The only way Peter Nicholas could have been more surprised last summer was if Deron Williams had walked into his office wearing his Utah Jazz jersey with a check in hand.
Instead, Nicholas, director of Salt Lake City’s Carmen B. Pingree Center, took a call from a Williams associate asking if his school for autistic children would like to benefit from a charity golf event put on by Williams’ Point of Hope Foundation, an offer that resulted in a $28,500 donation to the school.
“This was just a shot out of the blue for us,” Nicholas said.
In only his fourth NBA season, Williams has become nearly as aggressive off the court in giving through his charitable foundation as he is on the court as the Jazz’s star point guard. Williams so far has contributed $400,000 to numerous causes.
“Maybe in the future, we’ll narrow it down to one thing, but right now, I just think there’s so many areas that need to be touched that you just spread the love,” he said.
Williams is one of nearly 100 NBA players who have shown such philanthropic passion. Often raised in modest circumstances before parlaying their talent into multimillion-dollar NBA contracts, these players devote a portion of their wealth to charity, frequently targeting children with backgrounds similar to their own.
Players also are drawn to charitable giving by a desire to build prestige in their communities to boost their star power and their “brand.”
But an 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 from 2005-07, but only about 44 cents of every dollar raised — or just $14 million of that $31 million — actually reached needy causes, far below the 65 cents most philanthropic groups view as acceptable. Records show revenue often is quickly eaten up by poor planning and administrative costs.
• Although 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 executive 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 and actually lose money.
Though shining examples of NBA charity work abound, player foundations’ noble motives often go awry, as even the league acknowledges.
“We don’t shy from it,” NBA senior vice president Kathy Behrens said. “There are horror stories . . . of guys who set them up because their agent said to or they thought it was a good idea and they had good intentions, but not a good plan. That causes trouble.”
Numerous ways to give
Charitable giving by NBA players takes multiple forms.
Documents show some write five-figure checks to existing charities or lend their names to established causes. Others work through one or more of 29 NBA team foundations, which in turn dole out the money to causes ranging from food banks to Hurricane Katrina victims.
Some set up “donor assisted” foundations that entrust their charities’ operations to an umbrella organization with philanthropic expertise. About a dozen of the NBA’s biggest names — Yao Ming of the Houston Rockets and the Jazz’s Carlos Boozer among them — have foundations run by the Giving Back Fund, which manages charities for about 20 NBA, NFL and Olympic athletes. Giving Back had $1.1 million in revenue in 2007 and gave $824,092 to charitable causes.
Yet despite these alternatives, personal foundations have become “fashionable” at the expense of other avenues of giving, said Greg Johnson, executive director of the Sports Philanthropy Project in Boston.
Player-run foundations
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. Combined, these player-run charities raised $31 million from 2005 to 2007.
But that number doesn’t tell the complete story, said Scott Tainsky, who researched the foundations as a graduate student at the University of Michigan.
The average amount raised by player-run foundations — $325,564 in 2006, according to The Tribune analysis — is inflated by the largest of them, leaving the median in the low six figures, said Tainsky, now a professor at the University of Illinois.
“Just because someone’s foundation only has $15,000 in assets doesn’t mean they’re not putting a lot of their money or time elsewhere, but you can’t get around the fact that these are some of the smallest foundations you come across,” he said. “Most of the time the recommended assets to start with are well over what a lot of these foundations have, which certainly should cause anyone who’s inclined to question the authenticity of the intentions.”
Big names, small results
That’s not to say all player-run foundations fit that mold. Those run by former Nuggets center Dikembe Mutombo, retired Miami Heat center Alonzo Mourning, Phoenix Suns center Steve Nash, retired Sacramento Kings forward Shareef Abdur-Rahim and Nuggets forward Carmelo Anthony have yearly budgets of $1 million or more.
But even as celebrity involvement can bring fame and cash to a cause that might otherwise languish, it also can give donors a false sense of security, said Laurie Styron of the American Institute of Philanthropy.
