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Saturday, Mar 08 2014 08:30 PM

Color Me Rad: What percentage goes to charity?

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    By Nick Ellis / Special to The Californian

    Participants are ready for the start of the Color Me Rad race at the Kern County Fairgrounds in February.

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BY STEVEN MAYER Californian staff writer smayer@bakersfield.com

Information technology specialist Mikee Lee brought his whole family to Color Me Rad at the Kern County Fairgrounds last month.

He, his wife, Laurin, and their three boys had a great time -- and why not?

The 5K run-walk event is all about having some fun, getting some exercise -- and mixing it up with a little bit of controlled craziness. And all for a good cause, too.

But it was the "good cause" part that left Lee, 35, with some nagging questions.

No matter where he turned -- and he scoured the CMR website -- Lee could not gain a clear understanding of what percentage of the nearly $200 he spent in registration costs actually went to Ronald McDonald House, the local charity that partnered with Color Me Rad this year.

Lee assumed Color Me Rad would give a percentage of every dollar it took in to Ronald McDonald House, a nonprofit whose compassionate mission he supports.

"But they don't tell you that," he said of Color Me Rad. "It's not clear."

It's that lack of clarity, or transparency, that also bothers GuideStar, a Williamsburg, Va.-based organization that encourages charitable giving by advancing the cause of transparency in the relationships between donors and the organizations asking for their financial support.

There's an expectation, said GuideStar spokeswoman Lindsay Nichols, that a portion of every dollar will go to a deserving nonprofit or local charity.

"We want to encourage these events," Nichols said. "But they need to be explicit about what that means."

To its credit, Utah-based Color Me Rad is explicit on its website that it is a for-profit company.

But over the course of multiple email exchanges with The Californian, Color Me Rad spokeswoman Gretchen Willard said the company does not share information about how much money its events generate in gross receipts, costs or net profits. Willard made that point quite clear.

"We do not disclose the details of costs, gross earnings, etc.," Willard wrote. "Our charity partners are partners in the true sense of the word. We provide a no-cost, no-risk event, and they help provide some of the promotion of the event (including a promo code that gives a 10 percent discount to the participant and 15 percent of the registration fee to the charity)."

The promo code is indeed an important detail, one that both Lee and Nichols questioned.

 

THE COLOR ME FAD

Scarlett Sabin, the director of Bakersfield Ronald McDonald House, said she was thrilled to partner with Color Me Rad this year and saw it as a win for both organizations.

"We rely on these third-party events," Sabin said.

Fundraising events can be expensive to organize, and if not enough people show up, or costs careen out of control, nonprofits can sometimes take a loss as a result.

By partnering with companies like Color Me Rad, the for-profit assumes the risks, and organizes and pays for the event. There's very little downside, if any, for nonprofits. And the event gets lots of free publicity from local news organizations, partly because they also view the runs as charitable events.

As a result, the for-profit gets to make the rules. It ultimately decides how much will go to charity and how much will go toward profit. And it doesn't have to share that information with those who are donating the dollars.

What percentage of the gross went to Bakersfield Ronald McDonald House? That's a question Color Me Rad would not answer.

Nevertheless, some simple math combined with some investigative tools may provide a pretty good indication.

According to Sabin, Color Me Rad paid $75 for each volunteer recruited by the charity, up to a maximum of 100.

To their credit, Ronald McDonald House volunteers came out strong, reaching the maximum of 100. That means the nonprofit received $7,500 for its volunteers.

According to Willard, the event drew some 4,500 registered -- and color-bombed -- participants. Color Me Rad, she said, wrote a check to Ronald McDonald House for approximately $10,000, which included the $7,500 for the volunteers.

That means just $2,500 or so was generated from registration fees, the money people like Lee paid to participate in the event.

And this is where things get tricky.

As Willard stated, 15 percent of registration costs are set aside for the charity -- but only those registration forms that include the previously mentioned "promo code."

So where could participants find the promo code?

And how many of the 4,500 participants plugged in the promo code when they registered?

Lee said he looked for a promo code when he registered online.

"I couldn't find one," he said. "I went to the Color Me Rad Bakersfield website."

Nothing.

Twelve days before the event, Lee paid to register his wife, two of his sons and himself.

The cost was $45 per person, plus a processing fee of $8.38. The family also bought an extra color packet for $3. The total came to $191.38.

An examination of other CMR events across the United States and Canada showed that early registration costs vary. Registration is typically less expensive when participants register early. And those who use the promo code receive a 10 percent discount.

Sabin said that in the weeks leading up to the 5K she worked hard to disseminate the promo code to as many people as possible, through public service announcements, social media and direct appeals to groups. After all, more participants entering the promo code translates to more money for the charity.

"People just forgot," she said. "It is what it is."

For the record, the promo code was BRMH, the acronym for Bakersfield Ronald McDonald House.

Color Me Rad won't reveal the average registration cost, but plugging in an average of $40 per registration, including processing fees, and multiplying by 4,500 participants indicates gross receipts of about $180,000. If the $40 average is accurate, that would mean about 5.5 percent of the gross went to BRMH.

When presented with that scenario, Willard balked.

"Your estimations are way off. So, yes, it is WELL over 5 percent of the earnings, she wrote. "Also, the average registration price per runner was definitely not $40. It was quite a bit less."

She would not say how much less.

But maybe it doesn't matter. The simple math is not in dispute: $10,000 divided by 4,500 participants equals an average of $2.22 per participant going to the charity.

 

COLOR ME COSTS

Willard said the cost of putting on such events is considerable.

Every participant receives a T-shirt, sunglasses, a color packet and a snack and beverage.

In addition, there are costs for employees, color, venue rental, insurance for each participant, clean-up costs, EMTs, marketing costs, equipment rental, travel expenses for staff, labor costs for on-site staff, porta potty rentals, race equipment and all the other costs that go into running a business.

There's little doubt that the costs are significant.

A call to the Kern County Fairgrounds showed that CMR paid a fee of $3,200. But that cost included venue rental, clean-up costs, on-site staff and porta potty rental. According to the Bakersfield Police Department, the cost of its services at the event came to $704 for one police service technician and three officers, Rental of traffic cones was $60.

Average registration costs may indeed have been lower than $40, as early bird costs started at $27 and other discounts may have been available. But trying to narrow down the estimate to an accurate number ultimately resulted in a not-so-subtle threat of legal action by Color Me Rad.

"I've told you multiple times that we are a private company and like almost all private companies, we don't disclose our financials," Willard wrote. "Regardless, we have been completely transparent with you in terms of how much we gave to charity and you have interviewed the charity who is stoked with what they received. Thus, if you make assumptions that are grossly inaccurate and poorly researched and those assumptions result in damage to our company, we will have them reviewed by our attorney."

For both Mikee Lee and GuideStar's Nichols, the for-profit structure of Color Me Rad is not the issue. They simply want to know what percentage of the money raised is going to the charity. And the use of the promo code, they argue, should either be eliminated or made more transparent.

"The thing that raises a red flag for me is this code," Nichols said. "Most events, you sign up and a portion of the proceeds go to the charity.

"There's not usually another hurdle to get over."

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