This is ugly
What would you think if a charity raised nearly a million dollars but spent less than half a cent of every dollar raised on the causes it was supposed to support? Hold that thought.
Now, what would you think if the sole director of that same private Toronto-based charitable foundation now wants greater control over another charity, this one in Ottawa — the Ottawa Senators Foundation? You good with that? Again, hold that thought. First, some background:
We are witnessing the start of a blistering fight between the franchise’s enigmatic owner, Eugene Melnyk, who never seems to miss a chance to do the wrong thing on the PR front, and the team’s charitable foundation, which just happens to enjoy broad community support.
The fight is for nothing less than control of the Sens Foundation and the allocation of millions of dollars it dispenses to worthy causes every year. And the fight could get very messy.
Melnyk has long agitated for more say in the foundation’s operations, including deciding where all the money goes after the bills are paid. He wants to broaden the list of prospective recipients beyond local youth-related programs that are currently funded to embrace causes closer to his own heart, like organ donation awareness. That’s not surprising, given that he narrowly survived a liver transplant in 2015. But the manner in which he is going about it has a growing number of community leaders worried and angry.
STORY CONTINUES BELOW
The team recently warned the Sens Foundation that it will either start marching to Melnyk’s drum or be replaced by a new charitable organization that will. Last week, the foundation’s voluntary board of directors, which prides itself in its independence providing community oversight, responded with a polite “No thanks.”
Unless the differences are resolved, the two sides will officially part ways July 31, leaving Melnyk in search of a new charitable foundation more to his liking while the existing one embarks on a very uncertain future independent of the hockey team.
The team’s new president of business operations, Anthony Leblanc, told Postmedia’s Bruce Garrioch on Friday the team just wants to make the Sens foundation more efficient so more money can be invested in good causes, like organ donation awareness. Leblanc has been on the job seven weeks and you’d think he’d have bigger fish to fry, given the team’s myriad challenges on and off ice.
Undaunted, Leblanc cited a since-widely disputed 2018 Charity Intelligence Report which gave the Sens foundation a C- grade for spending about half what it raises on programs. The findings were controversial, in part because of the manner in which it calculates expenses related to 50/50 draws.
Charity Intelligence does not always hit the mark in assessing charities. Last year, it apologized to the Winnipeg Jets foundation for, among other reasons, misrepresenting its revenue reporting.
Still, Leblanc insisted the Sens Foundation should be spending closer to 70-80 cents of each dollar raised, a near-impossible benchmark when half the proceeds of a simple 50/50 draw are deemed to be an expense.
Also, it’s tough for the foundation to keep up with some other like-minded sports-related charities when some Canadian NHL teams cover the rent and even the salaries of their foundations’ employees. The Sens Foundation, meanwhile, is assessed hundreds of thousands of dollars in HR, IT, finance and rent costs annually, according to individuals familiar with the situation.
The real issue isn’t costs. It’s about control of the foundation’s operations, including where it dispenses the cash.
The foundation hasn’t entirely ignored Melnyk’s appeal to flow at least some cash into organ donation awareness. In 2018, against its better judgment, perhaps, it donated $100,000, plus an additional $15,000 in sponsorships, to The Organ Project (TOP), a Toronto-based private charitable foundation set up by Melnyk in 2016 to manage his pet project — creating greater awareness about organ donations and waiting lists.
According to Canada Revenue Agency filings, the Organ Donation Project generated $991,708 in revenues in 2018, primarily thanks to a big charity gala it staged in Toronto. No doubt, that $100,000 Senators Foundation cheque helped.
So what happened to all that money? Again, according to CRA filings, The Organ Project invested barely $5,000 of the nearly $1 million it raised on organ donor awareness. For those without a calculator, that’s 0.49 per cent, or less than half a cent for every dollar raised. And yet the Sens Foundation is being attacked for investing about 50 cents on every dollar it raises on programs. The hypocrisy is stunning.
So, where did all The Organ Project money go if not to worthy causes? According to CRA, a whopping $779,464 went to cover fundraising costs. Another $238,118 went to management and administration. I’m told these are the kind of results almost certain to draw the attention of the taxman.
The Organ Project is registered as a “private foundation” and, as such does not require an arm’s length community board of directors overseeing operations as does the Ottawa Senators Foundation. Instead, it appears to have only one director: Eugene Melnyk.
The Organ Project shut down last year with a promise to re-launch this spring. That hasn’t happened. Its Toronto office is closed and there doesn’t appear to be anybody left on the payroll.
Its balance sheet lists $201,378 in assets and $391,655 in liabilities, including a $224,902 unpaid debt to someone with a “non-arm’s length” relationship with the private foundation, according to the CRA filing.
So, who do you want overseeing the important work of the Senators Foundation? A volunteer board of community leaders or … somebody else?