AIDSRide Organizers’ Business Model, Mission Criticized

Since 1994, Pallotta Teamworks, a for-profit fundraising company, has staged bike rides to raise money for AIDS services and vaccine research, but some criticize that "too much" of the raised funds go toward company expenses or are used to "satisfy Pallotta's fees for organizing and staging the events," the Southern Voice reports. Pallotta Teamworks produces AIDSRides in Washington, D.C, Massachusetts, Minnesota and California, and AIDS Vaccine Rides in Montana, Alaska and Canada. This year, Pallotta hopes to raise more than $4 million for AIDS vaccine research from the vaccine rides using a new business model that company officials say should raise more funds and increase the proportion going directly to beneficiaries. The money for the vaccine rides will be divided between vaccine researchers Dr. Irvin Chen at the AIDS Institute at the University of California-Los Angeles, Dr. David Ho of the Aaron Diamond AIDS Research Center and Dr. Rafi Ahmed of the Emory Vaccine Center.

Complaints and Compliments
Under the current system, beneficiaries provide Pallotta with "seed money" for the rides to cover "logistics and overhead expenses." At the conclusion of the event, the organizations receive their initial contribution along with a percentage of the profits that can "var[y] widely depending on the size, expenses and success of an event." Norm Bowling, senior vice president for business and public affairs at Pallotta, said the amount received "hinges on turnout." But this business model has led some participants to complain that they were "led to believe they would see more money than they actually did" (O'Briant, Southern Voice, 4/26). A low return on a Pallotta-sponsored AIDS Ride in Texas in 1998 prompted 10 agencies to drop out of the fundraiser the following year. The 1998 ride netted only a 15% profit (Kaiser Daily HIV/AIDS Report, 2/24/99). In 1997, the company was fined $110,000 by the state of Pennsylvania for "misrepresentation," but admitted "no wrongdoing" in the settlement. This year the company says its events, including the vaccine rides, should bring in $135 million, of which 60% will go to charity. "We hope that fundraising costs will not exceed 35% of the total contributions," Bennett Weiner, COO of the Wise Giving Alliance division of the Better Business Bureau, said. Bowling said that because Pallotta's events "do more than operate as simple fundraisers," the Wise Giving standards "don't necessarily apply" to them. "These are events of some epic proportion which garner a lot of visibility for the cause and ... they have a tremendous impact on the people who participate in the events," he said. Jacqueline Fine, program administrator at the Emory Vaccine Research Center, which received $1.1 million from the Alaska ride last summer, said that Pallotta is a "for-profit organization and that is never hidden ... We would not have received this money without their efforts."

A New Model
For this year's AIDS Vaccine Rides, Pallotta has adopted a new business strategy. Independent financing for start-up costs was obtained from a lender instead of from the beneficiaries. Bowling said the new approach will allow the company to remain more in keeping with its desire to be "characterized or seen as a production company." Bowling added, "We are really in the business of transforming experiences and human potential events, and in order to go in the direction we wanted to go, we saw that we need[ed] to finance our own events." The model will allow the company to "branch out" beyond AIDS- and breast cancer-related events, its current "main focus," but the company did not specify to which issues (Southern Voice, 4/26).