Best Buddies is an international organization with almost 1,900 chapters worldwide. It impacts the lives of over 900,000 people with intellectual and developmental disabilities. As with any charitable organization, fundraising and obtaining sufficient financial support to address its mission is critical. The organization uses star power whenever possible to attract donors to its mission. Its fundraising “friends” include Sugar Ray Leonard, Kyrie Irving, Carl Lewis and Cindy Crawford. One of those stars is quarterback Tom Brady of the New England Patriots.
Recently, Best Buddies initiated a new promotion together with Shaw’s and the Star Market grocery stores, which will run in 153 stores from April 14 to May 11, 2017. Clerks will ask customers at the register to donate to support Team Tom Brady. For every $3 donation, guests will receive a Team Tom Brady sticker and their names will be displayed in their local supermarket. The Best Buddies website indicates that Star Market will donate 100 percent of the proceeds from this fundraiser to Best Buddies.
But a front-page article in the Sunday Boston Globe recently threw some dirt at this organization and Tom Brady. The Globe article notes that Brady has lent his celebrity presence to the Best Buddies charity, helping it raise nearly $20 million for those with disabilities. However, starting in 2011, a new agreement between Brady and Best Buddies has resulted in the organization paying $2.75 million to Brady’s own charitable foundation and pledging an additional $500k payment in 2017, for a total of $3.25 million. I verified these assertions by reviewing Brady's foundation's tax returns.
The Globe notes that there is nothing illegal about Best Buddies making charitable contributions to Brady’s tax-exempt, charitable foundation. But it does question why one charity with its own priorities and needs would donate to another charity with different priorities. As we noted in a previous post, there is nothing wrong with one charity donating to another. And often, there are good reasons for such arrangements.
The backstory here is that while Brady volunteered his time and image for many years to Best Buddies, there came a point when Brady wanted to create his own charitable foundation and focus his giving in areas important to his family. Best Buddies founder Anthony Shriver, realizing that the loss of Brady would be a significant blow to Best Buddies fundraising potential, worked out an agreement with Brady whereby Best Buddies would provide financial support to Brady’s foundation.
This looks like a sound business decision on Shriver’s part — he kept a known fundraising magnet onboard. From Brady’s standpoint, he had the choice of spending his efforts fundraising for his own foundation or for Best Buddies — and there is no doubt in my mind that fundraising for Best Buddies was the better choice. In business, one would call this a win-win situation.
What, if anything, is wrong with this arrangement? From a business standpoint, Shriver did what may have been best for his charity. He kept a certified star and fundraising magnet connected to his organization — but now, he had to pay for that arrangement. Rather than pay Brady as a hired subcontractor, Shriver chose to donate to Brady’s foundation. (We first saw this phenomenon last year with the Donald J. Trump Foundation receiving donations from many companies with whom Mr. Trump had business dealings.) Some philanthropy professionals believe Best Buddies should report the payments to Brady’s foundation as fundraising costs rather than donations. I believe that point has a great deal of merit.
Is Best Buddies diluting the donations received in Brady’s name? Although I am not sure what was done in the past, the statement on the Best Buddies website that all proceeds from the 2017 Team Tom Brady promotion will go to Best Buddies means that Best Buddies must find some other source of revenue from which to make the $500K donation promised to Brady for this year. It is the same as if each donor restricted their donation only to Best Buddies programs and services.
Does Best Buddies have revenues from which it is free to make donations to other charities? While that is an excellent question, the answer, which is not readily available from a review of Best Buddies' tax returns, is probably “yes.”
Various charity watchdogs are less than happy with this arrangement. Although Best Buddies receives three out of four stars from Charity Navigator, others in the industry indicate that the failure to report these payments as a fundraising expense is “sloppy” at best. In today’s world of transparency, this does appear a bit too cloudy. Good business, but cloudy charity work? Don’t we want good business practices in charitable organizations? A dilemma for sure!
What is the takeaway for the donor? If you want to be sure that your donation stays with the charity to which you made the donation, be sure to indicate that your donation is restricted to the programs and services of the charity. This should be understood when a donor writes a check to a charity, but adding this language to your contribution can’t hurt.