Charity watchdog urges donors to think twice before giving to Calgary Flames Foundation

The charity watchdog group Charity Intelligence Canada says the Calgary Flames charitable foundation is offside when it comes to transparency, its high fundraising costs and the amount it saves.

Report by Charity Intelligence finds Flames’ charitable foundation’s fundraising costs are above average

Most of the money raised by the Flames Foundation came in through 50/50 draws. The foundation is being criticized by a charity watchdog for only donating 30 cents of every dollar raised. (CBC News)

UPDATE: Click here to read the Flames Foundation response this story


Non-profit watchdog group Charity Intelligence Canada said the Calgary Flames charitable foundation is offside when it comes to transparency, its high fundraising costs and the amount it saves.

Charity Intelligence reviewed the Flames' financial statements for the 2017 fiscal year, ranking the club's charity the worst of eight foundations attached to professional Canadian sports teams when it comes to getting the most bang per donated buck.

It also found the Flames Foundation kept nearly as much money as it handed out in grants and is holding nearly $8 million in its reserves.

Red flags

Charity Intelligence said those are red flags when considering donating to a charity.

"So … be a fan, cheer for the Flames, but seriously if you are looking at giving and in your giving to have impact and really go to help people, you have so many choices in Calgary," said Kate Bahen, managing director of Charity Intelligence Canada.

Last spring, CBC News contacted each of the eight foundations attached to Canada's NHL, MLB and NBA teams requesting copies of their financial statements for the past three fiscal years.

With the exception of Maple Leaf Sports & Entertainment, whose financials are made available online, and the Jays Care Foundation, which provided its financials upon request, all of the other foundations declined to provide the documents or stopped responding to emails after several follow-up requests.

Requests were then made to the Canada Revenue Agency to get copies of these statements — which each foundation is required to file annually.

The files were then compiled and shared with Charity Intelligence for feedback on the performance of these foundations.

Analysts from the watchdog group used these records to update all of their pro-sport team foundation evaluations.

Pattern emerges

Charity Intelligence's report found a similar pattern among all the professional sports teams' charities, giving five of the eight foundations a zero out of three rating on financial transparency.

The Flames Foundation received a one out of three because it eventually emailed two years worth of financial statements after Charity Intelligence asked again for the records.

Using a four-star rating system that evaluates transparency, administrative and fundraising costs, cash build-up and social outcomes reporting, Charity Intelligence gave most teams a one-star rating, placing them in the bottom 20 per cent of charities that have been put under the microscope by their team of analysts over the years.

Only the foundations supported by Toronto-based teams — the Jays, Maple Leafs and Raptors — scored a higher rating.

"The highest rated one we have is the Maple Leafs Foundation in Toronto. They're financially transparent.

"They don't have excessive money in the bank relative to what they spend each year on programs. So that gets a two-star rating overall so it's on par with other charities in Canada. So it's average and that's the highest-rated one we have," said Bahen.

Low return

Charity Intelligence is critical of the Calgary Flames Foundation for donating 30 cents for every dollar it raises.

In comparison, the MLSE and the Vancouver Canucks for Kids Fund are in line with other charities that Charity Intelligence has looked at over the course of several years.

The MLSE and the Vancouver Canucks spent or donated more than 70 cents on average for every dollar they raised on charitable activities.

The watchdog group broke down what was raised, how it was collected and the costs involved.

Charity Intelligence found most of the money raised by the Flames Foundation came through 50/50 draws — 65 per cent of the $4.1 million raised, for a total of $2.6 million in the 2016/2017 season.

That figure only includes the net proceeds, not the total collected during each 50/50 draw.

Charity Intelligence doesn't include these proceeds because it said most people don't consider buying a 50/50 ticket as a donation, and they realize only half of it will end up going to a cause.

Around $300,000 comes from direct donations to the Flames Foundation.

And the rest of the money, about $1.1 million, is collected via specialty events, including celebrity golf and poker tournaments.

Kate Bahen is the managing director of Charity Intelligence Canada, a national charity watchdog. (CBC)

Bahen said it's the latter that are so expensive to run and account for the low return.

The Foundation spent nearly $960,000 to cover the cost of hosting these events.

"It's great fun for corporations to buy sponsorships and go out and play golf with your favourite athlete, etc., but these are very expensive," she said.

"These galas are very expensive fundraising events, so as a donor you really just have to know the facts before you give."

In a place like Alberta, for example, which has had some very tough times over the last few years, does it make sense that a sport-franchise-affiliated Canadian registered charity would hold on to so much money when the needs in the community are quite great?- Mark Blumberg

Charity Intelligence also has concerns about how much the Flames' charity has in the bank.

While the Flames paid out $1.8 million to different charities, organizations and programs, it banked $1.2 million, boosting the non-profit's reserves to $7.8 million in 2017.

Some charity experts wonder why the foundation needs to sit on so much money.

"I think that it's questionable that an organization is doing active vigorous fundraising when they are potentially sitting on large amounts of money," said Mark Blumberg, a Canadian charity and non-profit lawyer.

He said it is not uncommon for charities to have a few months worth of reserve funds to pay for the lights, or other operating costs, if they run into trouble.

Or sometimes, Blumberg added, a charity sets aside some money to pay for huge capital projects, but that is usually clearly stated.

Blumberg says the Canada Revenue Agency says every Canadian charity with a large reserve needs a reserve fund policy which sets out why they need to have a reserve. He says it's not clear if these foundations have such a policy.

Charity Intelligence could not find any reason why the Flames Foundation needed its nearly $8 million in reserves.

"In a place like Alberta, for example, which has had some very tough times over the last few years, does it make sense that a sport-franchise-affiliated Canadian registered charity would hold on to so much money when the needs in the community are quite great?" said Blumberg.

The Flames Foundation declined an invitation by CBC News to respond to the contents of the report.

NHL foundations respond as group

CBC News reached out to each Canadian NHL foundation for comment on the scores they were given by Charity Intelligence in their report. Initially some committed to interviews, but eventually backed out prior to publication. Instead, a written statement was provided on behalf of all the foundations.

"Ensuring that trust between our communities and our foundations remains in place, now and for years ahead, is paramount for our Canadian NHL clubs. Accordingly, our foundations are steadfastly committed to meeting and exceeding standards put forth by the Canada Revenue Agency (CRA) in accordance with our charitable registration numbers," the statement read.

Transparency 'good practice'

There is no legal requirement for charities to post their financial statements online, but charity watchdogs say it just makes sense to do so in this time of openness and transparency.

"I don't see any reason why a large organization that's asking the public money for money put up the last three to five years worth of financial statements," said Blumberg.

He said it's just good practice, and it's easy to do, since the charity has already spent money getting them prepared and can be easily uploaded to their website.

Otherwise he said they are available by request through the CRA.

"These are some of the largest charities in Canada. They're in the top four per cent. They're bringing in $47 million a year in donations. And Canadians expect charities to have open books and let donors know how the charities are spending their money," said Bahen.

Charity Intelligence said it's important to keep fan loyalty and charitable giving in perspective.

With files from Scott Dippel.

Corrections

  • A previous version of this story indicated Charity Intelligence reviewed the Flames' audited financial statements, when in fact, the financial statements were not audited.
    Nov 01, 2018 12:00 PM MT

About the Author

Colleen Underwood

Reporter

Colleen Underwood has been a reporter/editor with CBC news for more than 10 years filing stories from across southern Alberta for radio, television and online. Follow her on Twitter @cbccolleen.