Tax breaks power PGA Tour giving

The worst performance came from the Shriners Hospitals for Children Open in Las Vegas, which is a unique case because the hospital itself runs the tournament. Over two years, the hospital actually lost $4.5 million running the tournament, according to the institution's annual financial report. A hospital statement released to "Outside the Lines" through the PGA Tour states that the tournament provides valuable media exposure for the hospital that costs less than if the hospital had to pay for a similar exposure level.

The IRS records of other tournaments' finances raise other red flags, including some higher-than-standard salaries, contractors tied to board members or directors, and questionable expenses, such as the Waste Management Phoenix Open paying almost $650,000 to Waste Management of Arizona for trash removal.

"I think it's really awful. I think that it's deceiving the public, and that it's a house of cards that eventually will fall," Charity Navigator's Berger said.

While Berger doesn't hold back his criticism, charities that benefit from the tournaments are not necessarily complaining that they are not getting shares closer to acceptable industry standards.

The charity directors interviewed by "Outside the Lines" were all generally positive about the tournaments, with one exception of a charity manager -- who declined to comment -- who pulled his charity out of a tournament because he didn't feel like the financial benefit was worth the time involved.

It's common for local charities that get donations from tournaments to provide volunteers to help with crowd control, hospitality and course maintenance.

For example, youth from the Boys & Girls Club of Truckee Meadows in Reno, Nev., help pick up trash along the course during the Reno-Tahoe Open. The club, which has a budget of about $6 million, got $5,000 from the tournament in 2011, but chief professional officer Mike Wurm said he's grateful for every dollar.

"I will tell you it's not just the money, that the other parts of the experience -- exposing kids to an activity they wouldn't be exposed to -- that has a high value for us," he said. He said being tied to the tournament also raises the club's profile and fosters partnerships with other organizations, two intangibles often mentioned by PGA Tour officials as well.

Wurm said he runs his organization as efficiently as possible, spending 80 percent of the money to directly help children. That's unlike the tournament foundation that donates 3 percent to actual charities. But Wurm said he wouldn't criticize tournament officials for not reaching that same standard. He said the tournament benefits the local economy, especially in a region that was one of the worst hit nationwide by the recession.

"It's better to have what we have than have nothing at all, so I would hate to have some standard that would drive them out of here," he said. "It would be terrible to lose that event for this community."

Although Berger argues that the tournaments can and should donate more if they operated as regular businesses, Votaw said that losing the tax-exempt status would have a "chilling effect on the PGA Tour's ability to continue to contribute millions of dollars to charity."

"The objective of a for-profit corporation is to enrich its owners," he said. "We prefer to enrich communities. The tax laws also do not incentivize for-profit corporations to make significant gifts to charity."

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