Brooks Brothers, Golden Fleece Foundation Charity, and St. Jude’s
During the holiday season, Brooks Brothers puts a big effort into convincing customers to contribute to St. Jude’s Children’s Research Hospital and other charities at the point-of-sale and through promotions for the Golden Fleece Foundation Charity, a 501 (c) (3) exempt private foundation that supports many non-profits.
Customers are asked to support charities two ways. The first is through a point-of-sale donation where the customer is given a receipt for tax deduction purposes. The donation is given to the specified charity. For instance, a $1 point-of-sale contribution for St. Jude’s Children’s Research Hospital is given to ALSAC – St Jude’s Children’s Research Hospital which is also known as ALSAC (the fundraising arm of the organization) who gives 50 cents of every dollar to St. Jude’s Children’s Research Hospital (a separate non-profit), with the remaining 29 cents used to cover fundraising costs and 21 cents placed in their fund balance (according to the recent IRS Form 990).
The problem with the point-of-sale solicitation is that employees who solicit the funds from customers often tell the customer that 100% of the contribution is going to St. Jude’s Children’s Research Hospital when in fact the contribution is going to ALSAC. Whereas most non-profits are one organization, St. Jude’s is actually 2 organizations: the fundraising arm (ALSAC – St Jude’s Children’s Research Hospital) and the hospital (St. Jude’s Children’s Research Hospital). By having two separate organizations, most of the fundraising costs are separated from the hospital costs giving the impression that fundraising costs are low to people who do not understand the structure of the organization. And, of course there is a problem with employees of Brooks Brothers telling customers that 100% of their contribution is going to St. Jude’s. 50% is actually going to St. Jude’s Children’s Research Hospital.
The second way in which customers support the charities is to participate in a promotion whereby a percentage of sales at Brooks Brothers are donated to the Golden Fleece Foundation Charity who in turns makes donations to St. Jude’s, Make A Wish, American Red Cross, 9-11 Memorial, The Breast Cancer Research Foundation, Central Park Conservancy, Dignity U Wear, Housing Works, Project Angel Food and other charitable organizations.
The Golden Fleece Foundation Charity collected $952,000 in contributions in 2014, according to the IRS Form 990. $696,000 (73%) was distributed to other charities, $17,000 (2%) was used to pay expenses, and $239,000 (25%) was placed in their fund balance (like a savings account). In 2015, $806,000 in contributions were collected, of which $672,000 (83%) was distributed to other charities, $24,000 (3%) was spent on operating and administrative expenses. $110,000 (14%) was added to Golden Fleece Foundation Charity’s fund balance bringing the net fund balance to $570,000.
In other words:
$1.00: Contribution at Brooks Brothers to Golden Fleece Foundation Charity
– $0.02 – $0.03: Operating and Administrative Expenses
– $0.73 – $0.83: Contributions and Grants to other non-profits including St. Jude’s, Make a Wish, etc.
–$0.75 – $0.86: Subtotal of Foundation Expenses
-$0.25 – $0.14: To Fund Balance of Golden Fleece Foundation Charity
The Golden Fleece Foundation Charity was set up to do good things in the community and they have contributed 73-83% of the donations collected (while 14-25% has gone to their fund balance) while keeping operating and administrative expenses very low relative to other non-profits. It is also noteworthy to remember promotional sales for the charities benefit both the company and the charities.
As a contributor, there are several very important considerations worth giving thought to:
- Donations made at retail outlets are not tax-deductible unless you obtain a receipt and itemize your deductions.
- Making an indirect (i.e. through a promotional sale where a percentage of sales is donated) or direct donation (a point-of-sale) to a qualified charitable organization does not mean your total donation goes to the needy of whatever charitable organization the foundation or charity is helping. There is a ripple effect (meaning that each organization has to cover their operating and administrative expenses before giving) and most organizations want to build a fund balance (which means a portion of donations are not being spent but saved). Instead of giving to a foundation whose purpose is to support charities serving the various communities where the company does business, GIVE DIRECTLY TO THE CHARITIES. More of your donation will reach the charity this way.
- And, finally Brooks Brothers (and all retail outlets soliciting and collecting funds for non-profits) should provide accurate information to their customers about where their charitable dollars are going. At the end of the day, integrity is everything.