisfactory corrective action or to respond to the LFCC's request for 
information within 10 calendar days of the date of the request may 
result in a determination that the organization will not be included in 
the local list.


Sec.  950.205  [Amended]

    14. In Sec.  950.205, amend paragraph (c)(4) by removing the word 
``and'' and adding to the end of the sentence the text ``and supporting 
information to justify the reversal of the original decision.''
    15. Amend Sec.  950.301 as follows:
    a. Revise the section heading and paragraph (a);
    b. Revise paragraph (c);
    c. In paragraph (d), remove the word ``decertification'' in the 
last sentence and add in its place the text ``withdrawal of federation 
status''; and
    d. Revise paragraph (e)(2).
    The amendments to Sec.  950.301 read as follows:


Sec.  950.301  National and International federations eligibility.

    (a) The Director may recognize national and international 
federations that conform to the requirements and are eligible to 
receive designations. The Director may from time to time place a 
moratorium on the recognition of national and international 
federations. In order to determine whether the Director will recognize 
a national or international federation, the Director may request 
evidence of corrective action regarding any prior violation of 
regulation or directive, sanction, or penalty, as appropriate. The 
Director retains the ultimate authority to decide whether the 
federation has demonstrated, to the Director's satisfaction, that the 
federation has taken appropriate corrective action. Failure to 
demonstrate satisfactory corrective action or to respond to the 
Director's request for information within 10 calendar days of the date 
of the request may result in a determination that the federation will 
not be included in the national and international list.
* * * * *
    (c) An organization may apply to the Director for inclusion as a 
national or international federation to participate in the CFC if the 
applicant has, as members of the proposed federation, 15 or more 
charitable organizations, in addition to the federation itself, that 
meet the eligibility criteria of Sec. Sec.  950.202 and 950.203. The 
initial year an organization applies for federation status, it must 
submit the applications of all its proposed member organizations in 
addition to the federation application. Federations must re-establish 
eligibility each year, however only the applications of its new and 
former members that were not within their federation, as a CFC 
participant, in the previous year's campaign need accompany the annual 
federation application once an organization has obtained federation 
status, unless additional member applications are requested by the 
Director.
* * * * *
    (e) * * *
    (2) That it meets the eligibility requirements and public 
accountability standards contained in Sec. Sec.  950.202 and 950.203. 
The federation can demonstrate that it has met the eligibility 
requirement in Sec.  950.202(a) either through its own services, 
benefits, assistance or program activities or through its 15 members' 
activities.
    (i) The federation must complete the certification set forth at 
Sec.  950.203(a)(2) without regard to the amount of revenue reported on 
its IRS Form 990 and must provide a copy of its audited financial 
statements. The audited financial statements provided must verify that 
the federation is honoring designations made to each member 
organization by distributing a proportionate share of receipts based on 
donor designations to each member. The audit requirement is waived for 
newly created federations operating for less than a year as determined 
from the date of its IRS tax-exemption letter to the closing date of 
the CFC application period.
    (ii) The federation must provide a listing of its board of 
directors, beginning and ending dates of each member's term of office, 
and the board's meeting dates and locations for the previous year.
    (iii) The federation must certify that it prepares and makes 
available to the public, upon request, an annual report that includes a 
full description of the organization's activities and supporting 
services and identifies its directors and chief administrative 
personnel. The federation must provide a copy of its most recently 
completed annual report covering the fiscal year ending not more than 
18 months prior to January of the campaign year to which the federation 
is applying or the preceding calendar year. The annual report must also 
include an accurate description of the federation's membership dues 
and/or service charges received by the federation from the charitable 
organizations participating as members. The information must clearly 
present the amounts raised, the sources of contributions, the cost of 
fundraising, and how costs are recovered from donations.
* * * * *
    16. In Sec.  950.302, revise the section heading, remove paragraphs 
(c) through (e), and add a new paragraph (c) to read as follows:


Sec.  950.302  Responsibilities of national and international 
federations.

