Editor’s Note: We have posted multiple updates on the Finances of the Ironman Foundation, as well as our efforts on fundraising through the Foundation’s “Your Journey, Your Cause” program. To see these, please visit: 

The Foundation is Solid: 2014 Ironman Foundation Form 990 Analysis

or here: http://www.somerandomthursday.com/mission-accomplished/

In 2012 I raced Ironman Florida using an “Ironman Foundation Slot.”  Back in November of 2011, I was unsure if I wanted to do Florida again and I  didn’t register on site.  By the time I got home all the general entry slots were sold out, so I purchased a Foundation slot.  The way a Foundation slot works is that you pay double the entry price.  In 2012 I believe the price was $1300 plus active fees.  $650 of the fee went to WTC and the other $650 went to the Ironman Foundation (a 501(c)(3) not for profit organization) as a “charitable donation.”  This is how the Ironman Foundation describes the program:

In an effort to enhance the well-being of those in the communities where IRONMAN triathlons are held, The IRONMAN Foundation provides charitable support to a variety of local non-profit organizations that recognize citizens in need and support The IRONMAN Foundation’s mission. The Foundation provides grant funding opportunities as a way of leaving a little of IRONMAN’s legacy behind after race day. IMF works with community leaders to identify capital improvement projects and provide funding to support various initiatives.  All proceeds from The IRONMAN Foundation Community Fund Program support this program.

The proceeds from this program provide grant funding opportunities to non-profit organizations in the communities where our IRONMAN branded events are held.

I haven’t thought about the Foundation much since 2012, but recently two events have piqued my interest in it.  First, Ironman recently posted an ad for a job at the Foundation and the primary objective of the position was to drive profits for WTC — that’s interesting when the position is at a not-for-profit foundation.  Second, this past weekend general entry slots for Ironman Arizona sold out on-site, so the only slots available for those individuals who did not travel to Tempe are from third party vendors (e.g. Endurance Sports Travel) or Ironman Foundation Community slots.  While I am not of the mindset that all of the money raised by a 501(c)(3) organization must go directly to the organization’s mission (here’s a great Ted Talk on the topic), I am of the mind set that a 501(c)(3) needs to be clear about exactly where the money is going.

In the case of the Ironman Foundation this appears to be a bit of the problem.  Using the website GuideStar, I was able to download and review the Ironman Foundation’s tax returns for 20102011 and 2012, as well as, as audit report from 2012 (the Ironman Foundation has not provided GuideStar with its 2013 tax returns and I cannot find them anywhere).   I am neither and accountant, nor a tax attorney, but from my lay person’s vantage point there were several things in these documents that caused me concern:

1.  All of the members of the Ironman Foundation’s Board of Directors are WTC employees / officers.   Based on the available filings there are no independent directors — the Foundation is completely controlled by WTC.   The IRS’s guidance on governing 501(c)(3)s states:

Irrespective of size, a governing board should include independent members and should not be dominated by employees or others who are not, by their very nature, independent individuals because of family or business relationships. The Internal Revenue Service reviews the board composition of charities to determine whether the board represents a broad public interest, and to identify the potential for insider transactions that could result in misuse of charitable assets.

By itself, the lack of independent directors doesn’t mean that the foundation is being mismanaged or that there are insider transactions, but it does raise questions about transparency at the Foundation and control of its mission.

2.  The Foundation takes in considerably more money than it gives back in community grants or donations.  We’ve all seen articles and press releases like the ones here, here and here — the Ironman Foundation gives back to [INSERT NAME HERE] Community.  The impression that many individuals, myself included, have/had is that when you purchase an Ironman Foundation Slot for a race, the charitable portion of the race entry fee would go back to the community.  I think in many cases people believed that it would go back to specific community they were racing in (in my case, Panama City Beach, Florida).  Based on the Foundation’s tax filings, that does not appear to be true.  In fiscal year 2010 the Foundation took in $2.64 million and paid out $1.12 million.  In fiscal year 2011 the numbers were $1.9 million and $1.09 million and in fiscal year 2012 $.93 million and $.44 million (fiscal year 2012 looks low because the Foundation changed its accounting year so fiscal year 2012 only covers approximately September through December of 2012).  Based on these numbers about half of the money raised by the Foundation went back to the communities.  While the Foundation does not need to spend all of the donations it receives on local communities, it does owe its athletes and donors an explanation as to where this money is going (just look at the trouble the Red Cross has gotten into with regard to shifting donations from one cause to another).

