What are they riding for?

With as little as 6,5 cents of every AIDS-ride dollar going to charity, some pedal pushers wonder who's pocketing the profit

There's no question that the Tanqueray American AIDS Rides are the highest-grossing AIDS fund-misers in the history of the epidemic. Since they began five years ago, the bike-athons have generated a combined total of more than $96 million (as of December).

But new reports out of Texas and Wisconsin, which show AIDS agencies there receiving as little as 6.5 cents of every dollar pledged, are leading some to ask, Just whom is this philanthropic phenomenon benefiting?.

Certainly the rides offer participants an unparalleled experience--the challenge of a lifetime in the name of one of the best causes out there. Riders return year after year, often testifying at fundraising parties that the AIDS ride has changed, or even saved, their lives.

But critics complain that no expense is spared in creating the mega-events. Among the most controversial of these expenses is the management fee paid to Pallotta TeamWorks, the private, for-profit company founded by Dan Pallotta that organizes the rides.

"He's an AIDS profiteer--that's the widespread feeling in all the ACT UP chapters," says John Riley, a member of the New York chapter of ACT UP, referring to Pallotta.

Riley's point seemed to be underscored in February when numbers released for the 1998 Texas AIDS Ride showed that the 40 benefiting agencies would share less than 15%--$417,000--of the $2.9 million raised there, results that prompted ten participating San Antonio AIDS service organizations to withdraw their support from the 1999 ride. Only days later organizers of the Wisconsin portion of the 1998 Twin Cities-Wisconsin-Chicago AIDS Ride reported that they would get no more than 6.5%--$52,000--of the $806,000 raised there.

Chris Cole, national director of Tanqueray American AIDS Rides, says that those rides weren't failures because they, like the rest, finished in the black. But returns of 6.5%, 15%, even 58%--the average level that beneficiary agencies see from the AIDS rides--are below the 60o/6 rate of return that, according to the National Charities Information Bureau in New York City, charities should receive from all of their fund-raising efforts combined.

A spokesman for the bureau stressed, however, that no acceptable standard cost of fund-raising has been established for private companies, such as Pallotta's, that manage fund-raising programs for not-for-profits. So the $42 million that the logistical and administrative costs have eaten up since the AIDS rides began in 1994, including the undisclosed profit for Pallotta himself, may be controversial, but the costs are not, strictly speaking, unethical. And Pallotta TeamWorks officials contend that the high costs of running the events are necessary to maintain rider safety and produce the kind of experience that keeps riders coming back.

Success lies in the number of riders, Cole says. Overhead costs and Pallotta's fee are fixed, so once those costs are recouped, the rest of the money raised is largely gravy to be spread among the beneficiaries. But if the number of riders falls short of expectations, Pallotta TeamWorks' fee and the overhead do not go down; the return, however, does.

"The event is extremely cost-effective and brings in huge amounts of money in the cities where it works," Cole says. "In the others, we don't do them anymore."

But agencies in Florida said they had to fire Pallotta TeamWorks after two years' worth of returns came in under 20%. And groups in Philadelphia filed a complaint with the state attorney general's office when they received only 19% of the $1.7 million their riders had raised in the 1996 Philadelphia-Washington, D.C. AIDS Ride. Pallotta paid a $110,000 fine for misrepresenting the event. Now, despite the poor 1998 returns in Wisconsin, Pallotta TeamWorks is working with agencies there on a 1999 ride.

Pallotta TeamWorks' income falls into the same gray area as direct-mail pieces that cost more to produce than they generate. Charitable organizations view such expenses as a way to boost visibility and cultivate new donors. Suzanne Gillingham, director of finance for AIDS Network in Wisconsin, says the rides brought "a whole different kind of people than used to come to our dessert parties."

For AIDS organizations string by donor fatigue and the perception that the epidemic is over, the rides are quite attractive. The money, which comes in the form of unrestricted grants, can be used in any way the agencies see fit. Most say AIDS-ride dollars enable them to launch new programs they otherwise wouldn't have dreamed of undertaking.

That's why Wisconsin agencies are giving the ride another try. This time they say they are aiming for a 50% return. Given the results in neighboring Chicago, it's easy to see why they still have hope: The participating Chicago agencies received 62%--$2.2 million--of the nearly $3.5 million raised there. (The Twin Cities portion netted less than 30%.)

One problem last year, Gillingham says, was that Pallotta TeamWorks made no arrangements for taking bikes from Milwaukee, where most of Wisconsin's riders were, to Minneapolis, where the ride originated. It was a mistake comparable to the one Cole says Pallotta made in Texas, where the ride was scheduled for seven days in the 90-plus-degree weather in early fall, prompting many riders to withdraw. Gillingham says the Wisconsin ride was a first-time experience that taught everyone involved, including Pallotta, valuable lessons.

Florida agencies say they too have learned valuable lessons. They are now staging their own ride, the Walgreens Red Ribbon Ride, which wound its way from Orlando to Hollywood on the weekend of March 26-28.

Florida's is the first attempt by an AIDS-ride consortium to stage a ride independent of Pallotta. Even before the riders raised their kickstands, organizers pronounced it a success compared with their 1997 AIDS ride, which posted a return of only $80,000 of the $1.5 million raised. In contrast, the Red Ribbon Ride, after putting up minimal seed money, has already netted $96,000 in donations, all in advance of projected rider proceeds of at least $500,000.

"Those are very preliminary figures," says John Weatherhead, executive director of CenterOne Inc., a benefiting agency. "[But] expenses are significantly less," he says. "We were able to secure a lot of in-kind donations and underwriting from Walgreens [and other sponsors]. That really didn't happen with the other ride."

Certainly AIDS-ride agencies in other states will be watching to see if the final results from Florida are as good as these preliminary figures suggest.

The finish line

The following represents the money raised
during 1998 AIDS rides and the money given
to the benefiting agencies. The actual
return to the agencies is lower, allowing for
expenses incurred locally.

                      GROSS            NET

Boston          $3.5 million   $1.8 million
Chicago         $3.5 million   $2.2 million
Los Angeles     $5.1 million   $3.1 million
Minnesota       $1.5 million       $441,000
New York City   $3.3 million   $1.6 million
San Francisco   $4.7 million   $2.9 million
Texas           $2.9 million       $417,000
Washington,
D,C,            $3.9 million    $2 million
Wisconsin          $806,000        $85,000

--Source: Pallota TeamWorks THE ADVOCATE POLL

SPONSORED BY SAAB

Despite poor and controversial returns in Wisconsin and Texas, are AIDS rides still one of the best ways to raise money to fight the disease?

Sign on to The Advocate's Web site before April 27 to cast your vote and leave your comments. Results will appear in the May 25 issue.

www.advocate.com

Weisberg is metro news editor at Chicago's Windy City Times.