Growls

An analysis by the Salt Lake City Tribune, posted on December 26, reports that:

“NBA (National Basketball Association) player-run charities . . . face a wide range of problems, from meager funding and high administrative costs to a lack of professional staffing and oversight. Tax records indicate these 89 charities together raised at least $31 million between 2005 and 2007, but only about $14 million of that actually reached the needy causes.”

Several of the findings from the newspaper’s “analysis of 89 stand-alone NBA player charities include:

• 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.

Paul Caron, publisher of the TaxProf Blog, provides several “examples of the Form 990 data” of several of the player charities, including:

Steve Nash:  Steve Nash Foundation (2006)):
+ Revenue: $1,487,853
+ Expenses:  Charitable Program:  $318,499; Administration:  $916,531

According to the Tribune, “The NBA and the NBA Players Association know there's a problem. They have begun to address it as a formal part of the league's annual rookie orientation”