Staff? Overhead? Marketing? Promotions? Receptions?

I don't know if that is all that much out of line with other non-profits. The misconception that many make is thinking 100% of their donation goes to a particular cause. I feel like it isn't all that unusual to hear about stories where the non-profit only has 15-20% going toward the actual cause.

Sadly this isn't unusual but it also isn't the case with all charities. Whenever I am looking to possibly donate to a charity for the first time I always check them out first on Charity Navigator to see what their income is actually allocated to.

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"Just don’t abandon everything you’ve ever learned because of something someone said on the internet." - Eric McGinnis

What the person who wrote that understands about the tax code is less than what she doesn't know.

The 2013 tax return (990), assuming it is a calendar year filing, is due on May 15 but can be extended until Aug 15, which is very common. Even then, it would take time for Guidestar to acquire it and publish it. Much of the tax returns they publish are acquired directly from the IRS under the FOIA. It takes time for the IRS to enter the tax return and then respond to the FOIA request. Most tax information on Guidestar for charities have a significant delay of that nature.

Charities are required to use 5% of their assets for their charitable purposes each year. You may think 50% of their revenue is appropriate, but it is not the legal requirement. Most charities balance building their endowment with their current charitable distribution goals. Both are legitimate goals.

As to the legitimacy of a loan to WTC, that would be an issue if they were a "disqualified party", which I do not see that they are.

As to having the foundation help drive business to the for-profit side, this is common. Gambling websites do this extensively. For-Profit universities do this. Sports franchises do this. Fortune 500 companies do this.

a nonprofit is still a company in the sense it needs full time staff to operate, that takes money. You want a full time Exec. Director to give their full attention to the task at hand, that means a full-time position. There are industry guidelines and websites like Guidestar/CharityWatch/Charity Navigator can give you ratings/glimpse of nonprofits and access to public records.

Understanding how funds are labeled and the need for funding within each charity is important in discerning if a nonprofit is achieving their mission. For example, a disease related nonprofit might get hammered (like ALS) for giving what many perceive as low figure to actual ALS research. Upon closer inspection they may well be giving a substantial (and critical amount) to support services for the disease - stuff like family support, in home care options, treatment equipment, even things like travel expenses for sufferers/families.

Personally I would be hesitant to judge performance off a single percentage number for any nonprofit. not enough information. Doesn't mean it isn't worth looking closer, just that it is hard to make sound assessments off a single data point.

I try and ask charity solicitations what percentage they actually receive. Some are very high (70%), but a lot are in your 20% range.

On a side note, your local girl scout troop only gets 50 cents on a $4 box of cookies (12.5%). Our local cub scout pack got 40% on that popcorn.

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Proud Member of Chris McDonald's 2018 Big Sexy Race Team "That which doesn't kill me, will only make me stronger"
Blog-Twitter-Instagram-Race Reports - 2018 Races: IM Florida 70.3, IM Raleigh 70.3, IM 70.3 World Championships - South Africa, IM North Carolina 70.3

Other non-profits have marketing and promotion expenses, which may be a significant percentage of revenue. I don't see how that applies to the Ironman Foundation. Those slots sell themselves based on the regular slots selling out.

This looks like the typical charity scam. Loaning WTC money? Really?

Why is this different for the IM Foundation? A staff of 3-4 can easily cost 200-400k in personnel expenses. Who maintains the websites? Correspondence? Basic operations?



Do you have information to support this claim? What percent of charity slots sell out in a given year?


Please support your claim and explain how the loan was wrong, illegal or totally not justified.

Just out of curiosity, do you think that people buy charity slots at 2x the price because of all the great marketing and promotional work that IM Foundation does, and not because the regular entries have sold out and charity slots are the only means of entry?

In most instances no. In some instances it may be due to advertising.

I didn't buy a Cervelo because of all the great marketing and promotional work they do. However, I suspect marketing is a reasonable chunk of Cervelo's annual budget.

Just out of curiosity, do you think marketing/advertising should not be a line-item for the IM Foundation? And if not, why?

Of course marketing and advertising should be an expense line item for any non-profit. I don't think that IM Foundation does or needs to do much advertising and promotion in order to generate their charitable donation revenue, however, and IM Foundation certainly needs to do less marketing and advertising to generate their charitable revenue than other non-profits.

I believe that nearly all of charitable revenue for IM Foundation comes from people who are not giving money out of primarily charitable intent, but rather primarily out of desire to race a sold out event. I do not believe that many people who are donating to IM Foundation via charity registrations are doing so because 50% of their 2x registration fee flows to local charities. Indeed, I would hazard a guess that most people who purchase charity slots are completely unaware of the end destination of the charitable money, because their primary interest is simply in the entry to the race and the charitable donation is a necessary byproduct.

One way to know whether people are donating to IM Foundation out of charitable intent vs desire to race a sold out WTC event would be to see the ratio of charitable registrations that are sold while general registration is open vs while general registration is closed. If people are spending 2x for a registration because of the charitable aspect then we should see plenty of charitable slots sold while general registration remains open.

Per the 2012 990, which is available here, employee costs were $114,600, of which $95,000 went to the Executive Director.

Schedule D, Part VII, Investments, details the amounts due from World Triathlon Corp.

Marketing/Advertising for the quarter year period of the 2012 report was $10,142, per the audit statement.

The loan could possibly be construed as innurement, in which the 501(c)(3) is operating for the benefit of private interests. In this case, all members of the 501(c)(3) are all either employees or officers of WTC, in which the loan is an improper benefit. This said, we don't know the purpose behind the loan, consideration given, etc.

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Editor-in-Chief, Slowtwitch.com | Twitter

This reminds me a lot of some of the articles written about Livestrong. Lance was a fraud as an athlete, so Livestrong MUST have been a fraud as a charity. But, by measured accounts, that seems definitely not to have been the case.

