Posted by Kevin Arnovitz
Ross Siler, Tony Semerad, and Michael C. Lewis of The Salt Lake Tribune have published an exceptional piece of original reporting on NBA player charities:
[A]n analysis by The Salt Lake Tribune of hundreds of tax documents filed by NBA player charities has found these foundations face a dizzying array of problems, especially those set up by the athletes themselves without outside expertise.
Among the findings of The Tribune's analysis of 89 stand-alone NBA player charities:
» Together, they reported revenue of at least $31 million between 2005 and 2007, but only about 44 cents of every dollar raised -- or $14 million of that $31 million -- actually reached needy causes. The average NBA player foundation put just 51 cents of each dollar it spent toward charitable programs, well below the 65 cents most philanthropic watchdog groups view as acceptable. Tax records show budgets are quickly eaten up by poor planning and administrative costs.
» While a handful of player charities appear to be well-financed and tightly managed organizations that do good, a larger number are unimpressively funded and their activities poorly documented. Up to a quarter of NBA player charities analyzed lacked even basic documentation required by the Internal Revenue Service.
» In spite of their celebrity, NBA athletes seeking public donations often struggle for years before building a viable stream of donations. About a third of NBA player charities analyzed instead remain funded by the athletes' own wealth. Many close for lack of support or because athletes move on.
» Few player-run charities hire full-time directors to manage daily operations, and players commonly put family members, friends and former sports associates on their boards, despite IRS rules requiring that a majority of board members be nonrelatives.
» Some player charities hold lavish fundraising galas that cost tens of thousands of dollars but actually lose money.
Though shining examples of NBA charity work abound -- including noteworthy efforts by the five Jazz players, all of whom run effective charities -- player foundations' noble motives often go awry, as even the league acknowledges.
The report offers some detailed accounts of fundraising events that cost more money than they raise, and several player charities that have folded. The piece also points out that more players would be better off entrusting their charities to umbrella organizations that know what they're doing.
Foundations and charities are institutions, above all else. And all institutions -- whether they're government agencies, private corporations, universities, or non-profit organizations -- need more than good intentions to guarantee success. If they're governed by cronyism, poor planning, or the wrong set of priorities, they will fail.
