Friday, April 16, 2010

Give Where It Counts

You know all those 10K races and 5K walkathons and even concerts that are held on behalf of worthwhile charities? Doesn't it seem as though there are more and more of them all the time?

Jeanne Hopfensberger's story on the expansion of "cause marketing" in yesterday's Star Tribune did a good job of showing the negatives of these types of events (basically, that very little money usually goes to the cause), while still pointing out the positives as some see them (hey, lots of "awareness" is raised!).

An example used in Hopfensberger's story was the Turkey Day 5K, sponsored by Lifetime Fitness to benefit Second Harvest Heartland, our regional food shelf network. No one can argue that 2HH is a great cause. But according to the story, "The company [Lifetime Fitness] only cleared about $30,000 from the event" according to Lifetime's spokesperson, "because 80 percent of the registration fees were spent on police, Minneapolis Park Board fees, advertising and other logistics." If my math is right, that means the total income was $150,000. But only $10,000 (plus some amount of donated food) went to 2HH. That's a bit under 7 percent.

If they "cleared" $30,000, why didn't all of that amount go to 2HH? So maybe I'm not understanding the numbers here. But even if they netted $10,000 on expenses of $80,000, that's still only 12.5% of the amount spent.

Obviously, there are expenses involved in having a large event. But when I hear an event has major sponsors, I assume those sponsors are covering all or at least most of the operating cost, so that the registration fees or donations go to the named charity. Guess I'm wrong about that, though. The sponsors get their names all over the event, effectively getting a bunch of advertising subsidized by people who thought their money was going to charity.

Another prime example is the Freedom Concerts sponsored by an organization called Freedom Alliance, which is connected to Fox News's Sean Hannity. A conservative blogger named Debbie Schlussel blew the whistle on this, which she called a scam. The concerts are advertised as raising money to donate to injured veterans or to provide scholarships for the children of veterans. The concerts have raised tens of millions of dollars, but have only donated single-digit percentages of their ticket revenue to the people who are supposed to be their mission.

Schlussel documents that the vast majority of money goes to produce the concerts, even though the performing artists often donate their time: "millions of dollars went to expenses, including consultants and apparently to ferry the Hannity posse of family and friends in high style."

She goes on to give details:

According to its 2006 tax returns, Freedom Alliance reported revenue of $10,822,785, but only $397,900 -- or a beyond-measly 3.68% -- of that was given to the children of fallen troops as scholarships or as aid to severely injured soldiers.

On the other hand, 62% of the money went to “expenses,” including $979,485 for “consultants” and an “advisor.” Yes, consultant/advisors got more than double what injured troops and the kids of fallen troops got. The tax forms show that “New World Aviation” got paid $60,601 for “air travel.” Was that for Hannity’s G5 [private jet]? ... that year, Freedom Alliance spent $1,730,816 on postage and shipping and $1,414,215 on printing, for a total of $3,145,031, nearly half the revenue the charity spent that year and about eight times what the injured troops and the children of fallen ones received.
The most recent year on file is slightly better -- 12 percent went to veterans or their kids -- but still nowhere near the 70 percent figure generally recommended as a minimum when assessing the validity of a nonprofit's work. (70 to 90 percent is the idea range, according to Minnesota's Charity Review Council. More than 90 percent usually indicates an unsustainable organization.)

The key point of all this: The best way to give money to an organization you support is to send them cash directly, whether by check, through their website, or by using a reputable site like And if you don't intend to donate any additional money that year, save them money (and spare some trees) by telling them you don't want any additional mailings or phone calls.