More than half the money raised in the name of charity by Maple Leaf Sports and Entertainment was spent on fundraising and administration last year.

And the story is much the same at many professional sports foundations across Canada, a Star investigation has found.

Lavish gala dinners, golf tournaments and lotteries held by Canadian NHL club foundations routinely eat up between 40 and 65 per cent of revenues — and as much as 80 per cent in the case of the Edmonton Oilers’ foundation in 2008 — intended for disadvantaged children and community development.

Experts say well-run charitable operations should be directing less than 20 per cent of their charitable income on fundraising and administration.

“Canadians love their hockey teams, but it appears the charitable spending among these teams don’t return that affection as expected,” says Toronto forensic accountant Charles Smedmor.

“As community investments go, there are much better places to put your charitable dollars.”

Dr. Bruce Kidd, who was announced as chair of MLSE’s Team Up foundation in December, said his board of directors is “very concerned about the costs.”

“We are looking at the costs and the return on all of our activities and we’re trying to make them more effective to get the costs down to where they represent the industry standards or better than that.”

Fundraising and administration consumed 55 per cent of the $1.5 million raised last year by Team Up, according to the foundation’s self-reported figures to the Canada Revenue Agency.

That compares to 17 per cent reported by the Montreal Canadiens Children’s Foundation, the lowest figure among the country’s six NHL club foundations.

The other four team foundations reported internal costs of between 42 and 65 per cent last year.

The figures from Team Up, a newly-branded merging of philanthropic efforts for the Toronto Maple Leafs, Raptors, Marlies and Toronto FC, raise questions about the charity’s oversight of charitable dollars, say financial experts and forensic accountants who reviewed the records for the Star.

“The smart money isn’t giving through sports foundations (like Team Up) to achieve impact,” says Kate Bahen, managing director of Charity Intelligence Canada, a non-profit organization that analyzes charity finances. “(MLSE) is a massive hockey machine. But to present Team Up as experts in community development is a stretch.”

Asked what he’d tell a client donating money to Team Up, forensic accountant Ken Froese says: “I’d say find another way to give it more directly … to where it will make a difference.”

Froese, who reviewed Team Up’s filings for the Star, said he was “surprised” by the numbers.

“It should be the leading example in Canada for a sports foundation. But the foundation is a way of raising money and a lot of the use of the funds gives you advertising for the Raptors or the Toronto Maple Leafs. Other (charities) are more intent on solving issues and less on administration.”

Kevin Nonomura, Team Up’s treasurer and senior vice-president of finance for MLSE, said “this past year was a tough year for us.”

“We understand, from an outside perspective, it doesn’t look very good. … I’d like (fundraising and administration costs) to be as low as possible. And that’s why we’re trying to look at diversifying the way we raise money and try and find more efficient ways, effective ways to raise money.”

The federal Charities Directorate, which regulates the country’s 83,000 registered charities, says fundraising of more than 35 per cent of revenues triggers an examination “to determine if there is a trend of high fundraising costs.”

The Star’s analysis shows five of the six NHL team charity foundations exceed that threshold. All continue to operate without penalty.

CRA officials don’t comment on specific charities and their fundraising costs.

“(The numbers) tell me that Anglo-Canadian sports teams should stay out of the charity business based on the efficiency by which they generate and expend their funds,” says Ian Wintrip, a Toronto forensic accountant.

“When you look at (Team Up’s) administration and fundraising costs ... your objective wouldn’t be to have an organization like that. You would have loftier goals than that.”

Team Up and similar NHL club foundations do contribute to important community work.

Over the past 15 years, the Leafs Fund and Raptors Foundation — predecessors to Team Up — raised close to $30 million for disadvantaged youth, says a December press release announcing the newly named foundation.

MLSE has dedicated about $1.6 million over the past four years to building and refurbishing 13 hockey rinks, six basketball courts and three soccer pitches.

It also provides hundreds of “in-kind” gifts – autographed jerseys, plaques and memorabilia – to registered charities and schools to support their own community-based work.

