The Race For Revenue
March 1, 2013 Mark Hrywna
Race For the Cure revenue for Susan G. Komen for the Cure’s largest affiliates declined almost 7 percent last year, while the charity reported a 9-percent dip in overall revenues.
The latest figures available come from the Fiscal Year Ending in March 2012, before most Race for the Cure events were held last year. In the wake of a very public dispute with Planned Parenthood of America regarding grant funding, which Komen eventually reversed, many affiliates reported declines in participation and revenue, some as much as 10 to 50 percent. How much the public relations fiasco hurt the overall bottom line might be unclear because the vast majority of races will not be reflected in revenues until the fiscal year that ends this month.
Komen for the Cure and its affiliates operate on an April to March fiscal year since many races are held in the fall, making it difficult to get all the filings and paperwork necessary for a December year-end. Fewer than a dozen of the 133 races held by affiliates occurred before the end of the fiscal year in March 2012.
Andrea Rader, a spokeswoman for Komen headquarters in Dallas, Texas, wouldn’t attribute the 9-percent decline in revenue solely to the Planned Parenthood issue, portraying it as indicative of what nonprofits have been experiencing generally, with fundraising down during 2011.
“We saw the same thing in the 3-Day that we saw with Race for the Cure,” said Rader, which is a much larger financial commitment for participants, who must pledge to raise $2,300. “We saw a drop-off initially, and I think that’s coming back, this year,” she said.
There are 121 affiliates with approximately 133 local Race for the Cure events (some affiliates host two). Most races occur in the spring and fall, Rader said, so they’re still examining the impact and the Planned Parenthood issue really occurred in February and March (the final two months of Komen’s fiscal year), she said. “Combining that with sponsorships, we can’t say definitively an ‘x percent’ increase or decrease,” but there are lingering effects of the economy and the Planned Parenthood issue leveled off very shortly after the decision.
Komen headquarters and its affiliates reported an overall drop of 5 percent in revenue from Race for the Cure, down to $257 million, compared with overall net revenue of almost $399 million. It’s the first drop in net revenue in at least six years, but still 30 percent more than the $307 million consolidated total reported five years ago.
The top five affiliates, by race revenue, in FYE 2012 were:
- Greater New York City, $11.62 million;
- Philadelphia, $6.06 million;
- Denver Metropolitan, $5.86 million;
- Houston, $5.84 million; and,
- Maryland, $4.75 million.
Only Philadelphia and Houston saw declines from the Fiscal Year Ending 2011. Precisely half of the 120 Komen affiliates reporting Race for the Cure revenue had increases and half reported decreases for the Fiscal Year that ended March 2012. There were 71 affiliates that reported net revenue of $1 million last year and 23 of at least $3 million.
Local affiliates keep about 75 percent of revenue from their Race for the Cure, with 25 percent going to Komen national headquarters for research purposes. The average among affiliates was $1.46 million reported in race revenue last year. The Komen 3-Day event takes place in 15 cities around the nation, with revenues going to national headquarters, which took over the race several years ago from the National Philanthropic Trust.
Regardless of fiscal years, the dip in revenues has led to some affiliates restructuring while others have scaled back projections and goals for their next Race for the Cure events. The Southern Arizona affiliate, which held its races early in 2012 before the end of the fiscal year, furloughed employees for one day a week and continues to do so due to a 25-percent drop in Race revenues to $425,000.
Despite being a top 10 affiliate, Komen of Oregon and Southwest Washington saw a significant drop in revenue, enough to restructure staff through attrition, going from 15 full-time staff to 12. Chief Executive Officer Thomas Bruner said the organization “re-engineered the structure of development efforts so that we are investing staff time in individual giving, major gifts, planned giving, foundation grant writing, and not just in the Race. We are rebuilding a very robust volunteer-led Race steering committee to help compensate for less staff full-time employees on the Race.”
The Portland, Ore.-based affiliate consistently is in the top 10 percent of affiliates when it comes to Race for the Cure revenue. Those are impressive results when you consider it’s not a top 10 media market. For the fiscal year ending March 2012, it ranked first in contributions ($3 million) and sixth in Race revenue ($3.9 million). Its neighbor to the north, Komen Puget Sound in Seattle, Wash., also ranked highly, first in contributions ($3 million) and fifth in net revenue ($5.7 million). The population in the Pacific Northwest is smaller but it seems to have a deeper engagement, said Jim Clune, communications managers at Komen Puget Sound. Seattle often tops lists of per-capita giving around the United States, he said, with strong support from the corporate community such as Boeing, Microsoft and QFC. The United Way of King County routinely ranks first among United Way affiliates in funds raised.
“We serve an entire state and part of a second state, so the fact that we cover so much territory is somewhat unique,” said Oregon’s Bruner. States such as Texas and Florida have multiple affiliates and few affiliates have two races like Oregon does — one in Portland and another in Eugene, which started a few years ago.
Komen Maryland started a second, smaller race last year in Ocean City, on Maryland’s Eastern Shore, with some 4,000 people, generating about $350,000. Some of the revenue for that April race was secured before the end of the fiscal year in March and counted in that fiscal year, according to CEO Robin Prothro. Maryland ranked fifth among affiliates in race revenue last year and its flagship race had been holding steady since the recession, drawing some 33,000 registrants in 2011 to boost race revenue by 15.5 percent, to $4.75 million. Revenue from last October’s race, however, was down overall by at least a third, topping just $2 million in its 20th anniversary edition.
