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Livestrong celebrates successes but faces crossroads

Livestrong CEO and president Doug Ulman discusses the future of the organization Wednesday in Austin, Texas, after Lance Armstrong stepped down as chairman of the charity.
Livestrong CEO and president Doug Ulman discusses the future of the organization Wednesday in Austin, Texas, after Lance Armstrong stepped down as chairman of the charity.Jack Plunkett / AP

Lance Armstrong’s namesake foundation tonight will spotlight its finest deeds during its darkest hour, toasting its 15-year anniversary at a long-planned gala one day after its top executive beseeched previous donors to “send a clear message that we will not yield in our commitment” to cancer survivors.

For at least one day, that plea worked. CEO Doug Ulman’s nationally emailed appeal for “the cancer community … to pull together” – after its most famous face, Armstrong, resigned as Livestrong chairman – fueled 980 contributions totaling $120,000 on Thursday alone. That amount more than doubled the dollars that arrived at the nonprofit seven days ago, the organization reported.

Related: Armstrong leaves foundation to ride rocky road

“This week was always designed to be a major blowout to our donors, a big thank you to them for all their support throughout the years,” said Katherine McLane, spokeswoman of the Lance Armstrong Foundation. “It was never going to be business as usual this week. After yesterday’s news it does change the tone and, of course, we’re all aware of that.”

Livestrong sits at a surreal, four-way collision of glee and gloom, bucks and bikes. More than 1,700 people are expected to gather tonight in Austin – including Armstrong and some Hollywood names – to churn contributions, cheer the foundation and chatter about its former star. Armstrong quit Wednesday as chair, he said, to spare the anti-cancer juggernaut “any negative effects” from the doping scandal dogging the cycling legend. In a closing event on Sunday, 4,000 amateur riders and cancer survivors will pedal through Austin, many likely flashing their yellow Livestrong bracelets.

Armstrong decided to step down before the weekend festivities, McLane said, because "it would be disingenuous to have all of our nearest and dearest partners, supporters and donors in town, and be able to have face-to-face conversations with them, but then hold (the decision) and talk about it after they’re gone. He wanted to make sure that everybody understood his decision and to have a chance to talk with them in person." 

While prepping for its biggest party ever, the foundation says it is simultaneously repaving its leadership team and trying to bolster its $24.6 million donation base all while maintaining its mission to serve people throughout the country affected by cancer. Pardon the pun: This is crisis management on steroids.

“The foundation has existed for many years in a climate where these issues (allegations that Armstrong took performance-enhancing drugs) have been in the news,” McLane said. “The supporters of this movement seek inspiration from the foundation. And that’s the primary reason they support – not because of a celebrity or athlete.”

Long rated by nonprofit watchdogs – including the Better Business Bureau and CharityWatch – as a model of efficiency, the Armstrong Foundation’s financials are getting a fresh glance after this week’s bombshell. In sharp contrast to Livestrong’s reported a day-after donation bounce, fellow cancer-fighting group, the $285-million Susan G. Komen Foundation, suffered a damaging drop in contributions last March following its controversial plan to cut funding to Planned Parenthood.

Komen spends 21 cents to raise every dollar, according to Charity Navigator, a New Jersey group that monitors and grades nonprofits by dissecting the 990 tax forms each foundation must file annually with the Internal Revenue Service. Komen earns an overall rating of three out of four possible stars from Charity Navigator for its ratio of overhead to giving.

For context: Most nonprofits spend 13 cents to raise each dollar, said Charity Navigator spokeswoman Sandra Miniutti.

Last year, the Lance Armstrong Foundation invested $4 million to pull in contributions totaling $24.6 million, according to its 990 documents. That means the nonprofit spent 16 cents to generate every donated dollar.

“For that metric, they don’t score as high as they could,” Miniutti said. “Overall, we give them rating of four stars out of four. They spend over 80 percent of their budget on programs (that serve the cancer community). To put that in perspective, of the roughly 6,000 charities we rate, most of them spend 75 percent on programs and 25 on overhead. So they’re definitely more efficient than the typical charity.”

The Armstrong Foundation’s tax records show that 10 of its executives earned more than $100,000 in 2011. Ulman was the highest-paid employee at $354,150. (Armstrong earned no wages from the foundation, according to the 990). Those salaries are “not out of line” with similar-sized charities, Miniutti said. Overall, 97 people work at the Austin nonprofit, its filings show. In contrast, the American Cancer Society has 1,848 employees, according to Charity Navigator. 

Among the largest line items in its 990, the Armstrong foundation posted $46.8 million in total revenue last year against $31.6 million in total expenses, tax forms show. It spent $964,135 with Bully Pulpit Interactive, a digital marketing and advertising agency in Washington, D.C., and $1.2 million with Ginny’s Printing in Austin to produce the Livestrong information materials that doctors and hospitals around the country hand to people newly diagnosed with cancer.

In 2011, the foundation’s top beneficiaries included the University of Pennsylvania, which received $539,607 for its “care plan study and survivorship center," and the University of Wisconsin, which got $450,000 from Livestrong via a “corporate agreement” and for its “international pain policy fellowship,” the 990 document 

Whether Livestrong ultimately loses donations – and must, consequently, cut its giving – remains uncertain. Internally, however, that worry seems to exist, based on CEO Ulman’s emailed pitch Thursday: “I’m writing to ask you to show your support for the indispensable role that Livestrong plays in the lives of millions of cancer survivors around the world. Please make a donation today.”

The nonprofit – commonly just called “Livestrong,” but formally known as the Lance Armstrong Foundation – may have a new name in the near future.

Asked if the organization may drop “Lance Armstrong” from its title, McLane responded: “I think we will get though this week and then identify key considerations and prioritize them.”

But one expert in nonprofit management argues "the one mistake" Livestrong already is making: allowing Armstrong to keep his seat on the 15-member board of directors.

“If the controversy is cause enough for Armstrong to resign as the chairman, it is cause enough for him to no longer remain on the board of directors,” said Hannah Gregory, chief creative officer and founder of Shoestring, a national public relations and branding agency that exclusively serves nonprofits. “They should be sending a very clear message that the organization is a strong entity independent from its founder.”

According to foundation spokeswoman McLane, the board contains an array of people “who bring various backgrounds and areas of expertise to this foundation – business leaders, physicians, patient advocates.” That list includes Dr. Sanjay Gupta, CNN’s chief medical correspondent.

The foundation wants to retain Armstrong on its board because the cancer survivor has a proven record as a master fundraiser for programs and services that benefit people with cancer, McLane said.

Asked if Armstrong will keep that final tie to the organization, McLane said: “Yes, as of today, yes.”

But Gregory contends Armstrong’s continuing presence may cause some contributors to cool on Livestrong.

“His remaining on the board of directors does a disservice to the organization and its mission,” Gregory said. “Because what Armstrong is accused with – steroid use – is known to cause cancer. This makes this that much more important. The organization must communicate clearly and decisively and not be seen as contrary it its mission.”

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