Charity’s Foot Soldiers
Before you sentence me to the fiery circles of hell, be aware that I’m not the only one who thinks this way. “More often than not, special events are not a winning proposition for charities,” says Sandra Miniutti, the CFO and vice president of marketing at nonprofit watchdog Charity Navigator. “They consume staff time and cost a lot of money.” Givers might be surprised to know that a lot of fundraising dollars never reach the charity — they’re spent on the event. “One thing that has to be kept in check is the cost of putting on the event itself,” says Daniel Borochoff, the president and founder of CharityWatch, another watchdog group. “Hopefully the people doing the race are paying for the benefits they receive, and the sponsors’ money is going to the charity.” Others are blunter. Kim Irish, who until recently was with the advocacy group Breast Cancer Action, told SmartMoney: “If walking could cure breast cancer, it would be cured by now.”
Walkathons have been around since the 1960s, when they started out as humble affairs — a couple laps around the high school track, a finish line, a jug of ice water, some sliced oranges. The man who created today’s high-end, hard-core fundraising events was Dan Pallotta, a Malden kid who graduated from Harvard and went on to work at nonprofits in California. In 1994, he convinced 478 fundraisers to bike from San Francisco to L.A. (taking a route of almost 600 miles) in order to raise money for AIDS nonprofits. An astonishing $1.4 million was generated. The next year, participants in his AIDSRide series raised $11.4 million, and it kept snowballing. A few years later, Pallotta partnered with the Avon Foundation for Women and started three-day breast cancer walks in which participants walked up to 20 miles a day before crashing at enormous tent villages for the night. By 2002 riders and walkers had raised just shy of $200 million through the AIDSRides and $323 million through the Avon breast cancer walks. So stunning were the successes that Harvard Business School conducted a case study on Pallotta’s company, and other charities tried to adopt his tactics.
Pallotta’s genius was making the fundraisers hard for participants. “It was about doing a journey that was a metaphor for their grieving,” he says, “about honoring the people they loved in the best and most challenging way they knew how, and in the process, raising money to support the end of those problems.” If people had to struggle during training, they were also more likely to commit to the fundraising. That difficulty was also bound to open the wallets of friends, a fact confirmed by a recent study in the Journal of Behavioral Decision Making that showed that giving increases when participants tackle harder events — a phenomenon dubbed the “martyrdom effect.”
The nonprofits were grateful for Pallotta’s help at first, but that changed. It turned out that only 55 percent of the donations were going to the actual charities — the rest went to marketing, administration, event giveaways, and Pallotta’s firm, which was collecting an average of $270,000 per event by 2001. What did that mean in the real world? Only about half of the $200 million raised through the AIDSRide ended up in the bank accounts of actual charities, while the breast cancer groups received about $194 million of the $323 million raised. Critical news stories were written, and in 2001, the California AIDSRide sponsors dropped Pallotta as a production outfit. Certain they could do better for cheaper, they decided to put on their own event. One year later, Avon made a similar break. By cutting back on the marketing and giveaways, the company hoped to give more of the proceeds to charity.
Bravo, right? Pallotta may have had some good ideas, but why was he wasting so much money? Couldn’t the millions of dollars it cost to put on one of his events be better used on research? Do we really need the glitz and the T-shirts and the hats and the enormous fees?