This is one of the major issue with the internet. It's very easy to come up with a "plausible" story that goes something like, "I'm not an expert in this particular area, but I see a bunch of things that - in my non-expert opinion - are either nothing to worry about or potential red flags. Based on the fact that I harbor a personal dislike of this person/organization, I will assume that these things are red flags, and I will write a detailed and heavily biased account of why so-and-so is a terrible fraud."

If, at some point, the details actually do become clear, an apology or correction is rarely issued. And even when it is, it's just sort of like, "oops." And, given the way that we all consume media - we are so inundated and overwhelmed, it's not at all probable that just because we read the original story that we read the follow-up that says, "everything I wrote in that first article is wrong."

This extends most definitely from the most random blogger all the way to "legitimate" (in theory anyway) "news" channels, with CNN being the most egregious lately (Faux News is so clearly propaganda that I don't count them).

Now, certainly, bending of the rules (and plenty of outright fraud) exists in the non-profit world. Ironically, charity is big business. But I think this is a clear case of, "WTC is bad, so IMF must be bad too..."

What's interesting is that Kelly doesn't anywhere go into all of the various benefits of being associated with a larger for-profit entity. This topic is of particular interest to me because "my" charity - World Bicycle Relief - is "part" of SRAM. The Ironman Foundation gets to take advantage of loads of existing infrastructure within that exists within WTC. The need space within the WTC offices, but they don't need their own office building. They can leverage existing IT infrastructure - all the IMF employees have @ironman.com emails and phone numbers within the WTC switchboard. Need to transport supplies to a race? Just put them in the trucks leaving with the rest of the supplies going to the race.

I also think it's questionable to point out that the job listing mandated - in a very pro forma line item - that the employee needed to worry about the profitability of WTC. That's logical for two reasons - first, if WTC doesn't exist, then the IMF also wouldn't exist. Secondly, there's a lot of crossover - and it's intelligent - between supporters of IMF and sponsors/licensees of WTC. As an example, Newton is the official running shoe licensee of Ironman. But they are also the "title sponsor" of the IMF team. This makes good sense. But what that means - because of the way that Ironman necessarily does business - that someone who is part of the foundation necessarily needs to be in tune with the larger sales vision of the corporate entity.

50% payout is actually pretty darn good, especially considering how (relatively) small IMF is as a non-profit.

I am close friends - by virtue of my work for WBR and my annual fundraiser, which has been supported by IMF in a variety of ways since WTC created the IMF - with David Deschenes, who runs the IMF program. If anyone has any specific questions, I am happy to field them with David.

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"Non est ad astra mollis e terris via." - Seneca | rappstar.com | FB - Rappstar Racing | IG - @jordanrapp

kny wrote:

Just out of curiosity, do you think that people buy charity slots at 2x the price because of all the great marketing and promotional work that IM Foundation does, and not because the regular entries have sold out and charity slots are the only means of entry?

I agree with this. I think most people see it as tiered pricing, rather than a charitable endeavour. There is lots of information below that I've Google-Fu'd. It gets more interesting towards the bottom.

The standard for large sporting events will give spots to charities and then as a charity participant you sign up to raise X amount of money that you know goes straight to the charity. Most charities you can find out a decent level of information about what the money went on (expenses vs. charitable projects, etc), but I'm struggling to find info on IM Foundation.

Their website states they had given $100k to Kailua-Kona projects in 2012, and lists 26 charities, so that would be about $4k per charity which is pretty miserly and not going to make a difference to most of these organisations (except maybe the canoe clubs). I was there for 6 months and asked loads of people about WTC/Ironman and everyone was unanimous that they do little/nothing. I suspect it is an arrangement (explicit or implicit) that the local economy makes lots of money during the World Champs and this is enough for them to want to host it each year, keep the roads in pristine condition, etc.

Anyway, back to the $100k. In 2011 there were 4 ebay auction spots for the champs, with winning bids ranging from $45-60k. Let's pick the bottom number to underestimate and that is already $180k. If you paid someone $80k to list the spots on eBay and then put them in the starting list, then there's the $100k right there. WTC is still a small enough organisation that it's costs for a Ironman Foundation shouldn't be huge (it's not like they're the Red Cross, GreenPeace, etc).

Their news page is pretty terrible. Only one of the links works and it is to an external site. All the other links do not. I can't find any good information at all so it seems they are working in a vacuum, and at best don't feel the need to publicise their spending.

The other interesting figure is $18million in donations between 2003-2012.

More interesting points:
They've raised >$1million from crowdrise.
Guidestar shows their income/expenses based on IMF's 990 filing. Page 4 is the most informative:
- Their total assets grew at a healthy rate between 2011-2012 (from 2.7MM to 4.5MM)
- This goal is not uncommon amongst charities as growing assets allows you to earn interest and provides a buffer between spendings and earnings.
- They state they spent $18MM between 2003-2012 = $2MM year. So their assets would cover their donations for another 2 years (assuming they still get income to cover their expenses).
Give.com says their income is $2.3MM and assets are $5.2MM. Guidestar doesn't appear to have any information on 2013, and Give doesn't provide it's source unfortunately.
FoundationCenter appears to corroborate GuideStar, and also is missing 2013 990 filings information.
Ironman Foundations fiscal year runs from Jan 1st to Dec 31st. Their 2013 990 Filing would have been May 15th (rules for filing date here).
It lists their 2012 expenses as $572k and income as $1MM putting it well within the legal bounds of calling itself a charity.

So in my conclusion I don't think they are breaking any laws or anything, but it would be great to get more transparency on what they're doing with the money. I'm happy to approach them for information on this if people are interested. As a fairly young organisation it seems sensible to build an assets pot because then you can start to do good things with the interest and income of the fund, rather than push it straight out and leave the future of the charity as uncertain. Note that the name, email and telephone number of the executive director is public information but i won't post it here.

There are two ironman 501 registered charities but I was only looking at the latter:

26-1716311Ironman for KidsSan AntonioTXUnited StatesPC





65-1172979The Ironman Foundation Inc.TampaFLUnited StatesPC

For more information on charities and their 990 Filings click here.