3.  The Foundation made an approximately $2.5 million low interest loan to WTC.  In 2011/2012 the Foundation made a $2.5 million loan to WTC at an interest rate of 5% (it is unclear whether this was a lump sum loan or a revolving credit line).  From the documents I have access to, it does not appear that WTC gave the Foundation any security for the loan such as mortgage or lien.  Here is a description of the loan from the Foundation’s 2012 private audit:

Embedded image permalink

The existence of this loan raises the question of inurement.  The Internal Revenue Code forbids the use of the income or assets of a tax-exempt organization to directly or indirectly unduly benefit an individual or other organization that has a close relationship with the 501(c)(3) or is able to exercise significant control over the 501(c)(3) (this is known as “inurement”).   Any time assets of the organization flow through to benefit the organization’s insiders (in this case WTC, who holds all of the positions on the Foundation’s Board of Directors), inurement is an issue.  We don’t know enough about the terms of the loan, the security offered (if any) and the repayment to be able to fully analyze the situation but it does raise a huge red flag and is another example of the lack of transparency at the Foundation.

4.  The Foundation’s 2013 Tax Returns Are Unavailable.  Both myself and others have made several attempts to locate and review the Foundation’s 2013 tax returns.  Under the Internal Revenue Code, the Foundation must make its tax returns available for public inspection and copying.  The Foundation has not met this obligation.  Like the previous points, the issue again appears to be one of transparency and communication.  Perhaps the Foundation and WTC are doing everything on the up and up, but we don’t know — in fact we can’t know —  because the information is not available.  [ETA — I have learned that depending on filing of extensions the Foundation’s 2013 returns may not have been due until 11/17/14, which would explain why they are not available].  

5.  The numbers don’t line up.  Again, let me state I am not a CPA, but the numbers on the Foundation’s tax returns don’t appear to line up.  In its tax returns, the Foundation is specifically excluding “custodial funds” (funds WTC has allegedly taken in on behalf of the Foundation).  It looks like WTC and the Foundation may be transferring custodial funds back and forth for tax purposes and this practice is of questionable legality.  Once again, without additional information it is difficult to determine what is happening.  

So, what’s my advice to athlete’s considering purchasing a Foundation slot for Arizona (or for any other sold out race), go ahead and make the purchase but realize that you may just be paying WTC twice.

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Kelly Burns Gallagher

mccarter english employment litigator / oiselle team runner / coeur sports triathlete / sonic endurance coach & race director / witsup.com writer / dartmouth '02 / emorylaw '05

28 Comments

Jodi · November 19, 2014 at 7:47 am

Wow – well….honestly? The first thing that popped into my mind while reading your article is that I HAVE to update Running for Rescues’ Guidestar information. Beyond that? I have a lot of “thoughts”, none of which I haven’t had before, though, about non-profits in general. Running for Rescues has never had to file a tax return because we’ve never made more than $50k in a year – we only file a 990-N. THAT being said, I have the advantage of being able to keep ALL of our records/transactions on an accounting program called QuickBooks. I NEVER want ANYONE to feel like they’ve been duped by us or have fundraised for us for any other reason except what our mission statement is.
Non-profits ARE allowed to make profits, as you’ve pointed out – and I think that’s when things start to get tricky….especially when you have a “parent company” (which is definitely what is happening here) that you are loaning money to? I hate to say it, but I can almost bet that if you dig deep, you’ll find this happening in all “big-time” 501(c)3s. It’s a place for big companies to “hide” money.
I have seen lots of not-so-ethical things happen in the small non-profit circles that I roam around in, and it sucks…if people only knew.
Unfortunately, in the much bigger world of non–profits (like what you’re talking about in your article) I don’t think the people buying those slots really care where the money goes….they just want that SLOT! And a tax deduction, of course.

