May 2007

How Should We Evaluate the Effectiveness of Sports Philanthropy?

A Letter from the Executive Director

Recently, the Wall Street Journal published an article (Big Players in Charity, 4/28/07) which poses the question, “does a system of individual athlete foundations make sense?”  For the article, WSJ reviewed the latest IRS 990 tax filings of 85 athlete foundations, to determine the amount each foundation spent on administrative and overhead costs, versus charitable programs.  WSJ found that only “35 devoted more than 75% of their spending to charitable programs, the standard guideline.”

Here at SPP, we work under the premise that, while calculating administrative overhead ratios might provide a partial view into the value and impact of philanthropic activity, it is crucial “to prioritize the effectiveness of a particular charity in fulfilling its mission,” as I noted in my letter to the editors of the Wall Street Journal.

Beyond this, however, a number of studies, such as a study by the Nonprofit Overhead Cost Project, have suggested that financial standards such as administrative/overhead to program spending ratios may not be the most effective measures by which to evaluate a charitable entity, and may in fact inhibit an organization’s effectiveness in fulfilling its mission. 

There’s perhaps no issue more central to the work we do here at SPP – or the amazing work that so many of you undertake in your own communities – than the issue of how we measure our performance.  The metrics that we use will ultimately determine how we prove to our colleagues that our programs bring value to our organization.  More importantly, those metrics will demonstrate to the communities of which we’re a part that our efforts enhance the quality of life and have a tangible impact on the lives of those we serve.  It’s our responsibility to choose and employ measures what will gauge the true impact and outcomes of our endeavors – and to educate the community at large about the importance of assessing our work using the right tools – not only through the media, but within the media as well.

Because we feel this issue is so central to the work we all do, we here at SPP are taking steps to provide you with the tools and resources to learn more about the important issues raised in this dialogue, and to seek guidance from and share information and best practices with your colleagues.  For example we’ve dedicated the next few webinars to addressing important issues raised in this discussion, including:

• Taking a look at how the media covers sports philanthropy;

• Choosing and implementing appropriate tools and strategies for evaluating your programs; and

• Deciphering what information is truly captured on an IRS 990 form, how that information is interpreted, and how to ensure that your own organization’s tax filings truly and accurately reflect, to the extent possible, the breadth and depth of your charitable endeavors.

Look for more information on these webinars in the near future.  In the meantime, please take advantage of the resources we offer through our website, www.sportsphilanthropy.com.  And feel free to offer comments or suggestions on additional resources that might be helpful to you.  We look forward to hearing from you, and to continuing to serve you.

-Greg Johnson

Read the Wall Street Journal article, “Big Players in Charity”

Read SPP Executive Director Greg Johnson's Letter to the editors of the Wall Street Journal

Download a briefing paper on “The Pros and Cons of Financial Efficiency Standards,” prepared by the Nonprofit Overhead Cost Project