SBD/Issue 156/Franchises

Toronto Star Looks Into NHL Club Foundation Spending In Canada

 

More than half the money raised in the name of charity by Maple Leaf Sports & Entertainment last year was "spent on fundraising and administration," and the story is "much the same at many professional sports foundations across Canada," according to an investigation by Robert Cribb of the TORONTO STAR. Experts said that "well-run charitable operations should be directing less than 20[%] of their charitable income on fundraising and administration." But "lavish gala dinners, golf tournaments and lotteries held by Canadian NHL club foundations routinely eat up between [40-65%] of revenues -- and as much as 80[%] in the case of the Edmonton Oilers' foundation in 2008 -- intended for disadvantaged children and community development." Fundraising and administration consumed 55% of the C$1.5M raised by MLSE's Team Up Foundation last year, according to self-reported figures to the Canada Revenue Agency, compared to 17% for the Montreal Canadiens Children's Foundation, which boasts the "lowest figure among the country's six NHL club foundations." Foundations for the Senators, Flames, Oilers and Canucks last year "reported internal costs of between" 42-65%. Canada's federal Charities Directorate, which regulates the country's 83,000 registered charities, said fundraising of more than 35% of revenues triggers an examination "to determine if there is a trend of high fundraising costs." The Toronto Star investigation revealed that while "five of the six NHL team charity foundations exceed that threshold," all "continue to operate without penalty."

RAISING QUESTIONS: Financial experts and forensic accountants said that the figures from MLSE's Team Up "raise questions about the charity's oversight of charitable dollars." Forensic accountant Ken Froese, who reviewed Team Up's filings, said, "It should be the leading example in Canada for a sports foundation. But the foundation is a way of raising money and a lot of the use of the funds gives you advertising for the Raptors or the Toronto Maple Leafs." MLSE Senior VP/Finance and Team Up Treasurer Kevin Nonomura: "We understand, from an outside perspective, it doesn't look very good. ... We're trying to look at diversifying the way we raise money and try and find more efficient ways, effective ways to raise money" (TORONTO STAR, 4/24). Imagine Canada VP/Operations Cathy Barr said the fundraising and administration costs for the NHL foundations are "definitely on the high side in terms of what [is] widely perceived to be acceptable in the sector" (TORONTO STAR, 4/25).

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