Kurt @ Becoming An Ironman · November 19, 2014 at 8:30 am

I have to admit that I am both surprised and not surprised all in one, which has a few big implications. Pointing out that I am also not of the professional nature to comment on the legality, the number crunching, or fine details of the issue, as a lay person, this surprises me that there are this many red flags able to be thrown up. Even if two or three of them are explained away with a better understanding, the odds of so many flags being explained away is lower.

However, the bigger down side for WTC is that I am one of many I assume that are not surprised by this. With so many other things having come up in the past few years about WTC and their actions, another item coming up just adds to the list. And whether it is true or not, the bad PR pushes athletes like myself to look for other options. No one wants to be associated with the bully in school even if he is simply misunderstood.

Now to the details. I would be curious of course to hear this from a CPA or tax attorney. And of course my head is running through people who I know could do that. Haha. I would personally never do a Foundation Slot simply because of the money involved, but now I certainly wouldn’t do it. However, with the holidays upon us, there are groups asking for donations and funds almost everywhere you go. Of course, there have been reports to tell you how much of your donation goes to the actual cause versus administration/overhead, so that you can choose where to donate. In the same light, I would be curious if the Ironman Foundation runs along that lines and is simply on the “bad” side of that sliding scale.

Either way, I’m still looking to other races when possible to pay registration fees.

Bob Trent · November 19, 2014 at 10:16 am

Without detailed accounting of expenses and salaries of Foundation employees it’s impossible to know where the money goes. I am not one to rushare to the defense of WTC, but if they were responsibly handling the money and truly believed in the Foundation mission then they may be creating an endowment with the unused porion of the funds. The loan to WTC at the very least looks bad, but it could also be a place the Foundation chose to park funds safely with a reasonable return. Unfortunately with the board being made up entirely of WTC employees, no matter what the truth is, the perception is not going to be good. They need to be much more transparent.

David · November 19, 2014 at 11:35 am

This is terrible investigative journalism.

1/ So what. There are thousands of examples of this in the world.
2/ This is standard practise, especially for younger organisations. They need to build assets to guarantee the long term stability of the charity.
3/ The embedded image didn’t work in IE or Chrome for me. What’s your source of information? Do you know the circumstances of the loan?
4/ The 2013 forms are unavailable from the free internet sources you tried, or are unavailable from the the foundation and the IRS? That is a huge difference. Give, Guidestar, etc will lag getting the 990s, and as this foundation is still relatively small, they may just not have prioritised getting this one. Which one is it?
5/ It’s easy to say something doesn’t look right when you don’t understand it. Maybe say ‘I don’t understand the numbers’ rather than ‘The numbers don’t add up’

Did you speak to the director of the foundation? He may have been able to explain it to you.

I do applaud your call for more transparency although I disagree with the accusative approach you’ve taken.

    Kelly Burns Gallagher · November 19, 2014 at 12:31 pm

    The loan is detailed in the 2012 Audit Report as well as in the tax returns. There are links in the article to PDFs of all of these documents.

    Mark Cathcart · November 20, 2014 at 2:44 pm

    I think one of the real issues, is with the whole process and opaque ways that Ironman gets its community leverage. David Cook wrote an excellent piece about Ironman paying volunteers that is worth reading as the otherside of this http://www.timesfreepress.com/news/2014/oct/28/ironman-should-pay-its-volunteers/

    In essence the chain of payment goes like this…
    WTC comes to town, asks the town to pay to hold a race, and fund certain services
    Usually around $120k, although sometimes as high as $180k. Services include free permits waste, cops, and everything else they think the community can provide. In exchange the WTC promises in exchange for the provision of these they’ll make community group payouts, mostly always less than the city pays in cash to the WTC.

