CFC Certification Rule Finalized

On November 7, 2005 the Office of Personnel Management (OPM) issued a final rule (PDF) on compliance certification language for the Combined Federal Campaign, a workplace giving campaign for federal employees. The final rule encourages, but does not require organizations participating in the CFC to check terrorist lists. It does, however, require certification of compliance with anti-terrorism laws and regulations. OPM will begin accepting applications for the 2006 campaign on December 1, 2005.

Independent Sector filed comments with OPM in May, 2005 in support of dropping the list-checking requirement and suggesting alternate language regarding compliance. Both of these changes were adopted in the final rule.

OPM also urges charities to follow the Treasury Department’s Anti-Terrorist Financing Guidelines. The new certification language will be in effect for 2006 CFC. More on the Treasury Guidelines

Under the final rule, effective for 2006 and subsequent years, participating organizations would be required to certify that:

1) the organization is in compliance with all statutes, Executive orders and regulations restricting dealings with entities subject to economic sanctions administered by the Treasury’s Office of Foreign Assets Control;

2) the organization is aware that lists of countries and individuals subject to sanctions can be found at http://www.treas.gov/ofac; and

3) if any change in circumstances pertaining to this certification occurs, the organization will notify OPM’s Office of CFC Operations immediately.

In cases of noncompliance, OPM will take steps it deems appropriate including cutting off future funds or retracting funds already disbursed, and notifying other enforcement authorities.

CFC guidance for 2004 and 2005 required participating organizations to check the names of their employees and charities receiving funds against government terrorist lists. Independent Sector issued a statement opposing this requirement in December 2004 and filed comments with the CFC on May 31, 2005 in support of dropping the list-checking requirement and suggesting alternate language regarding noncompliance.

IS comments
CFC proposed rule (PDF)

Background
At its December 2004 meeting, Independent Sector's Board of Directors adopted a position opposing requirements by funders, including private organizations and government entities such as the Combined Federal Campaign, that nonprofits check their employees and the recipients of their funds against government terrorist watch lists.

While recognizing the importance of preventing the diversion of charitable resources, Independent Sector opposes such requirements because of “inherent problems with those lists such as false positives and the inability to clear up mistaken identities.” The board noted: “These problems make list checking an unworkable, impracticable means ” to a well-intentioned goal, since they “compromise the ability of charities to work with employees, volunteers, and service recipients in fulfillment of their charitable purposes.”

Independent Sector has shared its strong concerns with relevant groups, though we are not advising organizations to withdraw from funding initiatives that require such measures. IS urges other nonprofit organizations to address this issue with their boards of directors and, if they share our concerns, to let funders know of concerns about such requirements.

IS Position on Anti-Terrorism Certification

Independent Sector recognizes the legitimate role of the federal government to ensure that charities comply with all applicable laws and that charitable resources are not diverted for unlawful purposes, including supporting terrorism. Private and public funding agencies must take reasonable steps to assist government in this effort, but it is imperative that compliance measures imposed on charities are workable and do not compromise the ability of charities to work with employees, volunteers, and service recipients in fulfillment of their charitable purposes.

Therefore, Independent Sector opposes mandatory requirements to check government lists of suspected terrorists because of inherent problems with those lists such as false positives, and the inability to clear up mistaken identities. These problems make list checking an unworkable, impracticable means to accomplish the well-intentioned goal of preventing diversion of charitable resources to support terrorist activities.

The 2004 Combined Federal Campaign application required that a nonprofit "not knowingly employ individuals or contribute funds to organizations found on ... terrorist related lists promulgated by the U.S. Government, the United Nations, or the European Union." In July 2004, the CFC informed participating organizations that they have an affirmative obligation to check government terror watch lists in order to comply with the certification. This policy caused considerable concern among many nonprofits and prompted some organizations to withdraw from the program.

While some nonprofits believe the steps called for by the CFC are necessary to deny suspected terrorists access to charitable funds, others are deeply concerned about the civil liberties implications caused in part by faulty lists and the inability to clear up mistaken identities.

Last Updated: November 17, 2005