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Follow the ALS Ice Bucket Challenge Money

Follow the ALS Ice Bucket Challenge Money

How does the ALS Association spend its millions?

Trust not too much to appearances. -Virgil

As the nation sweated out summer 2014, scores of people took to the supposedly charitable act of dumping ice water on their heads to raise awareness about ALS, a neuro-degenerative disease.

In truth, the act of dumping cold water on one’s head was not really a charitable act, since doing so is merely an excuse to get out of being “obligated” to donate $100 to the ALS Association (ALSA), the charity behind this phenomenally successful sensation.

While many people were eager to take the ice bath and forgo the donation, the ALSA reported that from July 29 to August 27 it received $94.3 million in donations, compared to $2.7 million during the same period last year. This 3300% growth in fundraising was courtesy of donations from both existing donors and 2.1 million new ones.

Controversy arose when the ALSA released additional figures showing only 27% of its funds went directly to research last year, while 7% went to administrative costs, 14% to fundraising, 19% to patient and community services, and 32% to public and professional education.

Some, like Politifact, were quick to defend the ALSA, noting that its stated goal is not solely to fund research into ALS, but also “to provide educational and other services to patients and their families, health care professionals, legislators, and local communities.”

ALSExpenses

Provided by the ALS Association.

It is still a bit peculiar that a secondary purpose—education—received about $1.3 million more in funding than research.

This is not to say that the ALSA should have awarded larger grants or more grants if that would have been inappropriate or wasteful, but the fact remains that the group’s stated and most well-understood primary goal of research does not receive the majority of its funds.

Reviewing the group’s 2013 tax returns reveals that from approximately $24 million in revenues, 48% of it (or roughly $11.5 million) was spent on labor costs. These costs included compensation of nearly $5 million, non-employee compensation of $4 million, travel expenses of $1.3 million, employee benefits of nearly half a million, among other items.

Additionally, nearly $1 million was spent on “Lobbying” and $6.2 million went to “Grants and other assistance to governments and organizations in the United States.”

An excerpt from the ALS Association's 2013 tax returns.

The highest paid employee of the ALSA last year was then-CEO Jane Gilbert, whose salary was $339,475. There were ten other employees with six-figure salaries. Salary information on the current CEO, Barbara Newhouse, could not be found, but will become available when the organization files its return for this year.

The point in mentioning salaries is not to stoke up class warfare. What Gilbert and Newhouse are paid is not unfair, because their salaries are derived from voluntary giving, much like how the CEOs of private corporations earn their high salaries because consumers voluntarily buy their companies’ products and services. (Plus, regardless of one’s opinion of the Ice Bucket Challenge, it was a brilliant marketing strategy.) Furthermore, one’s salary is determined by the market, and a high salary is indicative of a competitive wage market.

However, there seems to be a particular and pertinent distinction between a private business, whose fundamental goal is to make profits, and a charity, whose fundamental goal is to relinquish as much of its funds to those in need.

An email inquiry to the ALSA regarding issues like the high labor costs was met with the group’s standard literature and FAQ-like materials.

Still, the ALSA has another problem brewing under in the form of its balance sheet.

On September 5, it was reported that Newhouse sent letters to three major charity rating organizations asking them not to penalize ALSA for having too much cash in the bank as it figures out how to spend its $100+ windfall coming from the Ice Bucket Challenge campaign. According to that same report by Biz Jounrals, the ALSA is currently rated a “B+” by Charity Watch, a charity corruption watchdog organization, but having so much stagnant cash could result in an “F” grade.

It is perhaps because of the specter of poor institutional reviews that could really tarnish the organization’s credit that some charities seek to spend as much money as possible without sufficent discern for where that spending is going.

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Comments

I always felt it was a typical “Look at me, I am a good person” symbolic act (like wearing a pink breast cancer awareness ribbon), that means absolutely nothing. For the record my girl friends brother died of ALS in 2012. You are right – better to write a check.

BannedbytheGuardian | September 8, 2014 at 7:57 pm

Money makes the world go round , the world go round . It is always about the money .

