The PGA Tour's nonprofit business model has allowed it to avoid paying up to $200 million in federal taxes over the past 20 years, and its tournaments -- designed to benefit local charities -- operate in ways that fall short of acceptable charitable practices, an "Outside the Lines" analysis of IRS data finds.
The tour's charitable giving is a centerpiece of its golf events, tournament telecasts and website. The professional golf organization touts nearly $2 billion in donations over 75 years.
Yet that philanthropy has been bolstered by millions of dollars of annual tax breaks for the PGA Tour and its tournaments, which often are run by charities that spend far more on prizes, catering and country clubs than they do on sick kids, wounded vets or economic development. In one case, running a PGA tournament actually caused a charity to lose money -- more than $4.5 million over two years, the analysis found.
"Outside the Lines" analyzed the tour's U.S.-based tournaments that received charitable tax exemptions in 2011 (the most recent year available) and found they spent, on average, about 16 percent on actual charity. That figure is far below the minimum 65 percent that charity watchdog groups say makes for a responsible charity.
One of the groups, Charity Navigator, gave a "zero rating" to each of the tournament charities it reviewed for "Outside the Lines."
"The lion's share of the money is going to big prizes, cash prizes for athletes and all the promotion around it, so it's really pathetic, actually," Charity Navigator president Ken Berger said. "Every single taxpayer in this country ultimately is bearing the burden of having to pay the taxes for this wildly inefficient organization that's giving so little to charity."
But questioning the PGA Tour's nonprofit status and charitable giving is disingenuous considering how much it has donated over the years -- far exceeding any tax breaks it may get, PGA spokesman Ty Votaw told "Outside the Lines."
"It's as if no good deed goes left unpunished," he said. Votaw declined an in-person interview but answered some questions via email and on the phone.
Tour officials don't dispute that the percentage donated to charity is low, but they say it simply shouldn't matter. What's more important is the bottom line, Votaw said.
"This isn't a bake sale where there is no overhead and everything is contributed," he wrote in email. "A tournament is a major undertaking that requires significant planning, setup and operation, all of which requires significant expense beyond the time contributed by volunteers."
He said that the tour's commitment to charity is "unprecedented in professional sports;" its donations dwarf the $368 million the NFL says it has spent on charity over the past 40 years.
But Berger and others say such donations aren't possible without such big tax breaks.
"There's no evidence that I can see that this couldn't be just as equally done by a for-profit that pays taxes," Berger said.
At least one congressman agrees: Sen. Tom Coburn, R-Okla., has a bill pending in the U.S. Senate that would strip the league offices of the PGA Tour, NFL, NHL and a handful of smaller pro sports leagues of their nonprofit, tax-exempt status.