    The WTC and the city promote economic benefit, additional hotel, restaurant an other taxes, and the fundraising as a way to promoting the race to residents to offset the once per year inconvenience.

    Athletes pay race entries and for the foundation slots as you’ve outlined. There is no accounting for how many of foundation slots there are, if the number increases each year etc.

    Local volunteer groups provide pre-race and race-day volunteers, these are more often than not minors(ie 16 and under). They work outdoors, often for 8+ hours in what ever the race conditions are, some start as early a 4am on race day.

    The volunteer groups receive a donation from the WTC/Ironman Foundation that almost always divided up by the # of volunteers and by volunteer hours is less than half minimum wage.

    WTC and the Ironman foundation announce charity giveback, which is really the cities own money, contributed back is some tax efficient way.

    Dan · November 20, 2014 at 6:47 pm

    David, the fact that “There are thousands of examples of this in the world” and “This is standard practise”, does not make it OK. WTC makes cynical use of it’s monopoly in the long distance triathlon field. The day there will a true competitor, athletes will stop attending it’s races

      bonnev659 · November 20, 2014 at 6:57 pm

      I agree. love supporting the smaller long distance tris the best

stephen repasi · November 19, 2014 at 12:04 pm

I ALWAYS thought creating a Non-Profit Org. is like making it BIG-TIME ! I was cynical from the beginning. Even if you DON’T “make” profit, you give yourself a SALARY, the size of which YOU will determine….Now, HOW MANY of us average schmoes would just LOVE to call $75,000 our yearly income….. I know it’s SAD, but be VERY, VERY selective who you donate to….if you do it, AT ALL…..

Emily · November 19, 2014 at 12:11 pm

Thanks for this – like you, I’ve made assumptions about where charitable contributions go (in general). Regardless of accuracy (hey, I don’t understand the numbers either!) this is a good reminder to endeavor to become informed about what I’m contributing to rather than sticking blindly with assumptions.

Anand Satchit · November 19, 2014 at 12:25 pm

I think David said it best.. the tone should be non-accusatory. Keep in mind that many 501c3’s folllow reporting requirements laid out by the IRS. If improved transparency is needed (which I agree with), you’d need to address all non-profits collectively and not just single out WTC/Ironman Foundation…

    Kelly Burns Gallagher · November 19, 2014 at 12:33 pm

    The point was about transparency. There is not enough information available to determine what is being done with donations or about the terms of the loan / revolving credit line.

      Anand Satchit · November 19, 2014 at 12:59 pm

      Hi Kelly – I agree that we need more transparency, though this is a systemic issue and not specific to the IM foundation. Rules for increased transparency need to apply to all non-profits or 501(c)3’s, not just the IM foundation.

      However, if the IM foundation volunteers to provide increased transparency, that is up to them (I don’t believe many if any non-profits would volunteer more info than is required).

        Kelly Burns Gallagher · November 19, 2014 at 1:49 pm

        My particular issue was seeing athletes with Foundation slots stating that ALL donations go back to the communities in which the race takes place. I agree, however, that there needs to be more transparency across the board with 501(c)(3)s.

David · November 19, 2014 at 1:41 pm

I agree. You need to be selective about who you donate to. I met someone once who had their own charity they ran. They basically went and fundraised and donated some of the money to other charities and the rest went on their salary and ‘expenses’. They were a glorified fundraiser earning a good commission, basically.

That said, the Ironman Foundation has lots of assets and you need someone skilled to handle that kind of money. You can’t just an ‘average schmoe’ off the street, with no training and pay them $40k. You need someone with understanding of the legal, financial, moral and reputation impact that each decision you make is going to have and how it fits in with the mission of the overall organisation. You have to pay a competitive salary for that.

    Kelly Burns Gallagher · November 19, 2014 at 1:48 pm

    I don’t have any issue with the executive compensation (take a look at the Ted Talk I linked to). My issue is with transparency. Because of the lack of transparency you can’t tell where donated funds are being allocated.

