I was asked by the EDGE Media web site to pen an article about the expenses of the annual high-profile AIDS Walk in San Francisco, and while researching the piece discovered that more than half of money raised went to overhead. With the permission of EDGE editors, I have cross-posted the article to my blog and here at Daily Kos.
As thousands of pairs of feet marched for AIDS Walk San Francisco in Golden Gate Park on July 15, every walker was showing commitment to people living with HIV, and a desire to end the AIDS epidemic. But after admitting that less than half of the funds raised by these walkers made it to the community, organizers pledged to lower these high operating costs.
"In recent years, some costs associated with producing the AIDS Walk have increased (e.g., permit fees, medical insurance for employees, etc), while the amount of money raised by participants has declined, resulting in an increase in the cost of fundraising ratio from previous years," explained organizers Craig Miller and Neil Giuliano of some increases in expenses.
Miller of MZA Events, which produces the pedestrian marathon, and Executive Director Neil Giuliano of the San Francisco AIDS Foundation, which organizes the AIDS Walk, reported that this year’s 26th edition of the annual fundraiser brought in $2.7 million for Bay Area service agencies. What Miller and Giuliano omitted from their announcement was the high estimate for expenses required to hold the AIDS Walk.
While the books have not closed for last month’s walk, at the request of the EDGE Media Network, the producers have shared final data for the 2010 and 2011 events, and explained some facts behind the figures.
According to MZA and SFAF’s public filing with the California Attorney General’s office for the 2011 event, total revenue that year was $2.8 million and expenses came to $1.6 million. This meant that 58 percent -- more than half of all donations raised -- were used for overhead expenses.
The breakdown of that $1.6 million figure in costs and fees included $450,000 in salaries for AIDS Walk employees. This was followed by programmatic costs of $392,000, fees or commissions of $212,000, printing costs of $159,000, advertising charges of $154,000, day-of-event rentals coming to $113,000 and a facilities charge of $100,000, in this grouping of six-figure expenses.
Additional overhead included $38,000 for fundraising incentives, $26,000 in telephone costs, $21,000 in postage and $14,000 for permits. No funds are spent on celebrities or entertainment, because the performers donate their time for a good cause.
The 58 percent overhead costs for the 2011 walk was a slight jump from the 52 percent overhead in 2010, which Miller and Giuliano explained was due to increases in permit fees and medical insurance for employees.
Regardless of these increases, this overhead is excessive. According to BoardSource.org, many organizations boast that they spend only five or six percent of their funds on overhead, while other well known and effective nonprofits generally spend 25 or 30 percent on overhead.
It is also a great leap from Miller’s early efforts, when he told the LA Times he had kept 1995 AIDS Walk Los Angeles overhead costs at just 21.5 percent. SFAF Executive Director Neil Giuliano and MZA event Craig Miller pledged to lower overhead costs
A History of Mismanaged Funds
In 2010, nonprofit watchdogs complained that the $700,000 grant from AIDS Walk revenue to the Pangaea Global AIDS Foundation (a charity whose focus is international scope and provides no services in the Bay Area), was money that should have stayed local. Miller and Giuliano said the diversion of revenue to that charity has ended.
"Pangaea is no longer affiliated with San Francisco AIDS Foundation. It became its own stand-alone non-profit in November 2010. Previously, we provided grant support to Pangaea. Our last grant to Pangaea was in 2010, at which time we removed it from our website and marketing materials," they said.
A leading rainmaker for the event, Max Kirkeberg, who lost one longtime partner to AIDS and whose husband is living with HIV, expressed his strong support of the walk, regardless of high expenses.
"I have participated in every walk except the first, and have been team captain of a church-and-school team for 13 years that has raised just under $600,000," said Kirkeberg. "Why do I do it? Because the SF AIDS Foundation is the biggest outfit supporting folks with AIDS and working to prevent HIV transmissions. Yes, it costs too much to produce an event this big, but if it raises lots of money for local agencies, then it is worth it."
Invoking the controversial expenses of the Dan Pallotta TeamWorks organizing of the SF AIDS Foundation’s AIDS Rides in the 1990s, John Iversen, who has lived with HIV for more than 30 years and is a member of ACT UP/East Bay, offered suggestions to cut expenses for the walk.
"It took a lawsuit, but the Foundation finally dumped Pallotta and now does the rides on their own after being burned big time on costs. SF AIDS Foundation needs to dump Craig Miller like they dumped Dan Pallotta and do the AIDS Walk on their own," said Iversen. "I think their staff has the skills and is compensated enough to do it on their own. I wonder how much money has been squandered using MZA Events, money that should have gone to direct services for people with AIDS or prevention programs?"
When asked if the foundation and MZA Events would post the data on expenses on their websites for easy and full transparency to walk participants and donors, they declined to do so, and noted the data is on the state Attorney General’s site. Annual reports on commercial fundraisers are published here.
Responding to the criticism that the 58 percent figure for 2011 AIDS Walk expenses was uncomfortably high, Miller and Giuliano made a promise to lower costs.
"We share the same goal: to maximize the amount of money and awareness raised in the Bay Area’s response to HIV/AIDS," they said. "We are working hard to get [expenses] back down, and are very committed to doing so."