This fundraiser turned into a windfall, and no reasonable organization would be able to apply those funds in one year.

I hope this organization is very transparent with how it uses this miracle, for it represents a sudden surge in resources that should not be wasted.

    healthguyfsu in reply to Valerie. | September 8, 2014 at 10:16 pm

    That’s completely untrue. It is very easy to spend a good chunk of it on funding more applications in highly competitive submissions. To give you an idea, the average NIH program (govt., much more money available) funds 10% of its submissions in a good year.

    All they need to do is set up a “call for proposals” and they will have no shortage of researchers at US universities asking for grant money. It would take about 6 months from start to finish and would be a huge gesture towards the research community if they did so.

Phillep Harding | September 8, 2014 at 8:00 pm

The students in the Acct for Non-profit Organizations class I took spent most of the first month with raised eyebrows and exchanging “He has to be kidding” looks.

NFP status is really ripe for abuse. Wide open.

Typical charity. Nobody outside the charity organization knows where the money really goes and for whom and what. Remember way back when charities sprung up for 9/11 families? Where did THAT money go? When I donate, I go directly to the end users who need the money.

My question is, “How does the ALSA decide who gets how much funding?”

It makes sense, if all the researchers combined are seeking/asking for a total of $x in funding, and that “x” amount is 27% of their budget, that that 27% would go to research, and anything else would go to education and outreach, after covering their other overhead costs.

On the other hand, if $x was requested totaling 50% of ALSA’s budget, it would make less sense to only pay out 27% for research and more for education/outreach.

So until I see how my question above is answered, I’d have a hard time getting excited about this.

    Casey Breznick in reply to Archer. | September 8, 2014 at 9:36 pm

    Archer, you raise a good point which I hinted at in my article. I wasn’t able to find that information. Perhaps others are better at Internet sleuthing than I am and can provide us with the requested/granted ratio.

    healthguyfsu in reply to Archer. | September 8, 2014 at 10:20 pm

    I don’t even have to look it up being in the biomedical field. There are far more people proposing research for grant funds than being funded in every biomedical discipline you can think of. That absolute best funding line I’ve ever seen was that 54% of applications were funded and that was for a low dollar training grant for new researchers that basically just paid their 36-43k salary and maybe a laptop.

      healthguyfsu in reply to healthguyfsu. | September 8, 2014 at 10:28 pm

      Couldn’t find their funding lines but here’s a list of the grants they offer.

      These are not high dollar grants. 80k per year on their established investigator grants compared to 500k per year on some of the higher NIH grants.

      On their funded programs page, they also have funded 22 “clinical management” grants for ALS from 1998-2011. I can tell you right now that there have been far more than 22 applications in that time period. 22 proposals received per year is closer to realistic than 22 in over a decade.

      http://www.alsa.org/research/for-researchers/call-for-abstracts.html

      I want to state though that no organization funds 100% of its grant proposals, and the private organizations will ALWAYS have a smaller pot than the government thanks to our government’s take over of this corner of the economy and medical industry. Most organizations never even come close and that even includes the NIH of the federal government. What I’m telling you though is that your concern for how much they spend elsewhere while skimming on research funding is a valid concern.

        Nice work! Given all that, I’m now having a hard time believing that education and outreach efforts are more costly than research, unless a ton of the grant proposals they’re getting are crap. Disputed hypotheses, half-baked methods, areas of study already covered by other grants, etc. Doesn’t seem likely, but there’s always the possibility.

        Still, maybe there is something to get excited about after all.

TruthOverPower | September 8, 2014 at 8:30 pm

It bothers me no end that CEOs and others are paid mid to high 6 figures while they pay below market wages to their workers, expecting them to suffer lower pay for the purpose of doing good. I’m a devout Catholic Christian who takes seriously the notion of stewardship and charity. But these kind of salaries turn me off completely.

I’ve changed a lot of my charitable giving over the last year because of this.

