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Are Vikings stadium e-Pulltabs charities quality charities?

The Deets

One common argument in support of e-pulltabs is that a portion of the money goes to support charities. While that’s true, the efficiency of some of the more popular e-pulltabs charities is pretty pathetic.

The top charity based on e-pulltabs venue partners is Community Charities of Minnesota (they don’t appear to have a website) with 13 e-pulltab bar partnerships to date (PDF). Here’s a look at their financials for the past year:

Community Charities of Minnesota Financial Report

As I read that, this particular charity takes in 4 dollars for every one that ends up going to their charitable cause. $800k turns into $200k. This seems very inefficient to me.

What if you’re a bar interested in making money from e-pulltabs but don’t have a charity partnership in place? No worries. The Minnesota Licensed Beverage Association has a charity in a box called the Minnesota Licensed Beverage Association Children’s Fund.

If you do not have a charity in your bar or restaurant, we’d be glad to help you find one or get the MLBA Children’s Fund charity (a 501c3 charitable organization, with pulltab sites all across the state.)

Here’s a look at their numbers:

Minnesota license beverage Association children's fund

To give those numbers some perspective, here’s a look at how Charity Navigator ranks charities based on their administrative expenses:

 charity navigator ratings

Both of the charities above appear to be fundraising charities, meaning they collect money only to donate it, so their overhead costs should be very low. As I understand this ranking system, both of these charities would receive a zero score from Charity Navigator for having administrative expenses greater than 25% of what ends up going to their charitable cause.

The MLBA Children’s Fund appears to kick a portion of what’s left for charitable purposes to the Friends of The St Paul Public Libraries, which seems like a worthy cause. But, wouldn’t the St Paul Public Libraries be better off if they were the direct recipient of the funds rather than getting a portion of what’s left after the MLBA Children’s Fund plays the role middleman?

Community Charities of Minnesota charitable work includes sponsoring a bumper bowling tournament.

A non-profit wing for your sales team?

Another thing that’s interesting about this arrangement is that the non-profit MLBA Children’s Fund executive, Colin Minehart, appears to be an active salesperson on behalf of the Minnesota Vikings, gambling vendors, and bars. Jean Hopfensperger profiled Minehart last fall after e-pulltabs went live:

It’s been a wild two weeks for Colin Minehart, one of Minnesota’s most ambitious promoters of electronic pulltab games. Fifteen hours a day, he’s on the phone, on the road, cajoling bars and restaurants to install the new games that are supposed to fund the Vikings stadium.

Minehart is the gambling manager for the Minnesota Licensed Beverage Association, an organization that has emerged as a key driver since the games were rolled out Sept. 18. Three of the five bars that launched the gambling tablets are tied to the MLBA’s small charity. Another four signed on last week. Dozens more are expected down the road.

“I just signed up Tom & Jerry’s in Chisholm,” said Minehart, leaving the Iron Range bar co-owned by former Minnesota Sen. Jerry Janezich. “Now I’m on my way to Wright. I’m getting ready to go to Long Prairie, Sanborn, then back to Milaca. … I’m averaging 1,000 miles a week.”

So, a guy who’s the head of a non-profit is driving 1,000 miles/week to sell e-pulltabs, where the majority of the net profits go to private businesses. Quite a deal for the Vikings, e-pulltabs vendors, and bars, eh? Perhaps this helps explain why the MLBA Children’s Fund’s administrative costs are so high?

Here’s an example of a charitable partnership that seems to make more sense to me. Local gay bars that have installed e-pulltabs chose the Aliveness Project as their charity partner. Here is what the Aliveness Project’s numbers look like:

aliveness project 990

They look better than the MLBA Children’s fund and Community Charities of Minnesota to me. And, they are doing far more than cashing and writing checks, including running housing, a food shelf, and counseling services for people suffering from HIV/AIDS in the Twin Cities.

My point is, if you’re going to exploit gamblers while claiming it’s for charity, at least have the decency to pick a quality charity to partner with.

Perhaps the Gambling Control Board could set some standards on charitable performance requirements for e-pulltabs partnerships? Give gamblers some confidence that at least a portion of their losses really do support a good cause.

This post was written by Ed Kohler and originally published on The Deets. Follow Ed on Twitter: @edkohler

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Comments (3)

Nice Expose'

This a really nice example of blogging complimenting Minnpost's coverage.

Incomplete

It’s hard to tell if the reporter was biased or just lazy. How can we fairly evaluate the financials of a charity without mentioning the gambling taxes they pay?

A normal charity is tax-exempt. A charitable gambling organization, on the other hand, pays taxes. The top tax rate is 36%. That’s a huge reason why there is so little money left to support our mission. The Legislature sucks out all the money before we have a chance to give it away.

I run a $4.5M 4-star charity. My operating expenses last year (with booths and 30 employees) were double what we had left to give away. So by this reporter’s reckoning, I’m a bad manager. But if anyone had bothered to ask, they would learn that the taxes we paid were 2.5 times our overhead. Or single biggest expense, more than all our giving PLUS all our operating costs, is raising money for the Legislature to spend.

If the supporting gov’t programs is a noble and/or essential purpose, our Minnesota gambling charities deserve applause, not the derision implicit in this reporter’s presentation.

Interesting points

@Mark, if it takes three dollars to create one that actually goes toward the charitable cause, perhaps there are more efficient ways to generate revenue? Do people, who think their money is going to a good cause, realize that only 1/3 of it makes it to their cause (and, it sounds like that's 1/3 of the share of losses that goes to the charity, so far less than 1/3 of the gross losses).

I happened to attend an empty bowls fundraiser tonight for a charity. The soups were donated by local businesses, items were donated for a silent auction, and volunteers ran the operation. The non-profit raised money from charging for the event and from the silent auction. And, the event was hosted at a high school.

Personally, I think gambling is a regressive tax and not a business the state should rely upon for revenue (especially if it's for corporate welfare).