in the days before sports stars' salaries rivaled the gross national product of some Third World countries, few athletes formed their own public charities or private foundations. The athlete charity is a phenomenon of only the past decade or so, says San Francisco-based nonprofit attorney Betsy Adler of Silk, Adler & Colvin, but the superstar foundation has now become part of the fabric of American sports culture. Sports agents like Leigh Steinberg routinely encourage their rich and famous clients to form charities of their own. Clients including ex-49er Steve Young, New England Patriots quarterback Drew Bledsoe, and retired Dallas Cowboys QB Troy Aikman have taken Steinberg's advice and now have their own foundations.
A recent USA Today investigation identified and examined 248 charities and private foundations around the country established by, or named after, sports figures; together those organizations funnel $62.3 million a year to charitable programs, the paper reported. Their cumulative generosity, however, has not won over all charity watchdogs.
"A lot of [athlete charities] are not really much of anything," says Dan Borochoff, president of the American Institute of Philanthropy in Maryland. "It's just something they like to have on the résumé. You read the bio of the athlete and see that they've got a charitable foundation, but you really don't know what they're doing. 'Where's the meat?' It improves their sponsorship marketing opportunities."
But for all the good PR a charity can bring a pro athlete, there's also some real risks attached to fronting a nonprofit organization. News investigations of athlete charities over the years have regularly found that the high-profile organizations often suffer from mismanagement, nepotism, bloated overhead, sloppy bookkeeping, fund-raisers (sometimes called "fun-raisers") so lavish that they lose money, and lack of nonprofit expertise.
"Very often athletes will have their mothers and brothers and fathers run the foundation because it's a nice way to give somebody a job and have tax-deductible dollars pay for it," says Marc Pollick, head of the Boston-based Giving Back Fund, which he founded in 1997 to manage celebrity and athlete charities. "We have nothing against mothers, brothers, and fathers -- they're wonderful people. But simply giving birth to an NBA superstar or baseball player doesn't qualify you with the proper knowledge to run a foundation."
In the eight years of its existence, the foundation of the Bay Area's biggest sports star, San Francisco Giants slugger Barry Bonds, has gone through almost all the classic ups and downs of athlete charities. In 1993, Bonds and his agent at the time, Beverly Hills Sports Council, came up with the idea of forming a charity in the baseball star's name. Bonds tapped his friend Steve Hoskins, a sports memorabilia salesman, to serve as chief financial officer of the new Bonds Family Foundation, and accountants with the Beverly Hills Sports Council agreed to handle the foundation's tax returns.
During the foundation's second year, Bonds got down to the business of raising money for his new organization. The slugger teamed up with his pal, pop singer Michael Bolton, who had his own charitable foundation, and hosted an event they called the "Field of Dreams Awards" on Nov. 6, 1994 at the Beverly Hilton. The two recruited Hollywood promoter David Gest (who is currently working with Michael Jackson's 30th anniversary tour) to produce the dinner and concert, which ultimately featured musical artists Bolton, Kenny G., Gladys Knight, Toni Braxton, comic Sid Caesar, and actors Anthony Quinn and Maureen O'Hara.
Despite earning a few complimentary nods in the press including a write-up in the Los Angeles Times, the event itself was a financial disaster. It didn't earn one penny for charity, financial records filed with the California Attorney General's Registry of Charitable Trusts indicate. In fact, the gala cost nearly $100,000 more than it took in. (Bonds would later abandon the star-studded gala as a fund-raising tool, instead opting to finance the foundation primarily with his own money.) Between December 1995 and April 1997, the attorney general's office sent the Bonds Foundation at least three separate warnings for filing either incomplete, contradictory, or late financial reports.
According to Bonds associate Charles Gardner, Bonds began to reassess his philanthropic priorities in 1997 when he moved back to the Bay Area from Los Angeles. As Gardner recalls, Bonds wanted to focus his charitable efforts on his hometown digs. And the baseball star also wanted to improve the administration of his faltering foundation. Gardner says that around this time -- which he describes as the foundation's "rebirth" -- he urged Bonds to hire San Francisco attorney Betsy Adler of Silk, Adler & Colvin. Shortly after Adler and her crew came aboard, they found irregularities in the Bonds Foundation's finances. The law firm's most disturbing finding: Its new client had tapped nearly $77,398 from the foundation to pay the baseball star's longtime publicist, from 1995 through 1997. The transactions seemed to violate federal tax rules prohibiting self-dealing.