While secular charities enrage me less, religious ones with high paid upper management just send me over the edge. Not saying they should take a vow of poverty but c’mon. Many people give sacrificially, and this is a betrayal of trust.

TruthOverPower | September 8, 2014 at 8:35 pm

“Education” can also be pretty fluffy – some brochures etc that are mailed out in conjunction with fund-raising. A long time ago I read a book called Unhealthy Charities that documented many ways that your money is wasted in medical charities.

From Amazon’s Booklist review:

“Before the recent United Way scandals, many thought giving to a health charity was purely a good thing. Now they wonder about some of the matters Bennett and DiLorenzo bring up in their detailed, documented report. The two stress throughout that attention should be paid to what charities actually do, not to what they say they do, but that factual information on where the donations go is often hard to dig up: auditors’ reports do not give the whole picture; much advertising and many public relations blurbs are misleading; and most charities spend most of their money on education and research, and these expenditures are often not very productive or helpful. For instance, the famous seven warning signs for cancer, a cornerstone of American Cancer Society propaganda, are also associated with other diseases. Moreover, money for research usually goes to established researchers, not innovators. Health charities would do much better, Bennett and DiLorenzo say, if they concentrated their funds on the sick and on community services.”

BannedbytheGuardian | September 8, 2014 at 8:52 pm

I am waiting to see celebs line up for the Ebola shit & blood bucket . Make that a shit & blood blood dumpster challenge .

I worked for a nonrofit for many years and it frosted my buns for much the people in the “development office” made. An admin assistant there made twice what an admin assistant made in any other area. The CDO was the second highest paid person there. (Gotta love 990’s.)

I teach medicine at a university hospital. I and a partner of mine run the respiratory end of a comprehensive ALS clinic. I’ve been providing care to ALS patients for about 15 years so I have a little experience on this.

One of the great things the ALSA does is to provide nursing support to ALS patients. The Association’s local chapter employs a marvelous RN who goes out to the homes of each and every ALS patient the center (ours, the other big one in our city, and every other patient she hears about) for personal visits. What does she do? She and the other nurses like her have a practical, “what do you need” approach for accommodations with the disease. You need grab-rails for the bathroom, she knows how to get people to you who can do that. You need a ramp for the front walkway, ditto. You need help getting to appointments, she has a list of driver volunteers. You need help understanding what the doctors are saying, she interprets. You have a family member who needs to hear all about the problems, she educates. You need a shoulder to cry on, she has a shoulder.

She comes to our clinic and to the north-side clinic of our competitor university. She knows every patient. She works with every family. The ALSA charges not a dime for what she does. She’ll email the docs to keep them up to date with the status of the patient after every one of her visits, and to make requests for things the patient needs. I’ve learned — I answer those emails VERY quickly.

She’s a full-time employee of the ALSA, and RNs are not cheap these days (nor should they be). So I figure that’s about $90-100K a year right there. Every major chapter in the ALSA, to my knowledge, provides that support. If that’s a party of “patient and community services”, it is money extra-ordinarily well spent.

The research dollars are well spent as well. The money primarily is used as “seed money” support to younger investigators who need help in establishing their research programs so that they can then go to NIH. More established investigators receive funding for new ideas that are “high risk” and wouldn’t be funded by NIH. I don’t have personal knowledge of their review process, but I do for other, similar organizations, and I haven’t heard of any complaints.

I’d want to know more about the “public and professional education” before commenting on that.

So I wouldn’t go after the ALSA too hard without knowing more. From what I’ve seen of them, they do indeed provide substantial help to people with a devastating disease.

    Casey Breznick in reply to stevewhitemd. | September 8, 2014 at 10:13 pm

    Without a doubt very respectable, Dr. White. However, this is no defense of how the ALSA spent nearly 50% of its funds last year on compensation and the like. Perhaps this year they won’t do that again, but the fact remains that they did last year and very few people know about it.

    I’m sure Enron and Arthur Andersen were doing wonderful things while at the same time doing some very bad things behind closed doors.