I agree with both these points. It would be ridiculous for WTC to start a charity in order to try and raise their own profits. They could sell slots on a price tier with no charity implication and they would still sell out because people want the product. I'm sure it's a well-meaning organisation, but it would be good to hear how the money is benefiting people. Their mission statement is quite vague.

I like WaterAid because I understand where the money is going and can use their website to see the exact projects and how they believe it will benefit communities. I'd encourage IM Foundation to have some kind of explanation to allay the fears.

I'm a cynic of the "Lance is bad, Livestrong must be too" ilk. But, Livestrong was actually a very efficient charity, with something on the order of $0.70 on the donated dollar going to the cause. Now, of course, the livestrong cause was "raising awareness of cancer" so marketing expenses were accounted as distributed funds, but that's another story.

Point is, charities run from the fraudulently inefficient (Sammy Sosa's pennies on the dollar fraud non-profit) to very efficient $0.90+ on the dollar getting to the cause.

One would expect IMF to skew towards the very efficient end because they operate at an advantage to most/all charities out there.

1. For a large percentage of their revenue they need to do no advertising/marketing. Community slots and Kona auctioned slots generate huge money at virtually no expense.
2. IMF is able to generate charitable revenue from people with no charitable intent to the IMF mission as a byproduct to selling a product (race entries) bundled with a mandated charitable donation.

For these reasons I would expect IMF to operate on the efficient side of the scale, but if it is true that they are less than 50% efficient, then that money is going somewhere. IMF reports that it has distributed >$30mm to "various nonprofit groups around the world". If that is true and they are really less than 50% efficient, then they have raised >$60mm and another $30+mm in expenses have been generated. I find this difficult to believe, but anything is plausible.

You can't band around 'efficiency' percentages without defining them as they aren't standard metrics, they are opinion.

A charity might get $1MM in income per year, spend $100k on charities and have expensives of $100k. You might say that their efficiency is 10% because they are currently doing good with 10% of it. Or you may say it is 90% because the money they're saving is earmarked for a project in another 2 years time that costs $2.4MM. Or you might say they're 90% efficient because only 10% is going on expenses.

They're all very different scenarios. Even websites with the goal of making expenses more transparent have to make compromises with how they define their own metrics and how they generate them.

Well, yes and no. The Program Expense Ratio: "the percent of a charity's budget spent on the programs and services it delivers", is a standard metric looked at in evaluating the efficiency of charities.

Yes, if IMF is hoarding today's donations to use in one big lump-sum at some future point, then that could make their Program Expense Ratio look poor today. Or, if IMF is off loaning cash to other businesses instead of spending it on the programs and services it delivers, that could make their Program Expense Ratio look poor. In either case, one would expect a donor to have the ability to understand that that is where their charitable donation is being used for rather than it going to "the programs and services it delivers".

Again, I am a cynic. But, I also believe WTC would be absolutely insane to do anything below-the-board with the IMF. Too much to lose and too little to gain. So, my guess is that a deeper dive into the numbers will reveal a better efficiency than the blog reports. Though that low interest loan to WTC needs some explaining.

I don't know if that is all that much out of line with other non-profits. The misconception that many make is thinking 100% of their donation goes to a particular cause.

I know more than a few people in the cause marketing and charity event game. This is correct. In fact, I've been told that ironically, one of the worst ways to try and raise funds for a charity is through these big charity or other endurance sports events - the overhead is always way higher than you think.

In fact, I was just called into consult with a high profile charity, in Canada, who had historically NOT been involved in endurance sports event oriented fund raising, and they wanted to know what it was all about and would it be worth their while. They wanted to start up an event. I suggested to them this may not be in their best interest, if raising more $$ was a goal - it might be good for their marketing, but in absolute terms of raising more $$, the gains if any would be marginal.

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Steve Fleck @stevefleck | Blog

I think we're in broad agreement kny. Basically we need more info.

Just to add another aspect to the efficiency point, the "services it delivers" is an interesting one. IMF doesn't really go out and actually buy canoes for the Kona canoe clubs, nor does it go out and buy medication, ship it to a crisis-struck area and give it to Red Cross. Therefore you have to kind of judge how efficient IMF is based on who it gives the money to. If it gives it to 'efficient' organisations then you could say it is more efficient because it is ensuring the money is getting to the grassroots. If it donates all its money to 'inefficient' organisations then it's all opinion as it might be giving 90% of it's money to other causes, but perhaps only a small percentage of that is actually getting to the people who need it.

The loan was the biggest red-flag I saw reviewing their 990s from 2008 onward. The audit statement provided the clarity behind that year's Due From World Triathlon Corporation under the assets portion of Schedule D.

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Editor-in-Chief, Slowtwitch.com | Twitter

I know a lot of people responded more substantively as to what was written in the article from a tax/charitable donation perspective. But I would like to quickly respond as a member of the IRONMAN Foundation Newton Running Ambassador Triathlon Team http://www.triteamforgood.com). For IMAZ, for example, our team targeted a specific charity (http://www.keenphoenix.org) as our community partner and raised $30,000+ through CrowdRise for KEEN (Kids Enjoy Exercise Now), an organization which works with kids with disabilities by providing exercise opportunities. For this team, 100% of what was raised went to the charity. All this was made possible through IM Foundation and Newton Running. All of the kids received new Newton shoes as well. Our team worked with the kids on Thursday might before the race and we were able to present the check to KEEN. None of the funds were used for team member entries. In fact, I paid for IMAZ through an IRONMAN Foundation spot. In addition, the Foundation supported a number of different charities in Phoenix. There are certainly ways to become more efficient as a charity to help bottom line giving, but I applaud WTC and IRONMAN for its creation of the Foundation and for its commitment to make a difference in the communities where races take place. I personally saw first hand the impact that is made.

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John Snyder @URNotAsCoolAsMe

I don't think people are questioning the good things that IMF does. The questions are more about transparency, and in particular, why IMF would've loaned WTC just short of $2.5 million.

