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.”
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.”
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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