Academy of Friends lags in charity payments

  • by Seth Hemmelgarn
  • Wednesday June 16, 2010
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A San Francisco organization that has contributed more than $8.5 million to over 70 Bay Area HIV/AIDS service organizations over the years cannot make full payments to this year's beneficiaries.

Academy of Friends, which is popular for its annual Academy Awards gala, has only distributed $31,380 of the $220,000 it had pledged to this year's 11 partner organizations. None of the 2010 beneficiaries has yet received the full amount that AOF had pledged to them.

Leaders from most organizations who have worked with AOF and agreed to interviews for this story indicated split payments are nothing new and they previously received the full amounts of what they had been pledged.

According to Mike Horak, AOF's executive director, beneficiaries' contracts state payments from ticket sales would be distributed in up to three installments.

However, the 2010 beneficiaries have been invited back for a second year, and groups who last participated in 2008-09 won't get to take part again in 2011.

In an exchange of e-mails with the Bay Area Reporter , Horak, who said most 2010 beneficiaries have agreed to come back in 2011, discussed what's happening.

"The simple truth is that AOF is realigning its processes this year and therefore will not have an open application session at this stage," as the group has typically had around June or July, wrote Horak. AOF "will announce our progress as the board meets and strategizes its plans" for the 2011 fiscal year "and beyond," he wrote.

"The fact that we are exploring ways to make our model stronger so that we can make future grants should encourage potential grant seekers to follow our progress and apply in the next open request for proposals," he added.

In another e-mail, Horak wrote, "Our goal is to steer at least 51 cents of every dollar to charitable organizations, but like many agencies we have struggled to reach that number in recent years."

He added, "While gala production costs have remained flat and office operations have been reduced, we quite simply have not attained the fundraising we had hoped to achieve from individuals, corporations, raffles and silent auction."

Like most nonprofits, he wrote, AOF, which has a 30-year history, has experienced a decline in corporate contributions. Corporate sponsors contributed approximately 14 percent of AOF's overall revenues for the fiscal year. 

However, Horak wrote, "All agencies who have partnered with Academy of Friends will receive their pledge according to the terms of their contract" by December 31, 2010.

Academy of Friends' budget for the fiscal year 2010 gala season was $1.05 million. Unaudited preliminary results will show a shortfall of roughly $200,000 in fundraising, he wrote.

Horak also said that since AOF's 2010 fiscal year ended May 31, audited statements wouldn't be available until at least October.

Asked about changes planned for the organization, Horak said, "Changes to the operations of the agency will be addressed by the board of directors at the upcoming retreat and throughout the course of the fiscal year. They will be prioritized accordingly."

AOF annually holds a strategic planning retreat in late July.

Funds for the beneficiaries come from individual gifts, corporate grants, gala ticket sales and other sources. Through sales of raffle tickets, gala tickets, or other underwriting, beneficiaries are required to raise 25 percent of their pledged grant.

Beneficiaries also provide volunteers who set up for the gala, distribute posters, and perform other tasks.

Horak indicated that a meeting with this year's beneficiaries is ahead.

"As the board formulates its strategies it will lay out plans to the beneficiary organizations," he said. "An exact date has not been identified at this writing, but is most likely to take place in September."

Forms filed with the IRS for June 2007 through May 2008 list AOF's costs for programs and services at $1,088,414. Of that, $408,500 went to beneficiaries, according to the forms, which the B.A.R. obtained from

Horak said that the remaining funds were used for gala-related expenses – including production, advertising, and talent – in addition to expenses to produce monthly fundraising events, among other costs.


Grantees weigh in

Dana Van Gorder, executive director of 2010 beneficiary Project Inform, said his agency last partnered with AOF two years ago. It received two payments, but was paid fully.

This year, Project Inform's contract is for $20,000. The group was to have received half that amount at the recent check distribution in late May, but instead it received $3,000, he said.

Van Gorder said AOF is "very genuine, and I take them completely at their word" that they will honor the contract.

Project Inform has a budget of $1.45 million, and Van Gorder said $20,000 is "a significant amount for any nonprofit right now. We'll be happy to see it eventually, and we're in a position to float it until we see it. We have cash reserves we use to handle these kinds of things. We always have any number of funders who take a while to actually get us checks, and so we use our cash reserves to be able to manage our cash flow, and that's what we'll do in this case."

Van Gorder said Project Inform would "happily" partner with AOF again in 2011 "because the return on our investment of time is a good one."

Ron Karp is executive director of Food for Thought, the Sonoma County AIDS food bank. The organization was a 2009 beneficiary.

Karp said they were granted $16,000, and they got the funding over three payments.

"For us, it's a large gift, because we're not a huge organization," said Karp.

Karp said he hadn't heard that Food for Thought would not be able to participate in 2011, but he said, "I don't think it's our place as a beneficiary to tell them how to run their business. ... Other funding organizations do that; they change their priorities or change the way they give funding. That's something we deal with all the time."

James Williamson, a board co-chair of the San Francisco LGBT Community Center, a 2010 beneficiary, expressed frustration, however.

He said he contributed $2,500 so that the center could meet its obligation as an AOF beneficiary.

Williamson said there hasn't been any explanation from AOF of what's going on. The expectation was that checks would be distributed in full in May, he said. Williamson said the lack of a timetable of when distributions will be made is causing confusion.

He said it's important "that the Academy of Friends continues because of the good work they do in raising money for HIV and AIDS programs." However, he added, "They need to communicate clearly what's happening right now so the recipient organizations can reply accordingly."

He also said, "$10,000 [the amount pledged to the center] is a lot of money for a nonprofit organization, and to not receive the funds when you anticipate it is a shock and causes hardship," said Williamson.

Told of Williamson's remarks, Horak wrote in an e-mail, "Each grantee was contacted by our beneficiary chair and had a personal conversation of the status of the grants and the payment cycle. Each grantee received the information that Academy of Friends stood firmly behind their commitments and would honor the grants we made to the organization."

He also wrote that each grantee was informed that the payment cycle would extend until December 31, 2010.

"Our intent was to be quite open and forward with beneficiaries as they are the reason we exist and whose purpose and missions assist us in raising funds for them and the community as a whole," said Horak.

He also said in an e-mail that the contract with each beneficiary states, "AOF shall distribute the ticket sales in up to three installments between May 31, 2010 and December 31, 2010."

In an interview in late May, Rebecca Rolfe, the center's executive director, said her organization was "honored" to partner with AOF this year.

She said the center "would love to be a beneficiary again" but was "exploring what [it] might mean to be a beneficiary again in 2011." Rolfe did not respond to a subsequent request for comment.