* * * * *
    (c) Each federation, as fiscal agent for its member organizations, 
must ensure that Federal employee designations are honored in that each 
member organization receives its proportionate share of receipts based 
on the results of each individual campaign. The proportionate share of 
receipts is determined by donor designations to the individual member 
as compared to total campaign designations.
    17. Amend Sec.  950.303 as follows:
    a. Revise paragraph (a);
    b. Revise paragraph (c);
    c. In paragraph (d), remove the word ``decertification'' in the 
last sentence and add in its place the text ``withdrawal of federation 
status''; and
    d. Revise paragraph (e)(2).
    The amendments to Sec.  950.303 read as follows:


Sec.  950.303  Local federations' eligibility.

    (a) LFCC's must approve local federations that meet the applicable 
requirements, except that in order to determine whether the LFCC must 
recognize a local federation, the LFCC may request evidence of 
corrective action regarding any prior violation of regulation or 
directive, sanction, or penalty, as appropriate. A local federation 
that has been notified that it will not be included on the local list 
because of failure to correct a prior violation may appeal the LFCC's 
decision to the Director in accordance with Sec.  950.205(b). The 
Director retains the ultimate authority to decide whether the local 
federation has demonstrated, to the Director's satisfaction, that the 
local federation has taken appropriate corrective action. Failure to 
demonstrate satisfactory corrective action or to respond to a request 
by the LFCC or Director for information within 10 calendar days of the 
date of the request

[[Page 37012]]

may result in a determination that the local federation will not be 
included in the local list.
* * * * *
    (c) An organization may apply to the LFCC for inclusion as a local 
federation to participate in the CFC if the applicant has as members of 
the proposed federation 15 or more charitable organizations, in 
addition to the federation itself, that meet the eligibility criteria 
of Sec. Sec.  950.202, 950.203 and 950.204. The initial year an 
organization applies for federation status, it must submit to the LFCC 
applications of all its proposed member organizations in addition to 
the federation application. Federations must re-establish eligibility 
each year, however only the applications of its new and former members 
that were not within their federation, as a CFC participant, in the 
previous year's campaign need accompany the annual federation 
application once an organization has obtained federation status, unless 
additional member applications are requested by the LFCC.
* * * * *
    (e) * * *
    (2) That it meets the eligibility requirements contained in Sec.  
950.204 (including eligibility requirements and public accountability 
standards of Sec. Sec.  950.202 and 950.203 that are incorporated by 
reference). The federation can demonstrate that it has met the 
eligibility requirement in Sec.  950.204(b)(1) either through its own 
services, benefits, assistance or program activities or through its 15 
members' activities.
    (i) The federation must complete the certification set forth at 
Sec.  950.203(a)(2) without regard to the amount of revenue reported on 
its IRS Form 990 and must provide a copy of its audited financial 
statements. The audited financial statements provided must verify that 
the federation is honoring designations made to each member 
organization by distributing a proportionate share of receipts based on 
donor designations to each member. The audit requirement is waived for 
newly created federations operating for less than a year as determined 
from the date of its IRS tax-exemption letter to the closing date of 
the CFC application period.
    (ii) The federation must provide a listing of its board of 
directors, beginning and ending dates of each member's term of office, 
and the board's meeting dates and locations for the previous year.
    (iii) The federation must certify that it prepares and makes 
available to the public, upon request, an annual report that includes a 
full description of the organization's activities and supporting 
services and identifies its directors and chief administrative 
personnel. The federation must provide a copy of its most recently 
completed annual report covering the fiscal year ending not more than 
18 months prior to January of the campaign year to which the federation 
is applying or the preceding calendar year. The annual report must also 
include an accurate description of the federation's membership dues 
and/or service charges received by the federation from the charitable 
organizations participating as members. The information must clearly 
present the amounts raised, the sources of contributions, the cost of 
fundraising, and how costs are recovered from donations.
* * * * *
    18. In Sec.  950.304, remove paragraphs (c) through (e), and add a 
new paragraph (c) to read as follows:


Sec.  950.304  Responsibilities of local federations.