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Editor-in-Chief, Slowtwitch.com | Twitter

Are they including the whole slot entry fee, or just the portion minus the race entry fee? IF a Foundation lost is $2000, but entry fee is $700, isn't the foundation only getting $1300?

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http://www.trainingbible.com

It's explained on the signup page here. $725 pays for the WTC entry fee. The other $725 goes to the Ironman Foundation.

This means IM makes the same profit out of this slot versus any other. It also means that the other $725 is tax deductible and will go to the charity, Ironman Foundation. Of that $725 the charity receives, a portion will go to the expenses of running the foundation and the remaining will be put towards good causes.

So let's say [hypothetically] Ironman Foundation expenses run at 50%, $367.50 of the $1450 will go to good causes. I've just made up that 50% as an example

I agree that endurance event oriented fundraising is a poor way to raise money. That's a far cry from how the IMF raises money via the Community Slots, though. The Community Slot model is fantastic; bundle a mandatory charitable donation on top of an entry fee for an in-demand product. Here you are able to get donations from people who have no desire or intent to donate to your cause. This is a phenomenal way to raise money for your charity, but requires you have the in-demand product to bundle the donation with.

I don't think the 50% number is out of line with average charity efficiencies. But, average charities have to put out real money to market and attract those with charitable intent to get their donations. Expensive activities like putting on events. IMF doesn't have to do that. They just have to have slots to sold out WTC races to bundle with. And Kona slots to auction. Their expenses ratio should be much more favorable than the average charity and the fact that it isn't is what raises some eyebrows.

My guess is the 50% number is wrong and they are actually a lot more efficient than this blog has revealed. They can't have big expenses. Their salary load is already determined to be negligible. They don't have infrastructure. They don't "do anything" charitable; they just pass money through, so they have no big expenses like equipment. I'm willing to bet when the truth comes out their actual efficiency number is very good.

The loan is dodgy and does harken to when a WTC employee (Lake Placid) forced a tri club to donate $2000 to IMF for cleanup of graffiti on the road. I remember at the time wondering "How can WTC force a charitable donation to IMF as punitive action?"

Couldn't the loan be looked at as an investment by the charity?

People keep referring to a loan, but I don't see what they're referring to.

I see $2.4MM listed in 'Other Assets' as coming from the World Triathlon Corporation, but couldn't this just be a $2.4MM donation/payment from WTC to the fund? I'm guessing all payments for stuff like charity slots are paid to WTC and then paid onto IMF so it might just be money that IMF knows it's going to get and therefore accounting for it

Beats me. I'm just going from what the blogger posted.

One thing I wonder is how much WTC sells the slots to IMF for. I remember stinley raising a kerfuffle by complaining that WTC was charging his charity $27K per Kona slot. Surely the same is true for IMF. How much does WTC sell Kona slots to IMF for that IMF auctions on ebay? How much does WTC sell other event slots to IMF for that IMF then sells as Community Slots. This has to be known information, because the buyer can only deduct the amount above this "intrinsic value", so the intrinsic value of the item sold by charity must be made known at least to the buyer. Does anyone know?

All this and then some.

The reality is Kelly isn't interested in talking about the benefits of the Foundation. She isn't interested in talking anything positive about IM. In fact, she is out to accomplish the opposite. She dislikes the brand. This isn't her first attempt to throw mud at Ironman. She was on the losing end of the battle with them and she is holding a grudge. So there isn't an objective viewpoint. There isn't constructive criticism of what's going on with the Foundation. It's just another attempt by her to stir the pot.

What I find ironic...better yet hypocritical...is if she dislikes IM so much, why did she and her husband race IM Florida last month? Seems like a long trip and a lot of money ($1500) to support a brand that she dislikes.

That's with a "traditional" Foundation slot. With Team IMF (new in 2015), all of the fundraising goes towards the 501(c)(3).

If you look at the audit sheet, Note 3 states that there is $557,626 Due from WTC that is "...the Foundation program contribution portion of general entry fee paid by participants in Ironman events owed at December 31, 2012. The Foundation entry fees are paid to the WTC and the WTC remits the Foundation program contribution portion monthly to the Foundation.

Note 4, meanwhile, speaks of the Note Receivable from WTC, which is a note that originated on December 31, 2011 with a principal amount of $2,499,929. This is the part of the audit sheet kny posted about above.

My prior post was deleted due to being on mobile and not being able to appropriately look to the PDF for quotation purposes.

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Editor-in-Chief, Slowtwitch.com | Twitter

The new Team IMF is the tried and true Team in Training model. IMF still buys a race entry from WTC (presumably for $725). The racer pays nothing (well nothing for TnT, but $100 for this program) and is obligated to raise $3000. It's a good model, better than the Community Slots approach. WTC gets their same $725 and IMF ends up with a minimum $2325, surely much more in most cases. With TnT you know where the donations are going (Leukemia and Lymphoma). With IMF, I think they'd be well served to open up their transparency a bit now that they're asking people to go out to the world and solicit donations from friends and family.

I appreciate Rappstar's comments and those of many who understand this better than I do.

When we donate to any charity we want to understand where the funds are going. Charities with high overhead, high fundraising costs and low percentage of money going to the intended charity activity/program we tend to avoid.

By discussing this issue we can better understand the foundation and what it does.

Let me expand on the IMF from a different perspective - one that is not associated with buying IMF slots to races, which so many of you seem to be hung up on. I used the IMF platform to raise money for a charity I chose. I raised money to help prevent and treat child abuse - sexual, mental, and physical. In the end, $0.93 of every dollar I raised went to my charity. A charity that I selected. That's impressive! IMF didn't take the money I raised. They gave it to my charity. I have proof of the check they cut to my charity.

Now, if you think the IMF is not giving back to local IM race communities, then you are misinformed. As previously stated in another post, this past weekend at IMAZ they gave $30,000 to KEEN, a Phoenix non profit. They also gave several thousand dollars to a local fire/rescue department. And these are just two examples.