The Planned Parenthood fiasco might have hurt the race, Prothro said, diminishing and aggravating a portion of base supporters. “One can only surmise that was one of the reasons why there was such a drop,” she said, though it’s difficult to separate how much of an effect the economy played or whether people are tired of asking friends for donations. There was a substantial decline in that component of the race, she said.
“It’s been challenging like it has for all events,” said Michelle Ostrander, executive director of the Denver Metropolitan affiliate. There was a “slight decrease” in participation as well as revenue and most every area of the race, from sponsorship to pledges, “but it’s more due to the ongoing economy as much as anything,” she said.
The Denver Metro Race is among the top affiliates, typically drawing 40,000 to 50,000 participants. While there were losses in some revenue streams, Ostrander said others made it up, such as the affiliate’s most successful gala ever, which raised $410,000 and had 950 people compared to 850 the previous year.
“We’re budgeting more conservatively than we have historically. We’re budgeting to do a little better in both communities than last year, but not a whole bunch. We’d rather aim for the sky but budget more pragmatically,” said Bruner. “I can’t say what’s typical. We’re in the middle of a new normal,” he said.
Both races in Portland and Eugene, Ore., faced a decline in participants and fundraising from last fall’s races, combining for about 28,500 participants and $2.85 million, compared with about 35,000 and $3.5 million, respectively, in 2011. Bruner, who was hired last September after the previous executive abruptly resigned following the public relations fiasco, attributed almost all of the declines to the Planned Parenthood situation earlier in the year.
“The increases aren’t numbers of people but we are getting some of the corporate sponsorship that we lost, generating slightly more money per race participant than we saw this year. We don’t think all of our losses are retrievable, but some portions are,” said Bruner.
Regardless of any real or perceived Planned Parenthood effect on Komen, affiliates continue to try to diversify their revenue sources. “Special events and third-party fundraising is great, it’s a great way to mobilize large numbers of people, a tremendous way to educate large groups of people, but it’s not the most financially sustainable model long term,” said Bruner. “Planned Parenthood or no Planned Parenthood, it’s still not the most sustainable model long term,” he said.
“We didn’t have lots of third-party events go away completely. Generally, it was just more challenging for those third-party events to raise as much as they did previously,” said Bruner. And though revenue was down last year, there also were some new third-party fundraisers that signed on.
Of the 133 third-party events for Komen Puget Sound last year, 22 did not renew for this year and 15 of those “were clearly driven by the national decision,” said Clune. Some attrition is expected year-to-year, he said, but typically it’s closer to seven or eight. In some cases, the attrition is unrelated, he said, such as a local hotel that could not hold an event due to water damage.
Other third-party events “stuck with us because, in large part, our executive director felt really strong and worked closely with those events, explaining our position,” Clune said. Even so, donations were down among all of those.
Race for the Cure is the single largest source of revenue for Puget Sound, which covers a 15-county area of western Washington. “We’re trying to diversify so all our eggs aren’t in that one basket,” Clune said.
There are varying levels in the Komen network of programs and policies, based on the number people working in them and how long they’ve been around, said Rader. Well-established affiliates have staff and more formalized programs while others are not as well staffed, primarily run by volunteers. More established, more savvy affiliates get more sources of revenue and are able to expand from the Race for the Cure — which typically births an affiliate — and move into other areas, Rader said. Denver Metropolitan was the first affiliate to begin an official planned giving program, about three years ago, and according to Ostrander, it already has yielded donations.
The Maryland affiliate is trying to keep the Race strong and steady — which takes a lot of time and effort — while also developing other avenues to diversify revenues, Prothro said. They’ve started planned giving, though that takes awhile to bear fruit, and have sought some grant funding. There are also individual giving opportunities around programs more specific to the survivor population.
There are plans to attract young professionals, specifically for third-party events, and vehicle donations, which haven’t been done much. Prothro said they’re working to find new audiences via outreach to minority populations, as well as a new faith-based initiative to focus on awareness, education and promoting fundraising opportunities.
“The people closest to us have really stuck with us,” said Clune, pointing to a sold-out gala that brought in $825,000 in one night in March 2012, more than the previous year. “People who know us, in our community, really stuck with us. Where we lost support was among those who don’t know us as well,” he said. “They don’t see Puget Sound (affiliate) as a member of the community but this big pink thing; they don’t differentiate between the affiliate and Komen.”
Puget Sound has one of the most even proportions of race revenue to other contributions and revenue among Komen affiliates, with $3 million in contributions versus $2.8 million in race revenue for the fiscal year ending March 2012. Most of the largest affiliates are close to 3:1 in race revenue.
Clune was hopeful for this year’s race after numbers were up during the first week of registration in January compared with last year. The June Race for the Cure will mark the 20th anniversary race for Puget Sound. Last year drew 8,500 participants, down 35 percent from the 13,000 in 2010, and raised about $1.1 million, short of its $1.8-million goal. NPT