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Can Livestrong Weather Armstrong’s Disgrace?

Now that Lance Armstrong has lost his seven Tour de France titles, the cancer nonprofit that bears his name may lose some of its donor base. It shouldn’t be that way, given the organization’s record, but experts say this is the gamble charities take by tying their fate to  a celebrity.

The U.S. Anti-Doping Agency stripped Armstrong of his victories Thursday  after the cyclist notified the agency that he would no longer fight allegations he used performance-enhancing drugs, and would instead focus on other things, including his charitable endeavors. The agency also banned Armstrong for life from participating in sports and events sanctioned by groups that adopt the World Anti-Doping Agency code.

Experts say it may be unwise for consumers to base their donations on a celebrity’s attachment to a particular group. “That’s not a good reason to give to charity,” says Sandra Miniutti, a vice president with ratings guide “You need to kick the tires.” Some, like Michael J Fox’s eponymous foundation for Parkinson’s research, get high marks from rating guides, but others, including the Christopher and Dana Reeve Foundation and The Children’s Health Fund (co-founded by Paul Simon) aren’t deemed as effective as other nonprofits doing similar work. The groups rate the charities on a variety of criteria, including having a good ratio of expenses put toward programs versus administrative costs, and on how transparently they are run. (For tips, see our how-to guide.)

However, in the case of Lance Armstrong’s namesake foundation, the charity’s reputation appears as stellar as the cyclist’s in his heyday. The group received high marks from Charity Navigator and the Better Business Bureau’s Wise Giving Alliance. “There’s no indication that there’s a relationship between Lance the athlete and the particular work of the foundation,” says H. Art Taylor, president and chief executive of the BBB Wise Giving Alliance. Its finances are solid, and as long as the foundation continues to operate effectively, there’s no reason for those ratings to change, he says.

But the legendary cyclist’s likeability — or lack thereof — may still sway donors, potentially affecting the charity’s revenue and effectiveness in future years. (According to the most recent data available, after Tiger Woods admitted to infidelity in late 2009, his Tiger Woods Foundation saw contributions fall 45% to $7 million in 2010. That’s just a little less than the contribution levels of 2008. But the charity still has good standing with rating groups.) “It could [hurt the foundation] if people give based on their affinity for Lance Armstrong, and that’s not easy to determine upfront,” Taylor says. Corporate donors could also shy away, says George Belch, a professor of marketing at Dan Diego State University’s Sports Business MBA program. Nike said in a statement Friday that it would continue to support Armstrong and the foundation. But with a ban in place, a previous $1 million donation deal for Armstrong to compete in World Triathlon Corporation events may be up in the air. The WTC had already paid out $250,000 to the foundation. (The Lance Armstrong Foundation did not respond to requests for comment.)

According to the most recent data available, contributions to the foundation during 2010 — the year doping allegations first came to light — fell 27% from 2009, to $29.7 million. Total revenue, however, rose 1.1% that year to $42.3 million. Earlier this month, executives told USA Today that donations this year were up 20% compared with the last two years, and the average amount donated rose from $72 to $75.

Public awareness of the doping accusations, which date back to 2010, may help the foundation to stay solvent, Belch says. Executives likely have plans in place to continue attracting both private and corporate donations. Armstrong’s announcement, which he said was not an admission of guilt or an acceptance of the sanctions, could also help. “It’s been handled in such as way that it allows people to make up their own minds,” Belch says. “The public tends to be somewhat forgiving, and they can also compartmentalize him versus the foundation, which has a very strong reputation.”

Down the line, donors should keep an eye on not just whether the charity is bringing in less, but if a change in its finances has made it less effective than other charities offering similar services, Miniutti says. That’s a better indication of whether or not to make a donation.



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    • The disgrace is not Armstrong’s, it is USADA’s! Armstrong passed every test ever asked of him, and they still accuse him of doping. So either they are saying that tests prove nothing, or they don’t care about proof. If the test prove nothing then still requiring them is an abuse of power (read bullying), and a waste of time and money. If the tests do prove something, then ignoring them is to ignore physical evidence so they can follow the accusations of a known cheat. That is even worse.

    • I agree w/Tray. Sloppy reporting. USADA has RECOMMENDED he be stripped of titles, but they cannot take away what they did not confer upon him. They say they have eyewitnesses prepared to testify, but will not allow a fair court setting, which is why LA said he will not continue to fight this. There are other governing bodies, namely the UCI, which has condemned USADA’s actions, and the CAS to which LA can and likely will appeal. TdF is owned by a private family in France and they’ll decide whether to officially take away titles. Nuisance USADA, taxpayer funded, needs to go away.

    • This is some truly terrible reporting. The Reeve Foundation is a BBB Wise Giving Alliance charity seal holder. Had this reporter done any homework at all, he would have learned that Charity Navigator has not been relevant to non-profit accountability for years.

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