Why are we trying to prosecute a non profit that is probably doing more good than many other organizations to which you donate on an annual basis? Do you pull public records for your local library, boys and girls club, or other charitable origination you give money to each year? Not likely.

I do tend to look up records before choosing charitable donations. I want to make sure that the funds or goods that I donate are being put forth to the causes that the charity says it is trying to benefit.

I don't think anybody is necessarily disputing the good work that the Foundation does, and if it appears that way from my posts, then I apologize for not appropriately stating my position. To wit: there is indisputable evidence that the IMF does do great things and provides funds in examples that you cite.

However, there are also questions when there sits a 2.5 million dollar note at a 5 percent interest rate. Considering that Foundation slots are accounted for elsewhere in the balance sheet, there is zero out there in regards to the purpose of this note.

Do we know that this was done in bad faith? No. That's the problem at this point: we simply don't know. That lack of transparency in process is problematic when you're talking about such close ties between a corporate parent and the non-profit entity.

I am hopeful that there is a simple explanation behind that note, that all is on the up and up, and we can go from there. But it's surprising to me that there was no explanation of that note anywhere in the first place.

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I don't think anyone's trying to prosecute IMF. A blogger published an article that raises some questions and now there is discussion about it. Personally, I think that more info will come out to show that the blogger got it wrong, or at least, got it horribly incomplete.

IMF is itself a 501(c)(3), but really it is just an entity that passes funds through to other charities. There should be precious little overhead. They don't "do anything" other than cut checks to other 501(c)(3)s. They don't build homes, have a research facility, deliver meals, fund scholarships, etc.... An entity that collects donations and distributes it to other charities should be terribly efficient. As you encountered with using IMF's platform to raise funds for your charity of choice, passing donations through was 93% efficient for you. This is great and how it should be. But, the blogger introduces data that makes it appear that IMF is far less efficient at distributing funds that come through via Community Slots. More like 50% efficient. I'm betting this is actually not true, but if it is, why would it be so poor? All IMF does is take in money from selling Community Slots and spit it out the other end to charities. Where's the rest of the money going if they're only 50% efficient? It's been shown they have nearly no salary. They have no equipment. They leverage WTC's offices and infrastructure. There is no reason the passthrough efficiency of donations from Community Slots should not be as excellent as you experienced with using their fundraising platform to raise for your charity of choice.

Rappstar says 50% efficiency is very good for a small charity, which may be true, but not for a charity like this which is just a funnel to other charities. And, you say $30K went to KEEN. That's great, but not if there are $60K of tax deductions out there that resulted in only $30K of actual donation. $30K is also only 40 Community Slots worth of donations. How many community slots were sold?

I will never give any money to a charity connected to a for-profit organization.

You are right that a "most random blogger" can interpret the information to fit their narrative, particularly if they dislike an organization.

Likewise, someone who likes (or works for) a particular organization can also do the same.

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Excellent points.

I for one railed against Livestrong... and while it may have done "some good" when you look at the corporate filings... you see a HUGE spike in Legal Fees when Mr PED started to crumble.

I have only done a cursory look at IMF and while most know my dislike for the WTC, looking just at the numbers and my understanding of their form and function, I could not understand what I saw as high overhead. A lot of this is obfuscated since the WTC numbers are masked to see a more comprehensive flow of financial interests.

Most charity organizations are hacks and if you want to have a nice cushy life, being the head of a charitable foundation.

Does the CEO of the Boy Scouts need to make almost $2M a year?

Or how about the Jimmy Fund... Kids with Cancer... but $1.4M for Ed Benz?

One of the best Scams... The Kardashian Family... The mother forms a "Church" and then the daughters periodically "purge" their closets with a percentage going to "charity" and you guessed it, the charities is their mother's which basically then pays Mom a nice income.

David, Jordan: What was the $2.5M loan for? That would answer a lot of questions.

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Internet User

Agreed. I never give to most of the large charities in the U.S. because I look at their salaries. Red Cross, United Way, etc. High 6 figure and even 7 figure salaries plus a plethora of perks. I will not support them.

I haven't done the amount of digging as many of you have, however...

I am a CPA who works entirely with non-profits, and I read 990s all day.

Looking at the most recent full year 990 on Guidestar (the one for the year ended 8/31/12), I don't know where people are getting this 50% number from. If you look at the statement of functional expenses, over 78% of IMF's operating expenses are grants to others. 78% is pretty good. However, I do have some questions after looking at that page of the 990. All the expenses make sense, and are pretty reasonable for an organization IMF's size, but legal expenses of almost $67k seem very high. IMF's relationship with WTC is complex, and perhaps they had some legal issues or IRS notices that needed to be paid. It looks like this was a one time thing because there aren't any legal fees for any of the other years, and IMF did change its accounting period during 2012, and that likely generated professional service fees. If you look at the 990 for the year ended 8/31/11, grants represent 84% of total expenses.

As for the related party connection, that isn't clear from the 990. It states that not all of the board members are independent, and I have to assume it's because of the board member's relationship with WTC. However, Schedule L isn't completed for loans to any officers or organizations that owned by officers. It seems, and I haven't dug a ton, that if the board members' connection with WTC was so strong that they weren't considered independent board members, that the loan would need to be disclosed on Schedule L.

Not to get on my soapbox, but I agree with what others have said about needing to look at lots of information re: a charity before deciding to donate. Any metric, taken in a vacuum, can distort things. Should a foundation give much of its revenue to the causes it raises funds for? Sure....maybe...but not necessarily. Should an organization, especially one structured like IMF, have a high percentage of its expenses go towards program? Sure....but something must be said for the cost of getting talented fundraisers and Executive Directors who could easily pull higher wages in commercial industries. Why must working for a NFP mean that you are paid less than fair market wages?

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Chris Harris

>Agreed. I never give to most of the large charities in the U.S. because I look at their salaries. Red Cross, United Way, etc. High 6 figure and even 7 figure salaries plus a plethora of perks. I will not support them.