David · November 19, 2014 at 2:20 pm

I definitely agree with the transparency. Their mission statement is vague, the ‘news’ is pretty much nonexistent and there is little info available as to where the money goes. I’d love to get info on this.

The Real Starky (@TheRealStarky) · November 20, 2014 at 2:15 pm

Excellent work. Best piece of investigative journalism of 2014.

nzmarty · November 20, 2014 at 2:43 pm

Your first mistake was buying a foundation slot. I am suspicious that you still wear one of those #%€strong cock rings too – you would have been better off just giving $650 to charity and spend a day doing swim/bike/run with your mates.

Jake · November 20, 2014 at 3:07 pm

Possible answer to the discrepancy between inflows and outflows:
-athlete pays IMF $1300
-IMF pays WTC $650 (expense) for race entry
-remaining $650 goes towards community donations.

I’m not familiar enough with this situation to know whether this is accurate or not, just adding more speculation, again, due to the apparent lack of transparency.

libertywizards · November 20, 2014 at 3:11 pm

All I see is another disgruntled triathlete going on another IRONMAN witch-hunt. Maybe you’re forgetting the fact that the IMF has given back over a million dollars into communities in various years.

Another point, welcome to the business world. People make money, there are costs associated with raising money, the IMF directors and employees have to be paid. This is how EVERY 5013c works. Some are better than others but trying to rip IMF when it has consistently paid out over 40% of what it takes in is out of line.

When WTC comes to a city, it is a massive boost for the local economy. Have we not seen firsthand how much has been raised for the various organizations the IMF works with? The results are great and most importantly for the ones in need. But we want to make this about the secret corruption festering in WTC right?

    Mark Cathcart · November 20, 2014 at 3:18 pm

    “it is a massive boost for the local economy” < can you substantiate that in any meaningful way other than speculation for a single race? Towns and cities host many events, some are more, some are less profitable.

neil · November 20, 2014 at 3:31 pm

The 2013 filing should be available now. Was the deadline Monday or Tuesday this week?

JD · November 20, 2014 at 4:11 pm

It may sound lame, but this is why I donate time to my charities that I work with (Children’s Healthcare of Atlanta, Furkids, Lifeline, Girls on the Run, Medals4Mettle). I would much rather give 40 hours a month of my time to various organizations I believe in, than money when I am unsure and honestly cannot understand the throughput of cash money within a charity. I’m a scientist, not an accountant/lawyer/legal scholar, so it is way over my head. I think you got the ball rolling to get us to think, which is great. I understand the imploring to “look at other charities and how they deal” but this is a charity that you are invested in and have a connection to, so I think it is only right you single them out, for this purpose.

I kind of love doing 140.6 races, but I am not going to pay 2x for a slot, I already feel bad enough paying almost 800.00 for one, because in the grand scheme of things, people are starving in other countries, sex slavery is still rampant in parts of the world, and children die daily from preventive illnesses/malnourishment while I drop 3/4 of 1000.00 to work out for a really long time, one day.

wb · November 20, 2014 at 4:33 pm

Thanks for the digging. I’ll be interested to hear what a CPA (or whatever the appropriate specialist is) thinks. Nos. 1, 2, and 3 on your list look especially bad. #1 is what caught my eye in the first place. I’ve done 2 races through “foundation” slots. At the races I’ve been to, the IM folks talk up all the “giving back” that they do, they usually bring up the local or someone similar to accept a check and make a speech… not that they don’t do good things, but they seem to be doing fewer good things than I’d been led to believe. I suppose it would be naive to think that, for all its talk about giving back and helping people push their limits and dreams, IM isn’t just another slick corporation like Disney… but it’s sobering to be reminded of that in this way.

bonnev659 · November 20, 2014 at 4:36 pm

thank you for this article. I think they should have it posted by now.

I am mixed about IM Foundation… until I see for myself what they are doing for “charity”

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