Role of the Federation
Federations are the liaison between a group of charities and various employer groups and offer benefits to both groups of stakeholders. A key role of federations is to evaluate member charities annually to ensure to both companies and donors they meet high standards of performance and financial integrity. Federations are focused on three primary goals.
- Supporting companies in their quest to make the workplace-giving campaign more efficient, cost effective and responsive to the employees’ charitable interests.
- Ensuring that donors in the workplace are presented with charitable giving options that meet the highest standards of efficiency, ethics and public accountability.
- Raising more money for member charities, enabling them to provide critical services.
Benefits to the Employer
- Federations represent only credible charities that are reviewed annually to ensure high standards of performance and financial integrity.
- Using federations is efficient for the employer. The employer is provided with a single point of contact representing a broad number of charities. Federations have staff and field directors who can coordinate their members for events, agency fairs, training and other campaign events.
- Federations often consist of charities with similar focus and purpose. A federation listing is an effective way to promote and market charitable giving to potential donors.
- Federations reduce the number of calls to an employer seeking access to the workplace campaign while responding to the employees desire for greater choice in the campaign.
- Federations offer resources to make the campaign more effective including a national network of experienced and trained staff, access to best practices, training for campaign volunteers and a link to volunteer opportunities.
Benefits to the Donor
- Donors are assured that the charities represented by federations are credible organizations and meet the highest standards of performance. Membership in a federation is like receiving the “Good Housekeeping” Seal of Approval for a charity.
- Efficiency of the federation ensures the maximum amount of the donor’s gift goes to the charity to provide services.
- Federations facilitate the acknowledgement of gifts to the donor
Benefits to Individual Charities
- Charities voluntarily participate in federations and recognize them as the most efficient means of participating in workplace giving campaigns.
- Federations allow charities to focus on its core mission of providing services. Charities often view the staff of federations as an extension of their own fundraising departments. The staff and administrative costs associated with federations are seen as comparable to setting up a workplace giving department within the charity.
- Federations reduce the cost and work for charities by providing aggregate reports from multiple employer groups, reducing the number of financial transactions and serving as the liaison to the campaign.
- Federations simplify and reduce processing costs to the individual charities.
- Federations coordinate workplace giving events and offer opportunities for the charities to interact with the workplace donor.
- By outsourcing this fundraising component and joining together with other charities, members of federations achieve an economy of scale in their workplace giving efforts that benefits the charities, the employers and the donors.
Why It Makes Sense to Use a Federation for Financial Disbursement
There is a perception that it is more efficient to bypass the federation and send payroll deduction payments directly to the member charities. Actually, for the reasons listed below, it is more efficient and cost effective for workplace giving donations to be processed by the federations.
More Efficient for the Employer
- Federations help the employer reduce the number of transactions and provide the employer with a single point of contact for any type of campaign communication. Preparing individual checks for each charity requires additional costs and manpower.
- It may be cost prohibitive for an employer to process pledge data and distribute checks monthly to such a large number of charities that may participate in a single workplace giving campaign.
- Federations ensure accurate reporting of campaign results to the employer, to donors and to participating charities.
- Federations verify the non-profit status and standards of each charity before releasing funds.
- Federations maintain current listings of each member charity including their address and contact people eliminating the need for the employer to maintain these same records for all participating charities.
More Efficient for the Charity
- There is no added cost to the charity to receive contributions through the federation. The cost to the charity will actually decrease if they are paid through a federation because contributions and reports are aggregated.
- Most charities operate with a small finance staff and they are not equipped to handle numerous small financial transactions.
- Even if they can, numerous small transactions are costly.
- Federations ensure the charity receives accurate reports in a consistent format.
- Federations are accountable to their members; members serve on each federation’s board of directors.
- Workplace giving is one of the lowest cost methods of fundraising (as compared to direct mail, events, major gifts, etc.) for charities and federations make it possible for individual charities to participate in workplace campaigns.