That's roughly market value for executive leadership of a large organization.

So you expect a charity to find quality executive leadership for less than market value? That's effectively expecting your charity to find leaders who are extraordinarily personally charitable, not just giving up 10-20% of annual income like most "charitable people" do, but 50-90% or more. That would certainly be a leader who leads by example, but I wonder how many of those people are out there.

Granted it is also debatable if the extreme rise in executive compensation over the past 20 years across all categories of charity and business reflects an actual in the value of the leadership or is some sort of market distortion.

Besides the ED, the 3 other people on the board are from Providence Equity.

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Internet User

I get that. My issue is more with the way it is reported on the 990. They claim on Part IV to not be related to any taxable or tax-exempt organization, however, it could be argued that WTC effectively controls IMF since its owners are the majority of the IMF board.

Why isn't WTC or Providence listed on Schedule R?

Also, if they aren't independent, then why isn't the loan to WTC disclosed on Schedule L?

If no reporting on Schedule R or Schedule L, then why are they bothering to disclose that the board members aren't independent? Unless it's for some other reason, like paying them....which would have to be disclosed, too. It's pretty clear why the ED isn't (and not all EDs are considered voting board members, so not all EDs are non-independent board members....it depends on the organization's by-laws) as he gets paid....but why the others without any disclosure?

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Chris Harris

From the 2011-2012 IMF 990, there were grants of $40,000 and $10,000, respectively, to the following two organizations: Madison Area Sports Commission and Louisville Sports Commission.

MASC's stated purpose is "promote sports travel within Dane County and promote youth sports activities." It took in $378,428 in revenue. Total expenses were $311,498. However, of that total, $32,587 went to grants. $80,472 went to salary (treasurer). $198,439 under "Other Expenses." Of that, $109,674 went to "bid fees/sponsorships." Included in these events are things like Ironman Wisconsin.

Louisville Sports Commission's stated purpose is "to attract quality sporting events to Louisville..." LSC did not pay out anything in Grants in the 2011-2012 990. Total revenue of $1.2 million. Salaries of $484,520. Total expenses of $1.176 million. More specifically, LSC spent $177,541 alone on the IM event.

Working on breaking down where those donations in fact went and what the respective purpose of each organization is.

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Editor-in-Chief, Slowtwitch.com | Twitter

Funny how some of that happens.

You can have a field day looking at Livestrong during the LA days. For get all the details, but one particular event I think Livestrong had pledged a bunch of money to Haiti for a Cancer wing in a hospital or something like that... then there was the big Hurricane and they did some fundraising for the "Hurricane Victims" and had gotten a big chunk from Nike and then a large portion of that money they really went to cover the previous pledge.

I think what one will find as you pull all the threads on orgs like IMF, in the end, much less goes where people think because everyone is taking a cut. In the case shown IMF takes their cut, does grants to other orgs who take their cuts, so in essence that initial amount paid part of the salaries in two orgs etc.

So it's friday morning and I'm tired and having a hard time connecting the dots. Are you saying that:

1. The foundation donated $40k to the Madison Area Sports Commission; and then,
2. The Madision Sports Commission paid $40k+ to bid on hosting ironman Wisconsin?

No. Not so simply quid pro quo. It's

1. The Foundation donated $40K to the Madison Area Sports Commission; and
2. The Madison Sports Commission was the community entity (in all likelihood) that paid the Host Sponsorship Fee and Host Support Services to WTC to support IM Wisconsin, a total that would be far in excess of $40K.

Items 1 + 2 are independent. But, yes, IMF donated to the local 501(c)(3) that then pays WTC the host fee and foots the support services bill. But that local 501(c)(3) surely does much more to promote endurance lifestyle and events in Madison, so is a non-profit that would be consist with IMF's mission.

Not quite that simple, but close.

Graft is graft.

$60K comes into IMF.

That $60K is stepped on, some salaries paid, etc. Out of that IMF gives $40K to MASC. That goes into a general bucket likely and out or part of that salaries and the like are paid... Later on down the line MASC likely pays $50K to WTC as part of their bid/fees.

The net result is a $60K charitable donation gets turned into $50K revenue for WTC albeit getting stepped on a bit. Additional funds obviously have to be added as well as IMF, salaries and expenses paid at IMF as well as additional funds from either donations or taxes from the community then siphoned back to the WTC.

Some people may say... but wait, why would MASC be into this? It will cost them money.. Just not as much.. They basically get $25K for free that goes back in as part of the other $25K that is siphoned off and $15K is pocketed.

So I'm still trying to figure out how wtc would benefit from this arrangement because, as others have said, wtc could simply charge double for "late entries" without running it through the foundation, and people would gladly pay. This is the only thing I could come up with:

• IMF takes in $60k in charity race fees, and doesn't pay taxes on that money.
• IMF gives $50k to a local sports commission, who also doesn't pay taxes.
• The local commission pays $50k-$100k to the city to provide host support services--road closures, park rental spaces, permitting fees, etc.

But if wtc had collected that extra $60k in race entry fees, and then paid the city directly for some of those support services--wtc would have paid taxes on the $60k. So by washing it through the foundation and the sports commission, it saves paying $15,000-$20,000 in taxes. And also makes it appear that communities are willing to pay a lot more than they actually do for the privilege of hosting an ironman--therefore creating more competition and buzz for other cities to do the same.

Am I close?

WTC avoids the ill will that would come from charging double for late entries. Imagine the uproar if WTC "sold out" races but then had additional slots available for 2x the price. Now, with the charity aspect to Community Slots, the premium extorted goes to a good cause and not WTC. I'm sure WTC could get away with just selling the last 200 slots at 2x the price, but there would be a PR crisis.

With that said, the IMF pays sports commission pays WTC is not "graft". Replace WTC with Tough Mudder and everything is completely kosher. IMF donates to local sports commission. Local sports commission spends money on supporting Tough Mudder. All is good.