* * * * *
    (c) Each federation, as fiscal agent for its member organizations, 
must ensure that Federal employee designations are honored in that each 
member organization receives its proportionate share of receipts based 
on the results of each individual campaign. The proportionate share of 
receipts is determined by donor designations to the individual member 
as compared to total campaign designations.
    19. Amend Sec.  950.401 as follows:
    a. In paragraph (a), remove the word ``printed'' in the second 
sentence and add in its place ``developed'';
    b. In the first sentence of paragraph (e), add the text ``source 
of'' after the word ``official'', remove the word ``package'', and add 
the text ``either in hard copy or electronic format'' after the word 
``available'';
    c. In paragraph (f), remove the word ``package'' in the first and 
second sentences and add in its place ``design'';
    d. Revise the introductory paragraph of (g)(1);
    e. Revise paragraphs (g)(2), (g)(3), and (h); and
    f. In paragraph (k), remove the word ``year'' and add in its place 
``period'', and add to the end of the sentence the text ``or if the 
campaign can demonstrate to the satisfaction of the Director that it 
can make the same information available electronically without 
disrupting donor opportunities to contribute.''
    The amendments to Sec.  950.401 read as follows:


Sec.  950.401  Campaign and publicity materials.

    (g) * * *
    (1) OPM will include in the annual distribution of the National and 
International Lists explicit instructions for the production of the 
Charity Lists and language to be reproduced verbatim in the 
introductory section. The general information provided will include:
* * * * *
    (2) Following the introductory section, the Charity List will 
consist of three parts--the national, the international, and the local. 
The order of these three parts will be annually rotated in accordance 
with OPM instructions. In 1996 the Local part will be first followed by 
the National and finally the International. The national and 
international lists will consist of faithful reproductions of the lists 
of national and international organizations, including federations, 
provided by OPM. The third part, the local list, is determined by the 
LFCC. The order of listing of the federated and independent 
organizations within the three separate parts will be determined by 
random drawing. The order of organizations within each federation will 
be determined by the federation. The order within the national, 
international and local independent groups will be alphabetical. Absent 
specific instructions from OPM to the contrary, each participating 
organization and federated group listing must include a description, 
not to exceed 25 words, of their services and programs, plus a 
telephone number for the Federal donor to request further information 
about the group's services, benefits, and administrative expenses. Each 
listing will include the organization's administration and fundraising 
percentage as calculated pursuant to Sec.  950.203(a)(4). Neither the 
percentage of administrative and fundraising expenses, nor the 
telephone number count toward the 25-word statement.
    (3) Each federation and charitable organization will be assigned a 
code in a manner determined by the Director. At the beginning of each 
federated group's listing will be the federation's name, code number, 
25-word statement, percentage of administrative and fundraising 
expenses, and telephone number. The sections of the Charity Lists where 
the independent organizations are listed will begin with the titles 
National Independent Organizations, International Independent 
Organizations and Local Independent Organizations respectively.
    (h) Omission of an eligible charitable organization from the 
Charity List may

[[Page 37013]]

require that all Charity Lists be reproduced and reissued. Such 
omissions must be reported to OPM immediately upon discovery. The 
Director or LFCC may direct that the cost of such reproduction and 
reissue be borne by the PCFO or charged to CFC administrative expenses.
* * * * *
    20. Amend Sec.  950.402 as follows:
    a. In paragraph (a), remove the word ``year'' and add in its place 
``period'';
    b. In paragraph (c), add to the end of the second sentence a comma 
followed by the text ``except in cases of emergencies or disasters as 
approved by the Director. This restriction does not apply upon 
implementation of electronic technology that removes the geographic 
restrictions on giving as announced by the Director.'' and
    c. In paragraph (d), revise the last sentence.
    The amendments to Sec.  950.402 read as follows:


Sec.  950.402  Pledge card.

* * * * *
    (d) * * * For example, if an employee indicates a total gift of 
$100 on the pledge form, but designates $50 to one organization and $25 
to each of three other organizations, the PCFO must adjust the pledges 
proportionately by entering a pledge of $40 to the first organization 
and $20 to each of the three other organizations.


Sec.  950.403  [Removed]

    21. Remove Sec.  950.403.
    22. Revise Sec.  950.601 to read as follows:


Sec.  950.601  Release of contributor information.