Gardner says that the publicist had done some promotional work for the Field of Dreams event and continued to do other work for the Bonds Foundation afterward. Gardner estimates that the publicist spent twenty to thirty percent of her time working for the foundation, and the rest of the time working as Bonds' personal promoter, but because she was doing some work for the foundation, Gardner says, Bonds mistakenly believed "her salary could be paid through the foundation."
Adler says it was an "inadvertent screw-up" and notes that Bonds paid back the foundation all the money immediately after being told the transactions were improper.
"I can tell you that Barry didn't even think about not doing it right," Adler says. "He's a public figure, he doesn't need the embarrassment."
After moving to the Bay Area, Bonds did indeed shift the focus of his foundation's efforts. Tax records show that in 1998 the Bonds Family Foundation adopted a so-called loaned executive program where it supplied -- and paid the salary of -- a "full-time employee" to the United Way of the Bay Area. During the second year of the program, the Bonds Foundation paid its loaned executive a salary of $45,058. That same year Bonds personally gave a $50,000 tax-deductible donation to the foundation (accounting for the lion's share of the foundation's $60,548 in total revenues that year).
According to its 1999 tax return, the latest return available for the Bonds Foundation, the only executive the foundation leased out was Patricia Bonds, Barry's mom. USA Today, in its July 20, 2001 story on athlete charities, put the arrangement in a less-than-flattering light. Though the paper conceded there's nothing illegal about putting a family member on the payroll, it found that contrary to the assertion in the Bonds Foundation's tax return, the United Way actually did not ultimately determine Pat Bonds' salary -- Bonds Foundation board members did. And although Barry Bonds himself abstains from voting on anything regarding his mother's employment through the foundation, there are only two other board members besides Bonds, and one of them is Barry's friend and adviser Steve Hoskins.
Bonds and his associates -- as well as officials at United Way of the Bay Area -- consider the USA Today story unfair and misleading. For one thing, Gardner says, the United Way provided the Bonds Foundation with a salary survey to help the foundation's board set Pat Bonds' wages (which is corroborated by Eric McDonnell, a senior vice president at the United Way). Gardner describes the arrangement with United Way as a mutually beneficial partnership between a small foundation and a cash-strapped charity.
Gardner and attorney Betsy Adler also stress that Barry Bonds' organization is a private foundation and not a public charity that relies on public donations for its survival. Private foundations typically get most of their donations from one family or one person -- in this case, Barry Bonds. And since it's mostly Bonds' money, Gardner reasons, it makes perfect sense for his mom to be the foundation's loaned executive. "Obviously," Gardner says, "since [Pat Bonds] is part of the Barry Bonds family, she's going to have his interests at heart."
And in spite of its administrative hiccups, it can't be denied that the Bonds Foundation has managed to do some good: During its first two years of operation in 1998 and 1999, the Bonds Family Foundation directly donated nearly $100,000 to Bay Area charities, records show. And Gardner says that the foundation has stepped up its efforts, donating $326,000 over the last two years to things like the United Way's Link 'n Learn computer technology program for schools like Verde Elementary in North Richmond. So why do athletes like Barry Bonds continue to form their own foundations despite the risk of unwanted investigation? While many athletes say they want to give back to the community and share their good fortune with the less fortunate, a sports marketing consultant quoted by Forbes magazine in March 2000 expressed a more cynical view: "It's a way to build the brand."
Indeed, Barry Bonds has gotten an occasional PR boost from his charitable venture. But as the distinct lack of endorsements the mercurial star has collected -- even as he chases Mark McGwire's home run record -- can attest, Bonds' philanthropy hasn't translated into his own line of sportswear at K-Mart.
With a reported $10.3 million salary this year, Bonds could simply write a check to an established nonprofit from his personal checking account and receive similar tax benefits -- without having to worry about bad publicity that can come from running a foundation. (That's something Cubs homerun king Sammy Sosa, whose troubled foundation is being investigated by the IRS, is learning the hard way.) Adler explains that Bonds and other wealthy people establish private foundations for two main reasons: "One is they want to make an institutional statement about their commitment to long-term giving. Another [reason] is that they want some degree of autonomy over that giving. If it's a private foundation, 'I'm in charge.' ... You get someone who is self-made, who has created his own wealth as Barry Bonds has, autonomy is going to matter."
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