September 13, 2006
Using Charities For Financial Gain
A local politician once remarked "the big money is in Not-For-Profit" and around here, there is little doubt he was correct.
About seven years ago The Independent did a series on the matter. We discovered, for example, that year the Hampton Classic paid its co-directors about 10 times the amount it contributed to Southampton Hospital, the main beneficiary of the event.
We revealed that Podell House came before the East Hampton Town Board with a request for more money, had a half-dozen employees earning six figure incomes, had millions of dollars of stocks and bonds, and didn't have a single East End resident in its local "house."
It seems each summer local newspapers are inundated with more and more "for charity" events, and organizers are getting more and more brazen. A ritzy clothing boutique will hold an opening showcasing some hoity-toity designer's new clothing line, which sells for hundreds of dollars an item. They will donate a "portion" of the proceeds to some needy charity. Thus, the newspaper should give them plenty of free publicity.
Guess what? In many cases, organizers rake in thousands, and the charities get little or nothing.
In one notable instance last summer, a Foreigner concert billed to benefit local charities not only didn't produce a profit, it lost money, and the organizers tried to stick the charities with the unpaid bills. Raise a red flag when you read "a percentage of the profits will be donated to . . ." Ask what percentage, and what happens when there is no profit after everyone involved grabs a piece of the action.
The charities are between a rock and a hard place, as was the case with the state's Police Benevolent Association some time ago. Then it was revealed only five percent of a million dollars raised by an independent firm actually went to the PBA. Still, a spokesman said, the group was grateful for the $50,000. The problem was the people who contributed the million didn't intend for 95% of it to go to some high-paid shysters running a charade game.
We at The Independent have adopted a new policy we hope the other local papers will follow. From now on, when an event promises to be for the benefit of a charity, we are going to require, in exchange for free publicity, an accounting of how much was raised and how it was distributed. Any event that refuses to comply can either buy an ad or seek some other venue for its public relations machine to badger for free press.
Naïve or not, people who buy tickets or make contributions to events being held for a worthy cause believe the money is going to that cause. Maybe the knowledge that PR firms and organizers are pocketing most of the loot will give them pause in the future.
Here is some great advice: if you want to help a particular cause: first, check to see what that organization does with the money — the Better Business Bureau Wise Giving Alliance is one of many tools at a donor's disposal. When you decide on a worthy charity — one that doesn't spend most of the money on itself — give directly to the group.
If you want to hear Foreigner play or watch Jon McEnroe play tennis by all means do so. But if you want the ticket price to go to charity, stay home and send the organization a check.