RAISING MONEY FOR WHOM?

Let’s pretend you get a flyer from your local charity with information about poker game nights where they will be raising money for the cause.  It sounds like fun and you know the charity will benefit  because when you go to the poker web site of one of the companies that runs the games,you read that the games are, “supported by willing poker players aware a portion of each pot they win helps the sponsoring organization continue their community service efforts at a time when cash donations and State grants are disappearing.“  So how much will the charity earn from a poker night?  There’s the rub!

This week, the Chicago Tribune did an in-depth study of charity poker games that will really make anyone think before they ante up for a future game. The paper described how the money in the pots is divided up; but first some background.  

Rockford Charitable Games Association is one of the consulting companies that has been running games for more than 20 years.  Their web site says, “The Poker parties are a great new source of income for local charities. The players buy chips and play against each other, and the hosting charity has no investment in the games, as they are simply taking 10% of the pot up to a five-dollar ($5.00) maximum. If a pot is $30 the charity will take $3.00 for the house; if the pot is $80 the charity will take the maximum of $5.00 for the house.”  Sounds like a good deal for the charity because by being the house, they have to win.  But what does it cost to be “the house?”

For a typical poker game that runs from 2:00 p.m. until midnight with 250 players, the Tribune had Rockford Games do a profit breakdown:

Average purchase of chips per player: $100

250 players X $100 = $25,000 gross revenue

Average loss per player: $30

250 players X $30 = $7,500 revenue before expenses

Expenses:

3% tax on gross revenue = $750

Advertising, equipment rental, banquet hall, security guard = $2,200

Net Proceeds after expenses- $4,550

Consultant Fee- $2,200

Profit to Charity

$2,350

That means only 52% of the revenues after expenses go to the charity and 48% goes to Rockford Games-- the consultant.  That is an unconscionable percentage return for a charity event.

What about other charity events?

WingMadness (a police vs. firemen chicken wing eating contest) will be donating 100% of the money raised through sponsorship, ticket sales, raffle sales and the silent auction to Easter Seals.  This event is an anomaly because everything is donated so there are no expenses.

Another example of percentages?

Charity Navigator, the most prominent nonprofit watchdog, downgraded the Humane Society of the United States (HSUS) from 3 stars to one star because their “fundraising efficiency” went from spending 13 cents to raise every dollar to 27 cents.  During that same time HSUS spent 24.2% of its total budget on fundraising (as an overall percentage of its budget) from 12.7% in the previous year.

So HSUS was downgraded because they spent 24.2% of every dollar  and a poker game is costing 48%!

While I understand that small charities can really use the $2350 they can raise from a professionally run poker game, integrity must play a part here.   A not-for-profit could raise a lot of money running a brothel, but they would not do that.  The ante would be too high.