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In the news: Where does money raised from the Phoenix Open go?
September 26, 2024 (Arizona Republic) — The Thunderbirds gathered in late May to make a big public announcement: how much money the civic group had raised for Arizona charities from the 2024 WM Phoenix Open.
The Thunderbirds, formed nearly 90 years ago to promote tourism through the Phoenix Open, make the charity announcement every year with great fanfare.
But a review of documents filed with the IRS by The Arizona Republic shows not all of the money raised from the Phoenix Open goes to Arizona charities. Millions in tournament proceeds have gone to nonprofit groups in other states, ranging from Harvard University to the Barstool Fund, the charity arm of the sports and "bro culture" website Barstool Sports. Harvard received $25,000 in 2022. The Barstool Fund received $10,000 in 2021.
The grants given by The Thunderbirds go through a less stringent and transparent process than grants given by its charitable arm, Thunderbirds Charities, which only funds nonprofit groups in Arizona that submit an application described in detail online.
The amount of money The Thunderbirds gave directly to nonprofits is comparatively small; it made up about 3% of its giving in a 10-year period. The rest went to Thunderbirds Charities and two other Thunderbirds-related groups.
The Thunderbirds do not make a habit of publicizing their direct giving to nonprofit groups, unlike the promotion of charitable giving via Thunderbirds Charities.
Direct payments include donations on behalf of people who take part in various tournament-related competitions and activities. But there are also discretionary donations, and the organization provided little information about them. From IRS records, it's not clear which grants simply honored a contest winner's wishes and which were at the whim of The Thunderbirds.
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Robert Ashcraft, a professor at Arizona State University who teaches courses on nonprofit management and philanthropy, said The Thunderbirds are a large public-facing organization that, out of transparency, should make its giving practices clear, including why the organization gives money to nonprofit groups in other states.
"What this reveals to me is a number of questions that one could reasonably expect to be answered by a public-facing organization," said Ashcraft, who also runs ASU's Lodestar Center for Philanthropy and Nonprofit Innovation.
Laurie Styron, CEO and executive director of Charity Watch, a Chicago-based group that monitors and rates charities, said there is nothing wrong with charitable organizations donating money to groups in other states. But it could be unethical, she said, if a charity's stated mission or marketing and fundraising language create the perception that donations benefit a certain community when others beyond that community also benefit.
"So for example, if the charity's stated mission is that we support Arizona charities" or if the fundraising and marketing language "heavily implies or states or is giving people the impression that it's just going to support Arizona and Arizona charities, then that could be misleading if it's donating significant amounts of money out of state," Styron said.
"From an ethical perspective, the charity's messaging and its marketing and fundraising, when it's asking people for money, should be aligned with its stated mission and with how it's spending its money. So if it's directing a lot of money out of state while giving people the impression that the money will benefit the local community, that's not ethical."
Styron said, however, that as a 501(c)(6) nonprofit business league organization, The Thunderbirds group could have more latitude in its giving practices than Thunderbirds Charities, which is a 501(c)(3) charity organization.
"Those organizations are pretty much organized to benefit their own members and the interests of their members," Styron said, referring to 501(c)(6) business league groups.
Still, Styron said, the driving point is not to say one thing and do something else.
"I think that is a pretty universal thing, whether you're talking about a charity or a business league or even a for-profit company," she said.