Superstars whose charities have stumbled include former Chicago Bulls star Michael Jordan, whose foundation closed in 1996 after criticism over administrative costs and the hiring of his sister as executive director. L.A. Lakers Kobe Bryant has dissolved at least one charity as well.
Foundations run by former NBA MVPs Allen Iverson (Detroit Pistons and former Nugget) and Dirk Nowitzki (Dallas Mavericks) could not be reached for comment at their IRS-listed phone numbers.
The most recent tax documents available show Iverson’s Crossover Foundation took in $10,000 in 2005 and $5,000 in 2007, which, after $11,895 in donations to charity, left the organization $3,664 in the hole. Nowitzki’s foundation increased revenue more than sixfold in one year, from $5,926 in 2006 to $37,020 in 2007, but still carried a $14,879 deficit at the end of 2007.
Nuggets shooting guard Dahntay Jones’ charity, devoted to providing college scholarships and mentoring, took in $9,795 in 2005 and lost $8,102 in 2006. Charity vice president and Jones’ mother, Joanne Jones, said a death in the family forced the organization to cancel its big annual fundraiser one year.
“There’s so much competition out there,” she explained, citing fundraising, paperwork and finding volunteers all as challenges. “We can’t afford to pay (staff) because we’re trying to pay money into it so we can give scholarships out.”
Operational expertise
The Tribune’s analysis found only a dozen or so among 89 player-run charities that had hired full-time executive directors, often leaving board members reporting only a few hours of work each in charge of administration.
“If you’re going to have an effective organization — and ours is a very, very complicated sort of organization — in general, you do need somebody who is a professional” to run it, said Joan Mandle, Orlando Magic center Adonal Foyle’s adopted mother and director of his foundation, Democracy Matters, which mentors college-campus activists.
The Tribune’s analysis also found that players commonly rely on family members instead of independent experts to staff their boards, in many cases, violating IRS rules that require a majority of board members to be nonrelatives to ensure adequate oversight.
More than two-thirds of player-run foundation filing IRS forms from 2005-07 had family members, friends or past sports associates on their boards. In several cases, the boards were made up entirely of family members.
“They are all illegal,” said Marc Pollick of The Giving Back Fund. “The IRS just doesn’t have the arms to go after everybody.”
Celebrity causes challenges
Players typically start foundations with their own cash, reaping an immediate tax benefit but aspiring to eventually turn their operations into publicly supported charities. Fundraising, however, is often more difficult than they imagined.
“You’re always having to give credibility and justify, when it’s a sports celebrity, because people are skeptical,” Johnson said.
Charities often labor and sacrifice for years, sometimes decades, before establishing a good reputation with prospective donors.
Another pitfall: Player charities often hold annual lavish fundraising events that barely break even or lose money. Pollick at the Giving Back Foundation says these galas can turn into “fun-raisers instead of fundraisers.”
NBA free agent Robert Horry’s Big Shot Foundation reported $206,086 in fundraising expenses for 2005, its first year of operation, but, according to tax returns, the efforts raised nothing.
The year’s tab included $38,000 in artist’s fees; a total of $38,120 in building and venue rental; a $27,486 expenditure on an unitemized “commission”; $23,005 in food; $25,000 in golf course fees; $17,368 on hotels; along with other four-figure expenditures on a disc jockey, sound and lighting, trophies, video rental, logo shirts and security.
Attempts to reach a foundation spokesman at the phone number listed on tax returns were unsuccessful.
NBA trying to tackle the issue
The NBA, along with the NBA Players Association, knows there’s a problem. They have begun to address it as a formal part of the league’s annual rookie orientation. The NBA’s Behrens said the sessions offer straight talk on starting foundations.
“We tell the players to take their time, that the first thing they need to do is not go out and set up a foundation,” she said. “It’s a lot to take on and we really encourage the guys to just do it intelligently. It’s like starting your own business and sometimes people forget that.”
Kimberly Haynes, an Atlanta-based celebrity charity consultant, maintains that “99.9 percent of (players) come to it because it is their passion.”
But, Haynes and other experts say, while motives are noble, players all too frequently get in over their heads. “Education of the athlete is key.”