If IMF and WTC are sufficiently independent entities there is nothing wrong at all. If IMF and WTC are too tight, it could be questionable practice for one hand to donate to a firm that is contractually obligated to be paying the other hand fees in return.

I haven't done enough digging into the respective 990s of all of the organizations that IM gave to in their 2011 report (covers 8/1/11-7/31/12) and the 2012 report. This being said, the following organizations and amounts were part of the grants:

CNY Triathlon $5,700 (a triathlon club in upstate NY, which based on their webpage races a lot of IM events)
Madison Area Sports Commission $40,000 (granted $33K, spent over $228K on events including IM-Moo)
Palisades Interstate Park Commission $40,000 (manages the park)
Louisville Sports Commission $10,000

In the case of LSC, they provided $0 in grant money that year. According to their 990, they paid $177,541 out under "Ironman Event." There isn't detailing in terms of the expenses associated with it.

I do think it's questionable in regards to their stated mission of philanthropy when they're essentially donating to the commissions who are in part tasked with the promotion and development of the said event (or, in the case of CNY Triathlon, a club that races a ton of your events.) As kny said, though, there's nothing "technically" wrong with what they're doing. I do think it's a transparency issue, especially when the board of IMF consists of an Executive Director and then members of WTC's ownership structure (PEP).

Still waiting to find out why IMF and WTC executed that $2.5 million note in 2011, though.

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Editor-in-Chief, Slowtwitch.com | Twitter

It sounds slimy to me. WTC gets to deduct 50% of the foundation spot entry to charity. If any of the money granted to local non profits ends up back in WTC's pockets it just looks bad. Perhaps I am naive, but I would have thought that IMF was donating funds to local Boys and Girls Clubs, YMCA, recreation centers, etc... Thanks to rrheisler's research and others here this is certainly an interesting conversation. Add to the mix the mysterious loan and you can't help but scratch your head.

I stopped reading at "I am neither and accountant, nor a tax attorney, "

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Rodney
TrainingPeaks | Altra Running | RAD Roller
http://www.goinglong.ca

I have asked. David is on vacation through the end of this week. I will report back with whatever I learn.

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"Non est ad astra mollis e terris via." - Seneca | rappstar.com | FB - Rappstar Racing | IG - @jordanrapp

No they don't. IMF and WTC are separate entities. IMF pays WTC for the cost of a slot, presumably the same rate as athletes pay, but not necessarily. ie, WTC charges charities $27K for a Kona slot, but only charges athletes $800. For WTC, this amount is revenue. Nothing is deductible. WTC deducts nothing. For IMF, the 501(c)(3), the cost of the slot is an expense.

Now, if you consider IMF and WTC to be one and the same then it gets dodgy. But, they're not.

Actually, looking at the finances, IMF does not pay anything for slots. WTC remits funds to IMF monthly for the amount of Foundation slots (although it looks like it was behind in those payments.) WTC takes in the amount, then remits it to IMF. IMF then distributes some of the funds to sports commissions that, in part, are charged with market/produce the event (e.g., negotiating for permits, etc.)

Also of note were that a few of the EINs that are listed on respective IMF 990s do not work. Additionally, outside of the Exec Director, all members of the board are part of WTCs ownership (Providence Equity).

Lastly, there's that $2.5 mil note.

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Editor-in-Chief, Slowtwitch.com | Twitter

Ok, WTC takes in the funds (via active.com) and remits the charitable portion to IMF rather than IMF taking in funds and buying the race slots from WTC. Same end result, which is that WTC does not get any tax deduction as someone suggested above. The person buying the community slot gets the tax deduction, and the amount of this deduction should be spelled out loud and clear in the receipt for the Community Slot and very well should match exactly to what WTC remits IMF out of the total active.com transaction.

Surprised WTC isn't giving the money to IMF immediately upon receipt?

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you know my name, look up my number
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That's tricky. Having worked with online registration partners before, there's a period between when the user submits payment to, say, Active, and the period of time for that to then be sent onward to the event producer. So in that case, I'm not surprised.

I, however, thought that the payment itself in whole would not be remitted to WTC; I was of the mindset that the payments would be split by Active before being sent to WTC.

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Editor-in-Chief, Slowtwitch.com | Twitter

From looking over the community support pages on the IMF website specifically for Las Vegas, it appears that all the organizations receiving IMF support were small organizations who received donations in exchange for volunteer support at the race. $25,000 spread out to 16 organizations. It looks to me like WTC uses the foundation as a front to secure volunteers.

Which, in and of itself, is not insidious. Particularly in the light of the Liebesman case in re: wages for "volunteers."

That said, it's also curious to me that IMF is donating to the sports commissions in these respective communities, who's job it is to promote/facilitate the event. I'm also wondering why WTC is, in effect, collecting the totality of the Foundation slots monies (both the slot fee and the donation), and then remitting monthly to the Foundation; I would have thought that during the collection of funds of these slots, the Foundation money would be processed directly to the Foundation.

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Editor-in-Chief, Slowtwitch.com | Twitter

A couple years ago I took a charity spot at American Zofingen. I was led directly to the charity website where I registered and made the charitable donation. Once funds cleared I was sent a link to register for the race. Obviously WTC doesn't want to do that because Active would lose 1/2 of their cut. They probably get some type of short term benefit with having the extra cash on hand for however long they keep it before sending it to foundation.

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you know my name, look up my number
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I hope David had a great vacation.

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Internet User

We have emailed David Deschenes (executive director of the Ironman Foundation) twice, on whether or not he would like to comment on the blog post or speak about the purpose of the loan. He respectfully declined both times but did say he would keep to himself his "thoughts about the quality and fairness" of the blog post. Kelly did offer to publicly correct anything that was misrepresented but David has not clarified his comments. We will be discussing this issue with some newer discoveries later tonight on TRS Radio.

As far as the loan goes, my guess is that they are using it to construct a well thought-out race coverage infrastructure.

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Internet User

Declining to comment makes some sense. . . .don't feed the trolls.

Well Rapp did offer to field any specific questions regarding this topic with David, something which they have yet to do.

