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.

---

----------------------------------
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, "

---

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.

---

"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.

---

----------------------------------
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?

---

_______________________________________________
you know my name, look up my number
_______________________________________________

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.

---

----------------------------------
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.

---

----------------------------------
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.

---

_______________________________________________
you know my name, look up my number
_______________________________________________

I hope David had a great vacation.

---

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.

---

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.

---

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.

---

----------------------------------
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.