Foundation records obtained by the Star show that nearly 60 per cent of the more than 750 gifts Team Up donated last year were valued at $25 or less.

All of those little gifts amount to a big drain on resources, says forensic accountant Smedmor.

“Team Up's administration costs appear to be eating more of its donation and investment income than expected.”

Fundraising was Team Up’s single biggest expenditure last year at nearly $700,000.

In one case last year, the foundation paid a fundraiser nearly $24,000 to generate $3,200 in funds.

That $20,000 fundraising shortfall reflects a recent change in “strategic direction” towards attracting for philanthropic donations, says MLSE spokesperson Rajani Kamath, who would not name the fundraiser.

“We were prepared to make a short-term investment to recognize a long-term gain for our foundation.”

Many of the typical fundraising activities of sports foundations like Team Up come with big overhead.

Every dollar that comes in from game night 50/50 draws — lotteries that direct half the ticket sale proceeds to the charity and the other half to a winning ticket holder — only bring in 40 to 45 cents on the dollar, says Nonomura.

“It has the lowest net and highest expenses against it. … From the 50 cents we’re getting, we have to pay for the lottery licenses, the ticket printing and … someone to manage the program. It’s a high cost.”

Compare that to the Montreal Canadiens’ foundation, whose game-night lotteries (50/50 draws are not permitted in Quebec) hands back less than 20 per cent of total revenues to winners while keeping 80 per cent as charitable income.

Charity fundraising dinners – the bread and butter of many sports foundations – are one of the biggest revenue eaters.

A gala fundraiser held by the (Vancouver) Canucks For Kids foundation raised $300,000 for the charity’s work with children in need last year, says executive director Debbie Butt.

But that’s only after spending $200,000 to stage the event.

“You’ve got a hotel ballroom, you’ve got to pay $60 a head and you’ve got 700 people in the room … you have alcohol and corkage, then you have lights and staging,” said Butt, whose charity spent $2.1 million on fundraising and administration last year — 42 per cent of its total revenues.

“That’s a big overhead.”

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It’s no coincidence that sports foundations overwhelmingly target children as their charitable focus, says Bahen of Charity Intelligence.

“If you want to raise money, of course you pick kids’ causes because that will outdraw a charity for seniors eight to one. But this isn’t serious giving. It’s fundraising, marketing and glitz. The less you spend on flower arrangements and glitz, the more that goes to good.”

The Montreal Canadiens Children’s Foundation raised $3.4 million last year – more than doubling Team Up’s revenues -- without holding a gala fundraising event.

“I have seen gala dinners with costs of hosting up to 40 to 50 per cent of gross take,” said Pierre Boivin, chair of the foundation and president of the Montreal Canadiens. “We don’t have that as a recurring event.”

Danielle Robinson, president of the Sens Foundation, says high event costs are a struggle in most sports charities.

“People expect a certain quality of event when they’re paying a $4,000 for a table (at a gala),” said Robinson, whose foundation spent 49 per cent of revenues on fundraising and administration last year.

“A 30 per cent target as something we should all be striving to sit around.”

The Toronto Blue Jays’ charity, the Jays Care Foundation, spent 39 per cent of total revenues on fundraising and administration in 2008, the last year it reported its figures.

That’s high, says executive director Danielle Silverstein.

“It’s a number I pay attention to. We’re very focused on it. … I’d love for it to be under 30 per cent.”

The Edmonton Oilers Community Foundation shows the highest fundraising costs among Canadian NHL club foundations.

It spent 65 per cent of its revenues on internal costs last year – down from 80 per cent in 2008.

That dramatically higher spending — totaling $6.5 million last year and $9.1 million a year earlier — is largely attributable to an initiative unique to NHL club foundations: A high-profile lottery that includes lavish prizes such as cars, trips and a luxury home.

“Expenses are high because that’s the nature of the program,” said foundation executive director Natalie Minckler. “We were looking for ways to raise big dollars and bake sales weren’t going to cut it.”

rcribb@thestar.ca

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