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Internet User

PR 101

When you get your hand caught in the cookie jar, like loaning a PR company $2.5M of charitable funds, you don't want to do anything that might bring added publicity to the story. Keep your head down and hope it blows over.

Not insidious, but sad. What's sad is that a foundation with such excellent built in advantages, mission, and efficiencies has morphed into nothing more than WTC's bitch. I cannot believe that when the foundation was founded it existed as a way to funnel donated money in exchange for voluntary services. They can do so much more than just donating small amounts to volunteer organizations for canoe trailers and lacrosse uniforms. For example if they take their $25,000 and grant it to a local foundation who can then use that as a matching grant for some larger projects the money will go a lot farther. Isn't that what used to happen in Lake Placid?

But the way I read this thread... the IMF is run by the WTC to raise funds to pay for the volunteer organizations (rather than race fees) who work its races and to provide cheap loans back to the parent corp. Do I not understand correctly?

There's more to it than that, but based on my analysis of their 990 disclosures, that's part of what IMF does. Which, again, at least on the volunteer front: no harm, no foul there. That gets them out of the potential legal hot water that Competitor Group is currently finding itself in.

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Editor-in-Chief, Slowtwitch.com | Twitter

WTC using Ironman Foundation funds to pay for volunteer groups at WTC races rubs me the wrong way. All race producers pay volunteer groups for their help; that's standard practice and a typical expense of putting on events. WTC is getting around that by having people donate to charity and then using those funds to pay those event fees. Now, paying volunteer groups to help put on events would be consistent with IMF's mission, but it still rubs me the wrong way. Essentially WTC is using IMF funds to pay some event expenses.

It gets better: various donations to the sports commissions that help either promote or facilitate the event (e.g., $10000 to the Louisville Sports Commission who didn't pay a dime out in grants but spent $118K on "Ironman Event").

There's then the $27000 that went to John Bertsch's LLC, which additionally raises potential issues with inurement.

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Editor-in-Chief, Slowtwitch.com | Twitter

Kelly's analysis is updated here, along with additional research that Dark Mark and I have done. We also reported on the findings over on TRS Radio.

For what it's worth, as has been mentioned, we've requested comment from Mr. Deschenes who has declined to offer any explanation regarding the loan to WTC and its purpose, nor the donations to various sports commissions, nor the $27,000+ given to JMB Management, LLC in 2012.

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Editor-in-Chief, Slowtwitch.com | Twitter

I wouldn't hold out any hope of a response. He was emasculated the day he accepted the job as executive director of the foundation.

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you know my name, look up my number
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He's wise. Circle the wagons and wait it out. Like all ST bitching, it will eventually blow over and the pitchforks will move on. Nothing to be gained by speaking up and fanning the flames.

 But what is alleged is that the foundation is nothing more than a sham. Radio silence seems like a risky strategy.

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you know my name, look up my number
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Radio silence is only a risky strategy because DarkMark and TRS are on the case, so it could go viral like Lake Placid 7th place. Otherwise I'd say to hunker down and let the storm pass.

They can be as quiet as they like as we have them independently audited

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Internet User

I was going to say, I posed a couple hypotheticals to some business beat reporters, and they're intrigued.

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Editor-in-Chief, Slowtwitch.com | Twitter

We could always start a gofund.me to pay for the auditor.

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Internet User

IMO it's a far more worthy cause to crowd source than a trip to a race...

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Editor-in-Chief, Slowtwitch.com | Twitter

Yeah, that's how I understand it. Using charity for profit... legal, but unethical.

All:

And...here we go....

While the numbers of finishers have spiked at all IM/70.3+ events since 2008 so have the donations to the foundation. So have the gifts to local charities that volunteer for these races. No volunteers no race...right?! The sport of triathlon was built by vast support from volunteers on all THREE courses.

The real question now confronting the next owners will be how can a foundation keep supporting race operations in the next business model for the new owners? The top down model of organizing events from long distance and just paying volunteers to show up just might not be a sustaining business model in the near future.

EX: Local 70.3 was the event of events for years in our area. Because it was THE hometown race; grassroots bottom-up organization with LOCAL leadership, volunteer recruitment was time consuming but not stressful. Everyone wanted to help but just needed all the details. About 20-25 chicken dinners all year long at JayCee's, Optimist Clubs or Rotary and no problems...right. And it cost the race $0. We had no issue recruiting 1100-2200 most years.

It takes someone in the local area to make this work. Time consuming means leadership man-hours that someone needs to pay in the post 2010 era. Not done if you have $ to pass out.

2014....Guess what? Not much all year long and a BIG $20,000 check on race week and everyone just shows-up.

What happens to sustainability in the future without the $20,000 spent yearly?
What has happened to the local races that did not have those volunteer $ from 2008-2014?

Big picture...where is our sport going?

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STIndiana
America Multi-Sport, Inc.
America's Half June 10, 2017
USAT RD Century Club
http://www.americamultisport.com

Definitely kind of washes out the meaning of "community" in some ways; you don't build the same relationships, etc. as you do with that local feel.

As for some of the points we've been talking about:

To some extent, IMF can hide behind the name of "hey, we gave this money to a charitable organization, and they just happened to spend it however they saw fit." But it's a little...strange that approximately 10% of all donations is going to various sports commissions that help facilitate the race in some manner.

In order of sketchiness out of my findings thus far:

4.) WTC takes in all Foundation slot monies and then remits them to the Foundation, which it appears it is behind in payments on.
3.) Donations to the various sports commissions
2.) $2.5 million loan to WTC (it *could* be for the purposes of building an endowment...), but there has been a refusal to explain its purpose.
1.) The $27,000 payment to John Bertsch's LLC, the subsequent "removal" of Diana Bertsch from the Foundation's VP position during this point in time in one part of the 2012 990, yet still being mentioned in all of the comments below in the disclosures of relationships/ties for disclosure purposes.

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Editor-in-Chief, Slowtwitch.com | Twitter