Racing for Disaster - Paralympic Fundraising

May 22 marked 100 days to the start of the London 2012 Paralympic Games, and while a crisis was brewing behind the scenes, the Canadian Paralympic Committee (CPC) was determined to celebrate the 150 athletes who will represent Canada there. In Toronto, Paralympians met Prince Charles. In Richmond, B.C., the men's wheelchair basketball team held a public scrimmage. And the CPC launched a "Super Fan" contest for an expenses-paid trip to the Games.

But there was little good cheer days later as volunteer members of the Paralympic committee board confronted the possibility that its charitable fundraising arm--the Canadian Paralympic Foundation--was on the verge of bankruptcy, insiders say. Already strained relations between the committee and the autonomous foundation--whose mission is to raise funds and support the Paralympic committee--came to a head at an in-camera board meeting in Calgary on the last weekend in May. In a reversal of roles, senior representatives of the foundation, chaired by retired Conservative senator Vim Kochhar of Toronto, requested a $300,000 bailout from the committee it is supposed to finance.

The request was "reluctantly" rejected by CPC board members who refused to divert resources from the team of London-bound athletes and the committee's outreach and development programs, Paralympic president David Legg confirmed in an interview on Monday. Legg, a long-time board member and an associate professor at Mount Royal University in Calgary, said the board is dissatisfied with the subpar performance of the foundation, which operates with a separate staff and board of directors, and sets its own priorities. "We saw little prospect for improvement in the affairs of the foundation, with their current model and strategy," Legg said. "We are certainly disappointed. Frustrated is probably a good term for me personally."

The lack of a financial lifeline has cast the future of the nine-year-old foundation in doubt, and raised a number of unanswered questions. It's believed the foundation found an alternate source of funds to keep it operating at least in the short term, but even that is not clear. Senior representatives of the foundation did not respond to requests from Maclean's to discuss its finances, falling fundraising activities and the diversion of money to non-Paralympic sources--including half of the major gifts received in 2009. (Funds have gone to groups like the Canadian Curling Association, Own the Podium and the Rick Hansen Foundation, according to Canada Revenue Agency records.) Instead, Kochhar, the foundation chairman, issued a brief written statement. "Our board is completely dedicated to support the mandate and fundraising objectives of the foundation," he said, "and the foundation has the financial means to pursue its mission and intends to do so."

A harsher view of the foundation's future is contained in a confidential assessment by Ketchum Canada Inc. (KCI), a consulting agency for the philanthropic sector, which was commissioned by the CPC and the foundation. The report, obtained by Maclean's, said the foundation was in a "precarious" state and was operating with little coordination, communication or common purpose with the Paralympic committee. The report found the foundation was spending more than 80 cents for every dollar raised some years, has recently operated at a deficit, and at times diverted more than half of donations to sources other than the Paralympic committee. The relationship between the foundation and the committee "has become a confrontational environment with issues of misalignment and lack of trust," said the report from April 2011.

The cost of sending athletes, coaches, team leaders, medical and mission staff to London is estimated at $4 million. Legg said the dispute will "in no way" impact the performance of athletes in London. The foundation's support to Paralympians has fallen to just one per cent of the committee's budget. The Paralympic committee has substantial financial commitments from the federal government and an A-list of corporate sponsors. "Our sponsorship revenue is higher than it's ever been," said Legg.

Nevertheless, the dispute could still cause real long-term damage to the well-regarded Paralympic movement and alienate donors. Insiders say the foundation has squandered an opportunity to capitalize on public support from the 2010 Vancouver Games. The Paralympic committee had looked in vain to the foundation to raise about $600,000 to $1 million annually toward a program to "even the playing field" for Paralympians and others with disabilities to participate in sport and recreation. "In a perfect world, it would be 10 times that," Legg said.

The foundation has no shortage of big ambitions. It has a much-publicized goal of establishing a $20-million legacy fund "to expand community, club and league participation in Paralympic sport," its website says. But even Legg, the president of the Paralympic committee, said he is not aware of a legacy fund. He estimates the committee has received just $300,000 from the foundation since the 2009-10 fiscal year.

Critics pin many of the foundation's problems on the conflicting priorities of Kochhar, who retired from the Senate last September. He also serves as chairman of the Canadian Foundation for Physically Disabled Persons, a charity he helped found in 1987. It's not always clear where one charity ends and the other begins. The signature annual event for the foundation for physically disabled persons is the lavish Great Valentine Gala in Toronto. While the event often draws welcome attention to Paralympic athletes, the funds raised go to the disabled person's charity. "The association of the foundation with other organizations such as the Canadian Foundation for Physically Disabled Persons creates brand confusion in the minds of donors and sponsors," the KCI report said.

In 2009, the Paralympic foundation staged a gala hosted by auto parts magnate Frank Stronach and his daughter Belinda in Aurora, Ont., raising $179,000 in advance of the 2010 Paralympic Games in Vancouver. The KCI report called 2009 an "exceptional year" for the foundation. Gross revenues peaked at $760,000. But of the $485,000 it received in major gifts that year, "over half were designated to other organizations than the CPC." By 2010, gross revenues dropped below $300,000. By this May, it had just $20,000 in uncommitted funds.

The KCI report said the "status quo is not an option." It recommended the foundation hire a CEO with fundraising experience. It did so last year, luring Terry Slobodian away from a post with UNICEF in Moscow. By the time he arrived, however, the foundation had few resources to work with. Slobodian didn't respond to repeated requests for comment.

The KCI report offered three possible strategies for change. All required a more active and accountable fundraising arm, and a commitment to support the Paralympic committee priorities. As a last resort it said the foundation should be dissolved, and fundraising turned over to the Paralympic committee.

Legg said the committee is considering all options, but those are questions for after the London Games. "We have really high aspirations for our athletes," he said. "That really is our focus right now."

Maclean's June 18, 2012