    (a) The pledge form, designed pursuant to Sec.  950.402, must allow 
a contributor to indicate if the contributor does wish his or her name, 
contribution amount, and home contact information forwarded to the 
charitable organization or organizations designated. A PCFO's failure 
to honor a contributor's wish may result in the PCFO being sanctioned 
or penalized as provided for in Sec.  950.603(a).
    (b) The pledge form shall permit a contributor to specify which 
information, if any, he or she wishes released to organizations 
receiving his or her donations.
    (c) It is the responsibility of the PCFO to forward the contributor 
information for those who have indicated that they wish this 
information released to the recipient organization directly, if the 
organization is independent, and to the organization's federation if 
the organization is a member of a federation. The PCFO may not sell or 
make any other use of this information.
    23. In Sec.  950.602, revise paragraph (b) to read as follows:


Sec.  950.602  Solicitation methods.

* * * * *
    (b) Special CFC fundraising events, such as raffles, lotteries, 
auctions, bake sales, carnivals, athletic events, or other activities 
not specifically provided for in these regulations are permitted during 
the campaign period if approved by the appropriate agency head or 
government official, consistent with agency ethics regulations. CFC 
special fundraising events should be undertaken in the spirit of 
generating interest in the CFC and open without regard to whether an 
individual makes a contribution. Chances to win should be disassociated 
from amount of contributions, if any. Raffle prizes should be modest in 
nature and value. Examples of successful raffles have included 
opportunities for lunch with Agency Officials, parking spaces for a 
week, and holiday turkeys. Any special CFC fundraising event and prize 
or gift should be approved in advance by the Agency's ethics official.
* * * * *
    24. In Sec.  950.603, revise the section heading and paragraph (a) 
to read as follows:


Sec.  950.603  Sanctions and penalties.

    (a)(1) The Director may impose sanctions or penalties on a 
federation, charitable organization or PCFO for violating these 
regulations, other applicable provisions of law, or any directive or 
instruction from the Director. The Director will determine the 
appropriate sanction and/or penalty, up to and including expulsion from 
the CFC. In determining the appropriate sanction and/or penalty, the 
Director will consider previous violations, harm to Federal employee 
confidence in the CFC, and any other relevant factors. The Director may 
bar a federation or charitable organization from serving as PCFO, for a 
period not to exceed one campaign period, if it is determined that that 
the federation or charitable organization has violated any provisions 
of these regulations. A federation, charitable organization or PCFO 
will be notified in writing of the Director's intent to sanction and/or 
penalize and will have 10 calendar days from the date of receipt of the 
notice to submit a written response. The Director's final decision will 
be communicated in writing to the federation, charitable organization, 
or PCFO, with a copy to the appropriate LFCC.
    (2) The Director may withdraw federation status with respect to a 
national, international or local federation that makes a false 
certification or fails to comply with any directive of the Director, or 
to respond in a timely fashion to a request by the Director or LFCC for 
information or cooperation, including with respect to an investigation 
or in the settlement of disbursements. The LFCC may recommend the 
withdrawal of federation status with respect to a local federation. As 
stated in Sec. Sec.  950.301(d) and 950.303(d), failure to meet minimum 
federation eligibility requirements shall not be deemed to be a 
withdrawal of federation status subject to a hearing on the record. 
Eligibility decisions shall follow the procedures in Sec. Sec.  
950.301(f) and 950.303(f). A federation will be notified in writing of 
the Director's intent to withdraw federation status for a period of up 
to one campaign period and will have 10 calendar days from the date of 
receipt of the notice to submit a written response. On receipt of the 
response, or in the absence of a timely response, the Director or 
representative shall set a date, time, and place for a hearing. The 
federation shall be notified at least 10 calendar days in advance of 
the hearing. A hearing shall be conducted by a hearing officer 
designated by the Director unless it is waived in writing by the 
federation. After the hearing is held, or after the Director's receipt 
of the federation's written waiver of the hearing, the Director shall 
make a final decision on the record, taking into consideration the 
recommendation submitted by the hearing officer. The Director's final 
decision will be communicated in writing to the federation, with a copy 
to the appropriate LFCC.
    (3) A federation, charitable organization or PCFO sanctioned or 
penalized under any provision of these regulations must demonstrate to 
the satisfaction of the Director that it has taken corrective action to 
resolve the reason for sanction and/or penalty and has implemented 
reasonable and appropriate controls to ensure that the situation will 
not occur again prior to being allowed to participate in subsequent 
CFCs and/or serving as a PCFO for a campaign.
* * * * *
    25. Revise Sec.  950.604 to read as follows:


Sec.  950.604  Records retention.

