A federated fund is a cooperative enterprise, owned and controlled by the nonprofit members, whose purpose is raising program and operating capital for each member agency. It serves as a contribution vehicle for donors to direct charitable dollars to the groups and issues about which they care. A donor gift to the federation is usually distributed to all the member organizations, or donors can target gifts to specific groups in the federation.
The most familiar federated fund is probably the United Way. But there are many others. Many are state-wide or community-wide. Most are distinguished by the ability to partner with employers and execute workplace-giving programs that usually feature payroll deduction.
Federated Funds are favorites of businesses since they provide a safe and convenient way for their employees to contribute to charities. The downside of federated funds is that often new, small, or nonprofits with unique or offbeat missions are not included.