1. (a) To be eligible to participate in a state employee charitable campaign (SECC), a charitable organization must not spend more than 25% of its annual revenue for administrative and fund raising expenses.
2. (b) The calculation method used to determine administrative costs will be as follows: Administrative expenses + fund raising costs divided by total revenue = percentage of revenue for administrative costs. For purposes of listing administrative costs in the state employee charitable campaign brochure, calculation of administrative costs will be carried out two places, rounded down if under 0.50, rounded up if 0.50 or over; however, if the costs are any amount over 25%, a temporary exemption by the State Employee Charitable Campaign Policy Committee (SPC) will be required for an organization to participate in a state employee charitable campaign.

3. (c) The SPC may grant a charitable organization a temporary exemption from the requirement of subsection (a) of this section if the committee finds that:

   1. (1) the organization's administrative and fund raising expenses are reasonable under the circumstances; and
   2. (2) the organization has a practical plan to reduce its administrative and fund raising expenses to no more than 25% of its annual revenue within the next three years.
4. (d) The SPC may grant a temporary exemption to an organization for up to three consecutive years.

5. (e) The SPC may consider factors to determine whether administrative and fund raising expenses incurred by a charitable organization are reasonable. The factors may include, but are not limited to:

   1. (1) whether there has been a one-time, extraordinary expense and the reasons for that expense;
   2. (2) whether there has been an unanticipated financial crisis or miscalculation and the reasons for that situation;
   3. (3) the number of years the organization has been operating;
   4. (4) whether the organization has recently changed the time periods that comprise its fiscal year; and
   5. (5) whether the organization has changed management and the reasons for that change.

6. (f) Factors the SPC may consider to determine whether a plan to reduce expenses is practical may include, but are not limited to:

   1. (1) whether the plan explains which expenses are expected to be lower in the future and explains why this is expected;
   2. (2) whether corrective measures have already been instituted; and
   3. (3) whether progress under a previously submitted plan has been made, if organization has been previously granted a temporary exemption.

Source Note:The provisions of this §329.3 adopted to be effective June 23, 2002, 27 TexReg 5209.