    Federations, PCFO's and other participants in the CFC shall retain 
documents pertinent to the campaign for at least three completed 
campaign

[[Page 37014]]

periods. For example, documentation regarding the 2006 campaign, which 
would include selection of the PCFO in March of 2006 through the final 
distribution of contributions in approximately March 2008, must be 
retained through the completion of the 2007, 2008 and 2009 campaign 
periods (i.e. until approximately March 2011). Documents requested by 
OPM must be made available within 10 business days of the request.
    26. Amend Sec.  950.801 as follows:
    a. In paragraph (a)(1), remove the text ``one 30-day calendar day'' 
and add in its place the word ``a'', remove the text ``January and 
March'' and add in its place the text ``December and January'', and add 
the text ``and international'' to the last sentence after the word 
``national'';
    b. Revise paragraph (a)(2);
    c. In paragraph (a)(3), remove the date ``March 15'' and add in its 
place ``a date to be determined by OPM. The date will be part of the 
annual timetable issued by the Director under Sec.  950.801(b).'';
    d. In paragraph (a)(4), remove the text ``June 30'' and add in its 
place ``a date to be determined by OPM. The date will be part of the 
annual timetable issued by the Director under Sec.  950.801(b).''; and
    e. In paragraph (b), add the text ``and international'' in the 
first sentence after the word ``national'', and add a second sentence 
to read as follows: ``The Director will issue the timetable for a 
campaign period no later than October 31 of the year preceding the 
campaign period.''
    The amendments to Sec.  950.801 read as follows:


Sec.  950.801  Campaign schedule.

    (a) * * *
    (2) The Director will determine a date after the closing of the 
receipt of applications by which the Director will issue notices to 
each national and international applicant organization of the results 
of the Director's review. The date will be part of the annual timetable 
issued by the Director under Sec.  950.801(b).
* * * * *
    27. Amend Sec.  950.901 as follows:
    a. In paragraph (c)(1), remove the text ``printed or purchased from 
a central source'' and add in its place ``reproduced'', and remove the 
word ``distributed'' and add in its place ``made available'';
    b. In paragraph (c)(2), add the word ``paper'' after the word 
``each'', and add the text ``or an acceptable electronic version'' 
after the word ``authorization'';
    c. In paragraph (f)(1), add the text ``pay period number,'' after 
the word ``period,''; and
    d. Revise paragraphs (i)(1) and (i)(2) .
    The amendments to Sec.  950.901 read as follows:


Sec.  950.901  Payroll allotment.

* * * * *
    (i) * * *
    (1) The PCFO shall notify the federations, national and 
international organizations, and local organizations as soon as 
practicable after the completion of the campaign, but in no case later 
than a date to be determined by OPM, of the amounts, if any, designated 
to them and their member agencies and of the amounts of the 
undesignated funds, if any, allocated to them. The date will be part of 
the annual timetable issued by the Director under Sec.  950.801(b).
    (2) The PCFO is responsible for the accuracy of disbursements it 
transmits to recipients. It shall transmit disbursements at least 
quarterly, minus the approved proportionate share for administrative 
cost reimbursement and the PCFO fee set forth in Sec.  950.106. It 
shall remit the contributions to each organization or to the 
federation, if any, of which the organization is a member. The PCFO 
will distribute all CFC receipts beginning April 1, and quarterly 
thereafter. At the close of each disbursement period, the PCFO's CFC 
account shall have a balance of zero.
* * * * *
[FR Doc. 06-5795 Filed 6-26-06; 1:37 pm]
BILLING CODE 6325-46-P