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Komen Race Revenue Limping Along

By Mark Hrywna - April 1, 2014

Laura Farmer Sherman recalls doing almost 100 events in the months after the very public dispute two years ago between Susan G. Komen for the Cure and Planned Parenthood of America. Whether it was speeches, open houses or “Coffees with Komen,” she would talk to “anyone who’d listen” about what the San Diego affiliate does with donations and what would happen if they didn’t raise the money.

“There were a couple coffees that were really hard for me personally because people were very angry at the time,” said Farmer Sherman, executive director of the San Diego affiliate. “We were as honest as possible. A couple of times people said, you’ve broken our relationship irreparably. With those people I tried three times,” Farmer Sherman said, who estimated that 10 percent of supporters severed ties with the organization. “We just let them go, wished them well, and focused on who we have,” she said.

Komen San Diego was among only 26 of Komen’s 119 affiliates nationwide that increased race revenue from 2012 to 2013, the first full year of races after the February 2012 grant funding dispute. On average, race revenue was down about 15 percent among affiliates, with four out of five affiliates reporting lower numbers, according to Komen’s audited financial statements. For a geographic breakdown of race revenue by affiliate over the last two years, click here.

Special event revenue has been a challenge for many large, established organizations. Total revenue for the top 30 event series in 2013 was $1.667 billion, down 2.58 percent from 2012’s $1.711 billion, according to the Peer-to-Peer Fundraising Top 30, released by the Peer-to-Peer Professional Forum in Rye, N.Y. Komen’s 3-Day Walk series grossed $15.5 million less, almost 27 percent, in 2013 than in 2012, while Race for the Cure events collectively dropped by $20 million, almost 16 percent. The only other top 30 event that declined as much was Avon Foundation for Women’s Avon Walk for Breast Cancer, down 15 percent, to $40 million. Peer-to-Peer Professional Forum President David Hessekiel said there could have been some confusion among the public with Komen backlash possibly even impacting other cancer walks.

Komen remains among the largest breast cancer charities in the nation despite losses in revenue that mirrored the event declines. The Dallas, Texas headquarters reported total revenue of $146 million last year, down 26 percent, while affiliates reported a total $148 million, almost 17 percent less than the previous year, according to the most recent federal Form 990.

Despite a decline in participants the past several years, the San Diego affiliate raised about 15 percent more in race revenue last year. “I think that it can be directly related to the fact that we ‘energized our base,’” said Farmer Sherman. Of the 12,000 participants last year, fewer than 300 were responsible for raising $1.5 million of the overall $2.3 million grossed by San Diego, among the largest affiliates to see an increase.

She also credits the increase in race revenue to working hard on communicating. The San Diego affiliate unleashed a “Cancer Can’t. Komen Can.” campaign, featuring local breast cancer survivors. This year, the affiliate plans to focus on those core supporters who are so critical to its fundraising.

How much of an impact the Planned Parenthood funding spat has had financially on Komen can’t be precisely calculated. Many observers concede there’s been at least a residual effect.

“It’s relationships. They [Komen] dam­aged their relationships with donors. Refunding [grants to Planned Parenthood] was not a reason why people would go back to caring about them. I doubt it reinvigorated people’s sense of commitment,” said Peggy Morrison Outon, executive director of the Bayer Center for Nonprofit Management at Robert Morris University in Pittsburgh, Pa.

Fundraising “is not mechanical, it’s a relationship process. They have had a brilliant career in the way they’ve organized races, the mechanics have been tremendously enviable. But we’ve also seen that it’s a marriage between having really good technique and having strong relationships,” she said.

Rebuilding relationships at the affiliate level might be easier if there’s a longtime executive in place, rather than someone who’s been in the job barely a year, Outon said. There are some examples of both. Komen Connecticut has been led by Anne Morris for some 15 years and had race revenue increase some 67 percent though it’s unclear why. Morris did not respond to messages.

Despite modest drops in race revenue, Komen Maryland allocated more dollars to its mission during 2013 than 2012, giving about $500,000 to the national research program and about $1 million in local community grants across, according to Executive Director Robin Prothro. “We’re in a kind of rebuilding, rejuvenation mode,” she said.

The San Francisco Bay Area affiliate, which used to raise $2 million annually, had a 60-percent drop in race revenue. The affiliate appears to be without an executive director at the moment but it’s unclear. Board President Anita Jane Brink referred questions to the national office, which had no interest in talking specifically about affiliates, preferring to speak broadly about challenges facing the organization and nonprofits generally when it comes to fundraising and events revenues.

“There’s very little value from my perspective, to go affiliate by affiliate, seeing who’s having a better or worse time than others,” said Andrea Rader, a spokeswoman at the national office. All affiliates are part of the same headquarters that will help them through these issues and work together on strategies for raising funds, she said, with those discussions occurring internally.

“Some are having better results than others but we think over time, this is all going to straighten itself out,” Rader said. “As we move through and get further away from these issues from 2012, now two years old, we’re going to see our affiliates working to get their jobs done to raise the funds to serve our mission,” she said.

“Everyone is confronted with the same issues” of trying to generate more participation and revenue in their walks and races, Rader said. “What we’re seeing in terms of revenue…requires us to think strategically to raise revenue.”