      Arthur Andersen? The Supreme Court ruled unanimously that Arthur Andersen did nothing wrong. The firm was deliberately murdered by the DOJ.

        Casey Breznick in reply to Milhouse. | September 9, 2014 at 3:17 pm

        They were Enron’s auditors, and should have caught and reported Enron’s wrongdoings. The Supreme Court case, if I understand correctly, was about whether or not Arthur Andersen employees were breaking the law in shredding documents. So, AA employees did nothing criminal, but they did do things that were highly unethical.

        And to other readers: Obviously I don’t think the ALSA’s windfall should be spent immediately. My point in bringing up the specter of an “F” grade was to speculate a reason as to why the ALSA and other charities do in fact “feel the need” to spend all of their money, even if unwisely. Because if they do not spend most of it, they will be penalized. Perhaps this is not a good rating system.

    Manyburgers in reply to stevewhitemd. | September 9, 2014 at 10:29 am

    Steve is right – and I will add that the best service provided by the organization is the care and support for people with ALS. Frankly, the research aspect is the sexy attractant for donations, but the real value is the care for people who are, still being frank, about to watch themselves die – truly a terrible disease. To throw in some acrimony, the doctors have no idea how the disease works, or even how to diagnose it – it is a diagnosis by exclusion. So don’t imagine the research will net much by way of results.

I know little about ALSA or how they spend the money. They done a remarkable job of marketing and raising money. Good for them.

The level of funds are not likely to be repeated, as the fad will pass with the summer wind. Any charitable organization that has a one-time windfall like this should take a substantial amount of time to figure out how to best use the funds.

As chair of the board of a much larger non-profit, we are expecting to receive such a one-time windfall in the tens of millions of dollars. I will do my part to make sure that the use of the funds is decided over a several year process. Money will, by design, sit in the bank for a period of years.

I think the watchdog is wrong. If they got a windfall, then they should bank it and spread it out. Who knows – maybe they can run off the interest. As far as the CEO is concerned, it sounds like a complex field, so I think it is not out of line. A six-figure salary (I don’t earn one) isn’t out of line these days for a good professional. And as far as “compensation” is concerned, if you pay a nurse to see patients, that’s compensation.

Mind you, I give to a lot of charities that have almost no overhead. Quite a number have no tax exemption (it’s not as easy to get here in Israel as in the U.S.) because they don’t want to bother with the paperwork (and one possibly for political reasons).

Perhaps it is time to move the visibility light onto some other worthy cause. IF ALS has close to 100M in the bank I do think they should step up their work – people don’t donate to charities to have their gift sit in a bank.

Let’s start with a little public education. ALS is the most common motor neuron disease. In the U.S. alone, more than 5,600 new cases are diagnosed every year, and up to 30,000 Americans are currently affected. ALS is responsible for 2 deaths per 100,000 people per year. Median survival time from onset to death is 39 months. Victims, like Lou Gehrig, are often taken in the prime of life. For over 90% of cases, there is no known cause, no known cure, and no established means of prevention. If you are diagnosed with ALS, it is a virtual death sentence. ALS has been a nearly orphaned disease compared to other better-publicized conditions, including many non-lethal ones.

The ALS Association is a charity. No one is required to give to this cause. Your tax dollars aren’t involved.

No charity will be 100% perfect or even 90% perfect in how it spends it funds. Pharmaceutical companies have their inefficiencies and failings, sometimes massive, well-publicized, and even fatal ones. The goal of a private business is to return equity to stockholders. High executive salaries, and top pharmaceutical executives earn vastly larger sums, might or might not enhance that goal. In the case of the ALS Association, if they somehow came up with an idea that has allowed them to raise much-needed funds and if they are expected to sort out complex medical issues and priorities, then I don’t begrudge them their salaries.

Readers of Legal Insurrection are no doubt aware of the inefficiencies and failings of government entities.

This may be a one-time windfall for the ALS Association. I hope they spend their money well and not all once. Retaining some of the money for future needs after this one-time success may be the most prudent thing to do. I wish them well. I hope readers will as well and will consider making a contribution.

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