SBJ/April 29-May 5, 2013/Opinion

Changing the focus: Foundation failures carry heavy toll

A thlete foundations and their rampant mismanagement are in the news again. The Boston Globe did a major story a few Sundays ago, and ESPN’s “Outside the Lines” devoted a recent show to the topic. The names may change, but the story, it seems, is always the same.

Athlete A starts a foundation with the best of intentions. Through inexperience and mismanagement, the foundation ends up squandering its resources on often inappropriate expenses with very little if anything going to its charitable purpose.

These stories seem to run in cycles. Every six months or so, it becomes a hot topic and gets picked up in major media, then hibernates again until the next cycle. In the field of athlete philanthropy, almost nothing ever really changes. Sometimes the athlete closes his foundation; sometimes he or his representatives talk about internal restructuring and keep the foundation open. As Kyle Petty cautioned in the ESPN story, sponsors can decide to drop out from the bad media, but that’s about it in terms of consequences. It’s not nearly enough to bring about change in the community.

Perhaps the only way things will change is if we, the advisers to professional athletes, begin to refocus the discussions away from the legal and financial obligations, the IRS and the media, and begin to talk about the lost opportunity to make a positive impact. For every misspent charitable dollar, eight families that could have been fed go hungry, according to Feeding America’s website. Thirty-five charitable dollars would buy roof shingles for a new home built by Habitat for Humanity volunteers for a homeless family. And the average loan of $404 on microloan website Kiva.org would help a low-income man or woman build a sustainable business that will lift them and their families out of poverty.

Those are the human casualties of charitable mismanagement. That is what is most important, and yet that is what gets lost in the shuffle of all these “gotcha” stories.

Media reports highlight mismanagement of athlete foundations but not the lost impact to charities and those in need.
The 2010 Fidelity Charitable Advice and Giving Survey revealed that 31 percent of advisers don’t feel knowledgeable enough about charity to discuss the topic with their clients. But you don’t have to be a charity expert to understand the alleviation of hunger, homelessness and intergenerational poverty.

It’s really that simple. And that challenging.

Many advisers feel it is presumptuous to bring up charitable giving with a client — 44 percent of advisers do not proactively offer charitable planning advice because they see philanthropy as a client’s personal decision, according to the Fidelity survey — so they wait to see if the client will address it first. That doesn’t work so well for athletes. By the time an athlete brings up the topic of charity, he has probably been to a dozen celebrity golf tournaments, half a dozen bowling fundraisers, and observed what he doesn’t realize is the mismanagement of his teammates’ foundations in action. The prototype has been set. As any teacher or coach will tell you, undoing learned behavior is much harder than learning it right the first time. But here’s some good news for advisers who are concerned that discussing long-term charitable giving plans will hurt their relationships with their clients. According to a study released by Fidelity Investments in 2012, 72 percent of financial advisers working with clients averaging at least $1 million in investable assets reported that discussing charitable giving strengthened their relationship with their clients, and 37 percent said it helped to build multigenerational relationships with their clients.

Athletes have several points of contact that could and should address charitable giving; it’s not only their financial advisers. Agents and managers have an important role in guiding the athlete toward responsible decision-making. With online hourlong seminars held on virtually every charitable topic by some of the leading philanthropic organizations, lack of opportunity to learn is no longer an excuse for ignorance.

Initial discussions can start proactively as a way to manage the inevitable influx of charitable requests a new professional athlete will receive. Walk through a checklist of these types of requests, such as for personal appearances, use of likeness and image, and charitable donations. Briefly review the risks and rewards of each. Allow the athlete’s responses to guide how much detail you provide during the first conversation. But don’t interpret silence as lack of interest and don’t stop at one conversation. It may be that the athlete is overwhelmed or uncomfortable with his lack of experience. It doesn’t mean he isn’t interested.

Ask open-ended questions about his experience giving or receiving charity to help him feel more comfortable. One of our favorites is, “If you had a million dollars that you were required to give to charity, where would you give it and why?” Use the answer as a launching pad for other questions about the type of impact the athlete wants to have, exploring what type of charity work inspires him.

If the athlete isn’t getting animated when he speaks about a charitable cause, you probably haven’t found his charitable passion or potential yet. Keep the dialogue flowing. Consider recommending small steps to prepare him for larger commitments. If he expresses an interest in holding a fundraiser, suggest that he first speak with some volunteers on the planning committee of a local charity’s event so that he gains an appreciation for the time and money required to plan and execute a successful fundraiser.

NBA legend Charles Barkley was once famously quoted as saying he did not want to be a role model for young people. We’d venture to say that was not really his choice to make. You can’t undo the influence you have simply by saying you don’t want it.

Athletes’ advisers have a powerful influence over the young men and women they’ve been hired to advise. To paraphrase the great philosopher Jean-Paul Sartre, choosing not to discuss charity with an athlete is still a choice, with its own repercussions. Sometimes those repercussions might even be the life or death of someone in need.

Marc Pollick (mpollick@givingback.org) is president and founder of The Giving Back Fund. Stephanie Sandler (ssandler@givingback.org) is senior vice president of The Giving Back Fund.

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