With national headquarters holding half as many 3-Day for the Cure events in 2014, it’s expected that revenue will be even less than the $42 million raised last year. The 3-Day is sponsored by national headquarters while affiliates keep about 75 percent of revenue raised by the local Race for the Cure, typically 5K events.

The impact from a human resources perspective is more clear: Several executives at the national office in Dallas, Texas, along with at least a half-dozen chief executives at affiliates, including the largest, Greater New York City, left the organization within six months of the public relations fiasco. Some of the new affiliate executives have been on the job barely a year and Komen in February hired its first permanent vice president of development since 2012.

The organization waited to fill that post so that the new national CEO Judith Salerno, who started in September, could participate in the search, Rader said. Komen has renewed a search for a vice president of marketing after Dorothy Jones left the organization in December, after less than two years in the position.

Komen made some changes to its board, adding a second affiliate representative, while founder Nancy Brinker transitioned from CEO to chair, global strategy.

Board and governance changes have made the organization stronger, Farmer Sherman said, most notably the new Affiliate Leadership Council. Two affiliate representatives are elected from each of Komen’s seven regions and the council can report to the national board.

“Governance changes that national has made make it so it’s a shared decision,” Farmer Sherman said. Some affiliates felt blindsided by the Planned Parenthood decision two years ago and others publicly stated opposition to it before it was rescinded. Prothro of Komen Maryland said the new structure has improved, helping affiliates to look across the system at what can be shared, be it expenses or expertise.

On the network and headquarters level, one of the things Salerno has been undertaking is a complete look at how the organization operates, and aiming for areas that can be streamlined, Rader said.

“What we’re trying to do, as we always do, is look at our operations and services, at all aspects of how we do what we do to ensure we’re providing the widest range of services most effectively,” Rader said.

Some of the smallest Komen affiliates have merged or dissolved during the past two years. Komen North Dakota, which raised only $5,000 annually in race revenue, was dissolved as of April 2013. Effective April 2012, Coeur d’Alene, which had raised about $150,000 annually, merged with Boise, which typically raised more than $1 million.

Aspen merged with Denver in December to form Komen Colorado, though there’s also a Colorado Springs affiliate. Aspen was among Komen’s smallest affiliates, raising less than $200,000, while Denver is among the largest, typically raising upward of $6 million.

A drop in race revenues did not instigate the Colorado merger, according to Michele Ostrander, longtime executive director for the Denver affiliate. It can be difficult for a small affiliate to meet requirements set forth by headquarters, she said.

The two boards began discussions last summer after Aspen’s chief executive and board president both stepped down.

Rader dismissed specific questions about potential affiliate mergers, only to say that the charity is always examining for efficiencies, particularly as Salerno continues to learn the organization.

There’s a natural tension between affiliates and a national organization, according to Outon. “One of the ways national sort of justifies its existence is it makes the case why affiliates need them, by signaling a clear listening posture, that’s represented in the composition of the board,” she said.

For all of Komen’s changes, some observers still believe the breast cancer charity’s national board did not go far enough, particularly in the area of governance and when it comes to its founder. Brinker, now in a paid position as chair, global strategy, retained her lifetime seat on the national board amid shuffling of a few seats on the 10-member board.

“For the health of the organization, I don’t think lifetime board seats play a constructive role,” Outon said. “We teach that … there’s movement and recognition of a changing environment, not just inside but outside your walls. What’s that mean about composition of your board?”

Boards have emeritus positions for founders or longtime members but to have them as decisions makers for life is not a good idea, according to Doug White, who teaches board governance, ethics and fundraising at Columbia University’s Master of Science in fundraising management program and was the academic director of New York University’s Heyman Center for Philanthropy and Fundraising.

“With absolute 100 percent conviction, that’s just bad policy,” he said. “If they were to be really serious…they would take drastic action. What they’ve done is good,” he said regarding adding board members and affiliate representation. “Until that really breeds a sea change, that’s nothing but window dressing,” he said.

Cynthia Rowland, an attorney specializing in nonprofit law with Braun + Martel in San Francisco, Calif., said lifetime board seats are common, especially for organizations created by one person who has a strong vision. “It’s common for active organizations, fundraising from the public, to have a founder retain that right. It’s more of a personal philosophy question than a legal issue; they can do it either way,” she said.

Founders can stay involved but organizations do have to be on the lookout for whether it’s a good idea, according to Vernetta Walker, chief governance officer and vice president of programs for BoardSource in Washington, D.C. Some organizations will outgrow the founder’s vision. “There are some founders who want to maintain control, that’s where I see real distinction. Some are great and remain intimately involved and engaged but don’t stand in the way of the organization,” she said. In terms of having power and control, they understand they are one of several voices and feel a deep connection and passion for the organization.

“Some founders who are a presence, it’s a positive and well-received presence, there are others who really want to have their thumbprint on everything the organization does — that sets up a completely different dynamic,” Walker said.

There are organizations that have been around a long time but are still vibrant, people-oriented, contemporary organizations. “Whatever the organization, no matter how great the board members and founders were, there is a future and the future does not include these people,” said White, author of “Abusing Donor Intent: The Robertson Family’s Epic Lawsuit Against Princeton University.”  NPT

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