If Google is asked which professional sport is the most prolific charitable fundraiser, the internet will respond that golf’s PGA Tour raises more money for charity than any other league. However, even a cursory glance at the Tour’s finances reveals that the Tour’s carefully constructed image as a charitable giving juggernaut is misleading.
The reality is that the PGA Tour, in many key respects, operates like a for-profit business, even as the organization enjoys a major benefit as a federally registered non-profit: protection from hundreds of millions of dollars in federal taxes despite annual revenues approaching $1.5 billion.
None of this is meant to diminish the significance of the charitable work that the PGA Tour actually supports. But given the huge tax breaks it receives as a non-profit corporation registered with the IRS, it is completely fair to ask how the PGA Tour is spending its money - and how much of that money is actually going to philanthropic causes.
The short answer is that the bulk of the PGA Tour’s money does not appear to be going to charity, despite the fact that the organization promotes its charitable giving as “a centerpiece of its golf events, tournament telecasts and website,” as CNN points out in an article exploring the PGA Tour’s giving.
Instead, the PGA Tour has been spending the lion’s share of its money on things like lobbying, executive compensation, administrative costs and promotion of the PGA Tour and its events between 2014 and 2018, according to a review of the most recent, publicly available tax filings by the organization.
This despite the fact that the PGA Tour claims to be committed to “generating substantial charitable contributions in the communities where its tours are played.” In fact, most of the PGA Tour’s charitable contributions are actually raised and dispersed by local non-profit organizations that help oversee and manage individual tournaments that the PGA Tour sponsors.
For example, the Thunderbirds Charities is a non-profit organization formed in 1986 for the express purpose of raising and distributing funds via a tournament called the Waste Management Phoenix Open. The group raised $4 million for charity in 2021. But aside from providing a platform for fundraising, the Tour itself has almost nothing to do with the tournaments’ charitable efforts.
The Tour only made direct charitable contributions of $42.7 million in 2018, which is a paltry 3% of their $1.47 billion in revenue. While the Tour publicly takes credit for $190 million in charity, that inflated number reflects the total given by the tour and the local non-profits that put on the tournaments.
A 2013 ESPN investigation into the Tour’s charitable giving and tax-exempt status found that the local non-profits charged by the Tour to do the actual fundraising weren’t living up to their missions either. It found that those local organizations typically gave an average of 16% of their tournament revenues to local charities, with the rest going to prizes and promotional costs. ESPN even found that the Thunderbirds paid over $650,000 of the money raised back to Waste Management – the tournament sponsor – for trash removal at the event.
Meanwhile, PGA Tour executives are being handsomely compensated. According to the most recent compensation figures that all nonprofits must disclose, PGA Tour commissioner Jay Monahan collected $7.4 million in compensation in 2018. Monahan earned more than all but four of his own players that year.
The Tour also had enough left over to pay outgoing chief operating officer Ed Moorhouse another $7.4 million when he retired that year, while shelling out $817,000 to former commissioner Tim Finchem (even though Finchem retired from the PGA Tour in 2016).
If the Tour is not living up to its mission statement and is instead paying out millions to executives, it should be required to pay its fair share in taxes on the money it earns, just like the rest of us. It may be time for regulators to take a hard look at the Tour’s tax-exempt status.