Nonprofit Professional Sports: Really?

Nonprofit professional sports - it sounds like an oxymoron, doesn't it? And yet, these organizations are classified as nonprofit under U.S. tax law: NHL (National Hockey League), PGA (Professional Golfers' Association, and - until just a few months ago - the NFL (National Football League).

A little background on the IRS code: Section 501(c)(6) allows a tax exemption for business leagues, chambers of commerce, real estate boards, boards of trade, and professional football leagues. All of these are supposedly not organized for profit, and no net earnings can be used to benefit any private shareholder or individual. The explicit inclusion of professional football leagues was part of a 1966 deal Congress made when it granted an antitrust exemption that allowed the NFL to merge with the AFL (a now defunct football league).

Here's a quick summary of revenues and salaries for these "nonprofits":

• The NFL reported revenue of $327 million in 2013; Commissioner Roger Goodell's salary was $44 million; the average price for 2015 Super Bowl tickets was $2,600.
• The NHL has annual revenue of $3.7 billion; Commissioner Gary Bettman's combined salary and benefits come to $8 million.
• The PGA takes in $973 million annually; I couldn't find any public data for current Tour Commissioner Pete Bevacqua, but previous Tour Commissioner Tom Finchem received a salary of $5.1 million.

The NFL opted out of its tax-exempt status a mere 4 months ago; Major League Baseball did so in 2007, largely to avoid IRS reporting requirements - now they don't have to make public the salaries for their top executives.

Even former Republican Senator Tom Coburn (an ardent anti-tax Tea Party proponent) believes these organizations should be paying income and property tax. His proposed Marketplace Fairness Act would have ended the practice of allowing professional sports leagues to qualify as tax-exempt. According to Coburn, the result would be a gain of $91 million in tax revenues for the U.S.

And there's the sad case of FIFA (Federation Internationale de Football Association). FIFA is a registered nonprofit under Swiss law. Its 2013 revenue was $1.3 billion, with a net profit of $72 million. Its top 13 executives received $26.1 million. They've been in the news lately due to the arrests of top executives for bribery, kickbacks, and match fixing. The Mob Museum in Las Vegas - home of exhibits on gangsters, Mafia bosses, drug cartels, and all manner of corruption - just opened a new exhibit on FIFA called "The Beautiful Game Turns Ugly."

There's something rotten in the world of tax regulation in the U.S. and internationally when these bedfellows get to call themselves nonprofits.

Brevity Is the Soul of Messaging

We live in a world of busy people, short attention spans, quick sound bites, Twitter messages of 140 characters. catchy marketing phrases, chat acronyms, and emojis that replace words completely.

So it's essential that you keep it short and sweet in your website, enewsletters, email appeals, and solicitation letters. Here are a few practical tips for you:

• Highlight visuals. You've heard the old adage "one picture is worth a thousand words." Take photos and videos regularly, and use them.
• Tell very short stories. When it comes to fundraising, one pithy story is worth a thousand statistics.
• Use word count. This invaluable computer tool allows you to literally count words in text. Set a limit for yourself, write your text, check the word count, and then delete, delete, delete!
• Use bullets. There's nothing worse than long dense paragraphs - at best people will read the first sentence, and at worst they will not read it at all. Instead, break text down into key points using bullets that can be easily scanned.
• Focus on key achievements. I know you want to tell everyone about every wonderful thing your organization does. And you want to provide lots of impressive statistics to back that up. But they don't have the time or patience. Pinpoint key achievements with short pithy sentences and use statistical data strategically and sparingly.
• Drive people to your website. In your newsletters, entice them and leave them wanting more - which they can find by easily clicking the link to your website.
• Steal good ideas. Take the time to scan relevant websites and communications you receive from other nonprofits. What catches your eye? What motivates you to find out more? What causes you to lose attention? Use what you learn to inform your own communications.

Note: I limit myself to an absolute maximum of 500 words in each monthly blog post. I'm proud to say this one, appropriately, is a mere 327.

Good News or Bad? Giving USA 2014 Report

Giving USA just came out with its annual report on 2014 charitable giving in the United States. 

Here are some top findings on the good news side:

• A record $358.4 billion was contributed to nonprofits in 2014, an increase of 5.4% over the previous year.
• Donations from individuals, corporations, and foundations all exceeded the previous all-time high of 2007 (right before the recession caused donations to plunge.)
• This recovery from the recent recession was the shortest on record, and much faster than all the experts predicted.
• Charitable giving rose in all service areas except international aid (which is largely driven by situational disaster assistance). Arts, culture, and the humanities were tops with a 7.4% increase followed by the environment and animal welfare at 5.3%.
• Corporate giving increased a remarkable 12%, largely due to big growth in pre-tax profits and the Gross Domestic Product (GDP).
• Individual giving accounted for an astonishing 58% of the increase in giving in 2014.

And on the not-so-good news side:

• Corporate dollars were up - but not by much - .7% of pre-tax income (compared to 1.8% in 1985 and 2% in 1986). And much of this giving was in-kind rather than actual dollars.
• Religion still reigns at 32% of total gifts, but has been losing ground to other causes since 1982 when it topped the charts at 53%.
• This past recession hit harder than originally estimated, with a 14% decrease in gifts from 2007-2009 - making it the most serious decline since Giving USA started keeping count 60 years ago.
• Despite the big 2014 increase in individual giving, the average donated remained consistent at 2% of disposable income. This hasn't varied over time, even when the economy has been strong.
• Individual giving is not increasing as fast as giving by corporations and foundations - total contributed in 2014 was $258.5 billion, still short of the 2007 high.

Reading between the lines, the other important story is that the increase in individual giving has largely been driven by donations from "mega-donors." These gifts in the range of $80 million and up are being designated for big mainstream institutions (universities, hospitals, museums, etc.) as well as foundations that provide grants for big nonprofits.

In other words, a very small number of donors are controlling our philanthropic dollars, and they are not giving to small and mid-sized organizations that serve the neediest among us. The income inequality we are seeing throughout the country is indeed being reflected in the current landscape of charitable giving.