Last week the Boston Globe ran a story making the case that top pro athletes who start nonprofit foundations actually give only a small percentage of the funds they raise to the stated mission of their charities. While a charity can do much to burnish the reputation of the athlete, the Globe’s research suggests that often athlete-driven philanthropy does not provide much in the way of help to those in need.
The Globe’s research reveals that a charity started by Red Sox pitcher Josh Becket actually only gave 37 percent of the proceeds to “improve the health and well-being of children.” This, the Globe asserts, is “far less than the 65 to 75 percent that nonprofit specialists say is an acceptable minimum.”
Among the 50 nonprofits the Globe examined, nearly half spent less than 65 percent of revenues on charitable programs and donations.
Though this story should be included in the athletes-aren’t-worth-our-admiration motif du jour that started with Lance Armstrong’s confession and gained traction with Oscar Pistorius’ arrest –– a narrative I reject, by the way –– it illustrates an inherent weakness in the way that philanthropic organizations raise and disburse funds.
First off, let me say that in my experience, most of these athlete-driven nonprofits have their heart in the right place, and are really trying to do good. The vast majority of these organizations are stocked with sincere, driven, and smart people. But the weakness in their model is two-fold: 1. It’s expensive to run an old-school nonprofit. The fixed costs of office and staff can be onerous and often eat up much of the money raised; and 2. Most rely on fundraising events.
Events are great for friend-raising, donor cultivating, and public relations. And they can be a lot of fun. But events take intensive planning, are highly detailed in their execution, and often involve substantial front-loaded costs. One sporting organization has held an annual fundraiser for nearly 50 years. As one might imagine, they’ve become very good at running this event, and they are very proud of the fact that the event nets 65 percent of the gross proceeds of the night. Bear in mind that this is a very well-run event with a long history.
Newer nonprofits would be hard pressed to do as well with their events. Add to inexperience, the fact that people who are not extremely seasoned in fundraising tend to overestimate the largess of their potential donors, even as they underestimate the costs of bringing in the bucks.
Couple this well-intentioned optimism with the fact that athletes, by their very nature, set goals they will probably never approach (pretty much my entire Little League Baseball team were "destined to play for the Sox in Fenway." Just ask us, we would have told you).
But coming up short of your goals on RallyMe does not result in unpaid bills to the caterer or the concert hall. It’s highly unlikely that you will ever lose money on a crowdfunding campaign. If you incur any costs at all, they’re probably related to the costs of making a video, which you should be able to do for no more than, say $400. The only other fees that RallyMe charges are on money you raise. These platform fees total 8 percent (5% to RallyMe and 3% to PayPal).
If more athlete-driven philanthropies used a crowdfunding model like we offer on RallyMe, you’d see a marked increase to their bottom line. And since I believe in the people who run these organizations, I’d be willing to bet that the amount of money that flows to the ultimate beneficiaries would sharply increase.
I’m not saying don’t do events. I’m saying do fewer of them, and do them in conjunction with a crowdfunding campaign. Think outside the room (or the golf course or the charity bike ride). Ultimately, crowdfunding will benefit those who need the funds the most.