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ASOs Held Hostage? Bay Area Reporter, August 21, 2003
by Patrick Monette-Shaw Red underlined text was submitted, but cut due to space constraints; blue underlined text are links.
The B.A.R.'s AIDS Walk article and editorial July 24 raises important accountability questions the San Francisco AIDS Foundation has failed to answer. But it's not just the walk that needs revamping. It's time our diverse community demand greater control over equitable philanthropic distribution of charitable-giving resources, because SFAF's own behavior causes "donor fatigue" and "beneficiary fatigue."
Prior to AIDS Walk 1996, SFAF failed including in its tax returns how, or whether, it shared funds raised at walks with the 30-plus Bay Area AIDS service organization "beneficiaries." Only following intense community pressure did activists force SFAF and its subcontractor, then the Tides Foundation, into opening books to public scrutiny by publishing walk "grants" awarded. This victory occurred in AIDS Walk 10; seven years later, cumulative data from SFAF's tax returns is disturbing.
Records from the California's Attorney General's Office of Charitable Trusts date back only to AIDS Walk 4 (1990); the first three event producer annual reports are missing and 2003's report is due in January 2004. The 13 reports available (1990-2002) reveal annual event expenses soared nearly $1 million to $1.333 million, while revenue after expenses plummeted from 80 percent to only 61 percent. Cumulatively, MZA Events, the walk's producer, has spent $11.2 million on expenses. Since 1996, expenses as a percentage of revenue climbed 14 percent to 38 percent. Between 1999-2002, MZA's expenses skyrocketed $300,000, while between 2000-2003 gross revenue plummeted $700,000 - a combined $1 million loss.
Had SFAF restrained MZA's expenses, funds saved could have benefited smaller ASOs. Although SFAF waged a nasty, public battle with Pallotta Teamworks over out-of-control AIDS Ride expenses, SFAF appears wholly unable to control MZA's exorbitant spending. Indeed, while Palotta returned 67.3 percent of gross revenue from Ride 2000, MZA returned only 61.9 percent from Walk 2002. Worse, Walk-the-Talk Productions - whose president is MZA's Richard Zeichik - returned only 52.3 percent of gross revenue to SFAF from AIDS Marathon 2002.
While SFAF casts a blind eye toward "insider" event producers, the percentage of funds returned by MZA is a major cause of donor fatigue. Hundreds of donors, disgusted by SFAF's management, have stopped contributing to SFAF. Beneficiary organizations, also fatigued, must unanimously demand fair-share accountability.
Of the $3.6 million raised at Walk 2001, event expenses consumed 37.2 percent ($1.35 million). Of total grants awarded, a mere 2.81 percent ($215,253) went to 11 Bay Area ASOs outside of San Francisco County. Another 18 smaller San Francisco County ASO's were granted 3.72 percent ($284,931). Combined, only 6.53 percent ($500,184) of grants awarded went to these 29 ASOs, while nine needle exchange and substance abuse organizations received 10.08 percent ($773,206). SFAF awarded its three partners (Shanti, Project Inform, and UCSF) 3.10 percent ($237,500), exceeding grants made to the 11 Bay Area ASOs. Of $22.14 million raised at walks between 1996-2001, SFAF retained $8.79 million, spent $6.3 million on expenses, and granted $2.34 million to needle-exchange and substance abuse projects, while 64 of the smaller ASOs received only $3 million.
Also during 2001, SFAF
dipped into its own funds, diverting $2 million dollars in grants
to organizations in Africa to augment $4.4 million granted to
SFAF by Pfizer. SFAF awarded 79.7 percent ($6.45 million) of
its total $7.68 million grantmaking to global organizations in
2001, while awarding the measly $500,184 (6.53 percent of total
grantmaking) to the 29 non-partner, non-needle exchange ASOs.
her written deposition for the AIDS Ride lawsuit dated December
2001 (possibly after having granted $6.45 million to "global,"
not Bay Area, organizations), Christen noted that Palotta prefers
using a "grantee" rather than a "beneficiary"
model, affording beneficiaries "
virtually no control
or oversight of costs and cost of fundraising issues" for
events like the walks. Hello?
"Donor fatigue" results from placing restrictions on donations that are ignored. I sponsored a co-worker at Walk 2001 by writing two checks endorsed to the AIDS Emergency Fund and the Breast Cancer Emergency Fund, yet SFAF or MZA ignored my restrictions and cashed both checks without permission.
SFAF's current budget slashes grantmaking by $1 million over the previous year's amount to a paltry $393,268. Until SFAF revamps its operations, including firing Executive Director Pat Christen, inequitable disparities in revenue sharing will continue. To advocate for, or demand, changes to SFAF's grantmaking processes, public testimony at its August 25 board of director's meeting is encouraged. Pre-registration rules (48-hours beforehand) can be found searching for "board" at www.sfaf.org [or go here].
To ensure your donations are shared equitably throughout the Bay Area, mail donations directly to ASOs you prefer funding, not to SFAF. Lacking accountability checks and balances, it's time to stop enabling SFAF's grantee model hostage-taking.