With high levels of scrutiny in top athlete’s foundations, charities must be structured and managed correctly.
“I am a huge believer in giving back and helping out in the community and the world…I believe that the measure of a person’s life is the affect they have on others.” – Steve Nash, retired eight-time NBA All-Star
Many professional athletes give back to their community and world in a variety of ways. Some volunteer at local charities. Others launch fundraising events to raise donations for a particular cause. All share the joy that comes from being a part of something bigger than themselves.
What is a Professional Athlete’s Foundation?
A foundation can be set up by any individual or organization – including a family, a corporation, a group of friends, a celebrity or professional athlete. Here, we focus on athletes because we have many clients — both current leaders in their sport and others retired from competition — who start foundations as a way to do more good in the world.
With the added attention some athletes face from fans and the media, it is important to structure and manage the professional athlete’s foundation appropriately. The Cullinane Law Group provides peace of mind that your foundation is in good standing and fully compliant with the law.
What is a Foundation?
Generally, a foundation is an organization that supports charitable activities for the common good. Foundations work to help other organizations, institutions, or individuals for scientific, educational, cultural, religious, or other charitable purposes.
Many philanthropic and charitable organizations are considered to be “foundations.” The name foundation itself can represent several types of organizations.
The IRS distinguishes between two entities:
- Private foundations, which are usually funded by an individual, family, or corporation.
- Public charities, which may be nonprofit groups or community foundations that raise money from the general public.
Professional athletes set up both types of foundations. The Cullinane Law Group helps professional athletes and their agents and advisors in determining the best corporate and tax structure for their foundation to find long-term success.
Some athletes prefer to organize “private foundations” that they endow and fund themselves. These entities may offer donors more control over their charitable giving. We work with the professional athlete to make sure that this structure offers a good tax advantage in comparison to other entities.
Private foundations often invest their principal funding, then distribute the income from those investments for charitable purposes. Foundations often make financial grants to others. However, some private foundations also may operate programs. We help professional athletes and their advisors to set the foundation’s strategic plans.
Charitable Foundations (Public Charity Status)
Some athletes prefer to set up “charitable foundations” that have a public charity status because this entity may allow other individuals, corporations, and foundations to contribute to their foundation. These athletes may like to host special fundraising events (sports tournaments, galas, special events) to raise contributions for a cause that the athlete has pre-selected.
We work with the professional athlete to determine if this structure may offer tax deductibility options.
Problems with professional athlete’s foundations
Foundations must follow a complex set of guidelines for charitable organizations. While most professional athletes have strong plans when starting a new foundation, others may not use the necessary due diligence in the formation, management, and oversight of new foundations.
Professional athletes foundations are highly scrutinized. In addition to state and federal agencies to which the foundation must report certain financial and operational data, fans and the media closely monitor the foundation’s activities.
Because of the various regulations, and because of the extra layer of scrutiny, professional athletes may find their foundations in trouble. These problems can come from improper initial set-up, mismanagement, or lack of oversight.
An ESPN “Outside the Lines” investigation of 115 charities founded by high-profile, top-earning professional athletes revealed that the investigated professional athlete’s foundations don’t measure up to what charity experts would say is an efficient, effective use of money.
In that investigation, reporters found that problems with misuse of funds, including how much money a foundation actually spent on charitable work as opposed to administrative expenses. The report also found problems with management, including whether there are enough board members overseeing the organization.
These are major issues for the athlete. Our clients who are professional athletes don’t find these problems with their foundations. We help set up appropriate structures and manage the foundations long term, for ongoing success in operations.
Our Clients – Professional Athlete Foundations
We are honored to help professional athletes in their mission to give back and bring good to the world. Here a a few highlights.
Major League Baseball All-Star pitcher Justin Masterson, along with his wife Meryl, family, and friends, founded the Fortress Foundation.
Justin has always expressed a passion for giving back, because the game of baseball has given him so much.
Masterson has embarked on charitable trips to the Dominican Republic in past off seasons and has financially supported numerous causes.
“Meryl and I have received many blessings in this life,” Masterson said, “and strongly believe that to whom much is given, much is expected.”
Nancy “Lady Magic” Lieberman is a true pioneer in women’s sports. Her extensive resume includes: WNBA player, coach, general manager, sports broadcaster for ABC, NBC, ESPN, and FOX Sports Southwest (FSSW), motivational speaker, author and the first female coach of a men’s team under the NBA umbrella.
“Foundations and giving are about trust, character, honor and service to others. The Nancy Lieberman Foundation found all those qualities in the Cullinane Law Group. We are the fortunate ones to have them on our team.” – Nancy Lieberman, Basketball Hall of Famer.
With the Nancy Lieberman Foundation, Nancy and her team serve as a catalyst for the development of young girls and boys throughout the country by using basketball as a motivational tool. Nancy Lieberman is dedicated to expanding and ensuring sports opportunities for youth through her basketball camps and clinics.
Ready for Help with your Professional Athlete’s Foundation?
We offer a turn-key solution for quickly launching your new foundation. We complete all of the work to set up your foundation as a nonprofit corporation with tax-exempt status – from state corporate matters and IRS tax issues.
We help foundations to establish policy development, grants management, and grants administration, so that your programs have the strongest impact.
We ensure that your foundation is fully compliant, so your foundation is in the spotlight for the right reasons: making a difference in the world.
ESPN Outside the Lines: Athlete Charities Often Lack Standards