Federated funding is a financing option used by non-profits whose mission and vision are more clearly defined and easier to implement. An example of a federated fund is the March of Dimes charity. The benefits of using a federated fund include the ease of making and accepting employee contributions via the inclusion of payroll deductions. Charitable dollars can also be aggregated to more than one group or to target more than one issue associated with the operations of the charitable group. Therefore, a level of flexibility is associated with the designation of a federated funding arm.

The disadvantages of a federated funds is that its use is not common to major medical research facilities and other charitable organizations that...

Typically speaking, the use of a federated fund is the optimal solution for a service-based charity and not necessarily one engaging in technical medical research.
For an organization like HHMI, the recommendation is to not use this form of contributory financing as the staff of professionals essentially comprise that of a syndicate and not rank and file employees. The use of federated funds target larger charitable organizations that employ a large number of organizational staff. Numerous other funding sources available that will enable the continued success of the program, such as funding channels offered through the National Science Foundation (NSF).