The PGA Tour's nonprofit business model has allowed it to avoid paying up to $200 million in federal taxes over the past 20 years, and its tournaments -- designed to benefit local charities -- operate in ways that fall short of acceptable charitable practices, an "Outside the Lines" analysis of IRS data finds.
The tour's charitable giving is a centerpiece of its golf events, tournament telecasts and website. The professional golf organization touts nearly $2 billion in donations over 75 years.Yet that philanthropy has been bolstered by millions of dollars of annual tax breaks for the PGA Tour and its tournaments, which often are run by charities that spend far more on prizes, catering and country clubs than they do on sick kids, wounded vets or economic development. In one case, running a PGA tournament actually caused a charity to lose money -- more than $4.5 million over two years, the analysis found. (...)
"The lion's share of the money is going to big prizes, cash prizes for athletes and all the promotion around it, so it's really pathetic, actually," Charity Navigator president Ken Berger said. "Every single taxpayer in this country ultimately is bearing the burden of having to pay the taxes for this wildly inefficient organization that's giving so little to charity." (...)
On the PGA Tour's website, the very first tab -- "Charity" -- takes readers to a page where they can see the charities each tournament supports. The charities range from big names such as St. Jude Children's Research Hospital and Shriners Hospitals for Children to a scholarship program for caddies and local United Way chapters.
Using tournaments to raise money for charity dates to a $10,000 donation made by the Palm Beach Invitational in 1938; running each tournament as a charity became PGA Tour policy in 1979. That charitable structure helps attract sponsors, volunteers and fans, Votaw said.
"It's a means to an end, and the end is to benefit any number of charities that, in turn, help countless lives," he said.
Here's how it works: Take the FedEx St. Jude Classic in Memphis, Tenn. A nonprofit by the name of Youth Programs Inc. was formed in 1960 as a 501(c)(3) organization, which is the same public charity category as your local humane society, cancer research fundraising group, homeless shelter or Boys & Girls Clubs.
On its publicly available IRS form, the purpose of Youth Programs Inc. is to "host an annual professional PGA Tour sports event for the benefit of charitable organizations." In 2011, it made $15.3 million, about 89 percent of that from the golf tournament. It spent $15.3 million, which included about $6 million in prize money for the golfers and $5 million in TV promotion. It spent close to $1 million on tournament production and $500,000 on food and beverages, most likely at a discount, because Youth Programs is also exempt from paying sales tax in Tennessee.
The amount actually spent on charity -- the money given to St. Jude's -- was $1.5 million, or 10 percent of tournament expenses. Only $253,742 of that was actual cash to the research hospital. The rest went to St. Jude ads aired during the televised tournament, pro-am entry fees and air travel for celebrities.
by Paula Lavigne, ESPN, Outside the Lines | Read more:
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