The U.S. Olympic and Paralympic Foundation is changing the way its donations are reported to the IRS in a manner that will make it appear to be more efficiently fulfilling its core mission.
At the U.S. Olympic Committee’s April board meeting, directors voted to approve a switch to real-time, cash-based accounting for philanthropic income, matching the way it reports its bottom-line contributions to the Olympic team’s sports programs.
Without making any other changes, this will have the effect of raising the percentage of donations in any given year that ultimately go to the sole beneficiary, the USOC, instead of foundation overhead, the most common efficiency metric used by independent charity benchmarking services.
Under the old policy, if a donor pledged $2 million over the course of four years, the entire $2 million gift was booked in the first year, but the resulting grant to Team USA was only reported as it was actually distributed. So if the donor gave four annual gifts of $500,000, even if the entire sum of that gift went straight to athlete support, public tax filings would indicate that only 25 percent did in that year.
“It was all just done to clear it up and make it easier to understand,” said Morane Kerek, USOC chief financial officer.
In its first three full years in operation using the old reporting practices, the foundation distributed only 14 percent of its reported income back to the USOC — far short of the 75 percent recommended by Charity Navigator. The low number was at least in part because it included pledges not actually in hand yet.
At the same board meeting, the USOC decided to restrict all foundation grants to elite athlete support and programming. To cover administrative and fundraising expenses for the foundation, the USOC authorized a $49 million grant back to the foundation during the current quadrennial ending in 2020.
Kerek acknowledged that both changes are in part for “messaging” purposes. “It makes some logical sense,” she said. “Donors want to know what their funds are being used for, and this is a way to provide some clarity for that.”
The changes will be reflected in the 2017 financial reports, to be published in the coming weeks.
