December 28, 2008
NBA Player Charities: "Pattern of Mismanagement"
The Salt Lake City Tribune examined the Form 990s of the charitable foundations established by 89 NBA players in a detailed investigative report, NBA Player Charities Often a Losing Game; Tax Records Reveal Pattern of Mismanagement Despite Some Success Stories:
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 IRS.
- 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.
- No official numbers exist, but The Tribune found at least 85 players who have filed with the IRS seeking tax-exempt status for one or more charities, although only 59 of those foundations have filed forms required by law for charities pulling in more than $25,000 yearly.
Here are examples of the Form 990 data of the charitable foundations of some NBA stars:
- Carmelo Anthony: Carmelo Anthony Foundation (2006):
- Revenue: $1,058,256
- Expenses: Charitable Program: $426,991; Administration: $143,755
- Revenue: $10,000
- Expenses: Charitable Program: $6,500; Administration: $250
- Revenue: $189,792
- Expenses: Charitable Program: $103,744; Administration: $111,972
- Revenue: $1,487,853
- Expenses: Charitable Program: $318,499; Administration: $916,531
- Revenue: $67,928
- Expenses: Charitable Program: 0; Administration: $8,042
TrackBack URL for this entry:
Listed below are links to weblogs that reference NBA Player Charities: "Pattern of Mismanagement":
Is charity the primary purpose of these foundations? How many family members are involved in the administration of these charities, drawing pay and benefits from the pretax income of the well-paid stars. This must be a highly effective way of transferring income. The foundation could also support travel expenses as long as the travel can be associated with the basic charitable purpose of the foundation. Board meeting in Hawaii anyone?
The tax advantages of a personal charitable foundation goes well beyond NBA stars to other professional sports and Hollywood. I bet further investigation would yield more interesting results.
Posted by: Albert Schwartz | Dec 29, 2008 9:51:36 AM
Seems like you're missing the point of setting up a charity and putting your cousin in charge...
Posted by: Some Guy | Dec 29, 2008 3:12:10 PM
Most if not all these charities are probably in existence only at the desire of the NBA. They want their players to present a public image of philanthropy and so they request/require them to pony up some funds for a 'cause'. Most of the players don't really care, they are just going through the motions. As a result the charities look good on paper but do little that actually benefits anyone...except the folks getting salaries.
Posted by: Fred | Jan 6, 2009 6:40:27 AM