Legal Commentary

Thanks to television juggernaut American Idol and its second annual ?Idol Gives Back? campaign much of America will be focused on nonprofit organizations on Wednesday (April 9) evening. According to news reports we should expect A-list Hollywood celebrities (e.g., comedians Jim Carrey, Billy Crystal, Whoopi Goldberg, and Robin Williams, actors Brad Pitt, Reese Witherspoon, music stars Bono, Mariah Carey, Miley Cyrus, Snoop Dogg, Fergie, Alicia Keys, John Legend, Annie Lennox, Carrie Underwood) and politicos (Sens. Hillary Clinton, John McCain, and Barack Obama) to take the stage and take advantage of the show?s massive audience (approximately 25 million).

Last year, the event raised $76 million for nine charities working on poverty issues in the United States and Africa. This year?s two and half hour spectacular (yes, a half hour longer than usual) will benefit six entities. Although financial reports from the 2007 fundraiser haven?t been released yet (not that unsual for this time of year), producers have indicated that about 90% of the funds raised will be directed towards program activities. That?s actually quite good. The BBB Wise Giving Alliance Standards for Charity Accountability sets ?at least 65% of its total expenses on program activities? as its standard (recognizing the need for some reasonable expenses for administrative and fundraising activities). Last year, the experienced Charity Projects Entertainment Fund handled the event, and this year a newly formed entity the Idol Gives Back Foundation will be in charge. Let?s hope the new Foundation will keep overhead at those levels.

Generally, I think fundraising ratios are just one of many factors to consider when judging charitable effectiveness. The way charities raise money and carry out their programs can (and probably should) vary, based on the cause, the geographic region the organization conducts activities, the age of the charity, the ?popularity? of the cause, and several other factors. There?s no ideal fundraising percentage nor standard administrative ratio applicable to all charities, and lower is not always better. But, I think the high profile nature of American Idol and the Idol Gives Back Foundation make it an easy and visible target that can help or hurt the entire charitable sector.

Evidently, four charities that received money last year will benefit again: Global Fund to Fight AIDS (affiliated with singer Bono), Malaria No More (Board Chair Peter Chernin is the President & COO of News Corp., the parent of Fox Broadcasting which airs ?American Idol?), Children?s Health Fund (founded by singer Paul Simon) and the domestic programs of Save the Children. Two new charities join the list of 2008 beneficiaries: the Children?s Defense Fund (Reese Witherspoon is a member of the board of directors and Hillary Clinton is an emeritus member) and Make It Right, a campaign to help New Orleans recover from the effects of Hurricane Katrina (founded by Brad Pitt). Very interesting choices on the newcomers. On the one hand, the Children?s Defense Fund is a well-known, well-established, and highly respected charity (rated four stars by Charity Navigator) and Make It Right is a new entity without much of track record, but Pitt has staked his charitable reputation on the organization.

Personally, I?ll be sticking to my own charitable giving priorities (although I have supported one of Idol?s selected charities in the past). However, I think this initiative is a great way to highlight philanthropy and engage the show?s many younger viewers in giving. There are many great nonprofits focused on engaging youth and philanthropy who can sustain this interest all year round: America?s Promise, Children for Children Foundation, Corporation for National and Community Service, Do Something, Earth Force, Idealist Kids and Teens, Kids Can Make a Difference, among others.

Will the show top $100 million in donations this year? While Ryan Seacrest (the show?s host) will surely tout and focus on the fundraising tally, I am more interested in some other questions: Will this spark more youth and family charitable giving? Will the new Idol Foundation manage finances in a responsible manner to enhance trust and credibility in the sector? Let?s hope so.