Although ICA was incorporated in 1988, its story really began a year earlier, in 1987, when Congress passed legislation reorganizing the Combined Federal Campaign, or CFC. The Combined Federal Campaign - "CFC" - is the annual workplace charity fund drive for federal employees, postal workers, and military personnel. It is the largest and most successful workplace drive in the country.

The CFC allows contributors to make gifts only to pre-approved "authorized" charities. In 1987, CFC contributors were asking for more choices of charities, but the system was restricting choice.

A Monopoly of Access

Most national and international charities participate in the CFC through membership in United Way or other federated groups. (A "federated group," or "federation," is a term of art in the fund raising world that refers to a group of charities organized for purposes of participating in workplace employee payroll deduction fund drives or other collective fund raising efforts). In 1987 the government only recognized a handful of such groups, and no others were authorized. The existing federations had a monopoly.

Membership in those federations was restricted and expensive for those charities that did manage to get in. The existing member charities of these groups were in no hurry to invite other charities - their "competition" - to join.

Federal employee-givers chafed at the limited choice of charities and at the high fees the federations deducted from their gifts, but there was nothing they could do about it except refuse to contribute, which was anathema to the federal/military corporate culture. Military personnel, postal workers, and federal employees are, as a group, among the most generous givers in America.

Landmark Legislation

The new law provided - for the first time - for new, self-organized federated groups to be admitted to the CFC. In other words, if federal employees wanted more choice, they were now free to create it. That is just what they did.

In 1988 a group of federal and military volunteers led by James J. Casimir, the National Director of Appeals for the Internal Revenue Service, invited a number of CFC charities to a meeting at IRS headquarters in Washington DC. There the volunteers proposed to the assembled charities an entirely new model for a CFC federation, and they asked the charities to join it.

The New Model

That new model was ICA - Independent Charities of America. It was founded on the principles of:

• Contributor inclusion in federation governance. The Board of Directors included independent "public" members unaffiliated with any of the charities.
• Contributor freedom of choice. Contributors, not charities, were the federation's "customers." Contributors were encouraged to select the specific member charities to receive their gifts rather than have the federation boards divide up the money in the traditional manner.
• Membership inclusiveness. The "in" charities could not vote to keep out qualified new applicants. If a charity applicant met the standards, the applicant would be accepted.
• Streamlined Organization. The traditional organizational structure for a charitable federation was based on the United Way model, with its emphasis on "bricks and mortar" and a large permanent staff. The federal volunteers envisioned something much more efficient, with a preference for outsourcing for services as necessary rather than maintaining permanent staff; contracting for "shared services" with other federated groups to take advantage of economies of scale; and an emphasis on the use of information technology to reduce costs and improve service.
• A new approach to "campaign marketing" that promoted the member charities, not the federation. This theme was absolutely unheard of in the world of federation fund raising at the time. Traditionally, federated groups attempted to establish, enhance, and promote their "brand." Marketing efforts were focused on highlighting the federation itself, not on highlighting the member agencies of the federation. ICA took that model and stood it on its head. All marketing efforts were aimed at showcasing the member charities. "Nobody ever died of ICA," one of the founding board members once said. "It's all about the charities."

A Huge Success

ICA's debut to the contributing public was in the fall 1989 Combined Federal Campaign. ICA had only seventeen member charities. They expected to raise less than a million dollars. Instead, they raised $7 million, a record for such a small group. The federated fund raising world was stunned. Donors had flocked to the new model and voted with their pocketbooks.

For the next three years ICA could barely keep pace with its own growth. Applicant charities flocked to the federation by the score. That was a mixed blessing. The list grew so big it became unwieldy and longer "donor-friendly."

Affinity Federations: ICA's Fund Raising Engine Gets Turbocharged

The ICA Board of Directors responded to this challenge by doing something no other federation had ever done. Beginning in 1991, they started to break up ICA by "giving away" their member charities to newly created separate federations.

The new federations - called "affinity groups" - were designed to represent member charities by category of service. For example, ICA member charities that served children were assigned to the new group Children's Charities of America. Likewise, disease-fighting charities went to Health & Medical Research Charities of America. Animal welfare organizations went to Animal Charities of America. Etc.

The fund raising results of this reorganization were almost immediate, and they were stupendous. Individual member charities saw an average 40 percent increase in income compared to the amounts they raised when they were listed in mixed groups instead of affinity groups. The reason for this was that dividing the charities by group made it much easier for contributors to find the types of charities they wanted to support. Organization of presentation was the key. The new presentation was analogous to the random stalls of a bazaar compared to the organized, well-marked aisles of a supermarket.

IRS regulations and various other laws required that each affinity group federation be truly separate and independent of the others. The risk in reorganizing was that each affinity federation would duplicate its own administrative infrastructure, which would in turn decrease economies of scale and thus increase overhead operating costs. To address this concern, ICA negotiated "shared services" arrangements among the federations that allowed them to approach vendors as a group and share in the resultant lower costs. "Overhead" costs for the federations fell to a record low of under five percent, lower than those of any other federated group.

The Online Future

By 2000 ICA and the affinity federations recognized just how fast technology was changing the world of workplace fund raising. Many corporations were abandoning the old paper brochure and paper pledge card mechanism in favor of online campaigns hosted on company intranets or on web sites hosted by commercial third parties. At the same time, companies were expanding donor choice in their campaigns, sometimes allowing employees to choose any IRS-registered charity at all.

Online fund drives are less expensive to produce, but they also often raise less money. That is partly because charities are unskilled in "merchandizing" their case for giving on the web. Web-based fund drives have the potential to be much more involving than their static print-based counterparts, but few live up to that potential because their content is, in fact, often boring.

ICA addressed this challenge with a program to help member charities put their best foot forward in web-based campaigns. For example, on the basis that the web is a visual medium where a picture is worth a thousand words, ICA enables its members to upload their public service announcement display ads to campaign web sites.

ICA developed a web-based "campaign-in-a-box" for companies that do not have, or do not wish to use, their own in-house programming capabilities. The ICA system, GiveDirect, offers a search engine, web links to participating charities, gift acknowledgement by email, and even an interactive GUI pledge card that automatically tabulates gift amounts. The system is offered free to companies.

ICA also makes available the complete ICA member database content to the third party service providers that run workplace campaigns for dozens of companies using their own or their client companies' systems.

$50 Million A Year

ICA and its member charities now raise more than $50 million annually in federated fund drives, but that growth in gift revenue hasn't spread to the organization's waistline. Overhead is still under five percent. And falling.