Expenses ate up at least 86 percent of the $3.6 million raised in June for the annual D.C. AIDSRide organized by Pallotta TeamWorks, a rate that is expected to increase when the tally is complete, the benefiting charities said yesterday.
If the riders had not raised more money than required, the event might have lost money. Per-rider expenses averaged $400 more than the $2,400 each rider needed to raise to participate. But the event turned a $500,000 profit only because riders raised an average of more than $3,200, according to preliminary estimates made by the two charities that co-sponsored the ride.
"Disappointed doesn't even begin to describe how we feel," said Cornelius Baker, head of Whitman-Walker Clinic, one of two charities benefiting from the ride.
When the audit is completed in the fall, the return may be less than 14 cents on the dollar.
"It won't be higher," said Craig Shniderman, executive director of Food & Friends, the other charity involved in the AIDS ride. "It's in the ballpark, but it has the potential to be somewhat lower."
The beneficiaries blamed the faltering economy and the continuing controversy over events produced by Pallotta TeamWorks, a for-profit company that last week laid off 250 employees and suspended operations. The firm's future is unclear, and calls to its Los Angeles headquarters were not returned yesterday.
Critics of Pallotta events said the return on the D.C. ride was indicative of problems that have beset the company this summer.
"The returns are abysmal," said Wayne Turner, an AIDS activist with the D.C. chapter of Act Up. "People are beginning to wake up to the fact these AIDS rides are not about raising money at all. They're about building Dan Pallotta's empire, which is now crumbling."
This year, Pallotta TeamWorks was to have run 23 charitable events across the United States and in Africa and Europe. Pallotta's fee for each AIDS ride runs from $225,000 -- the amount for the District ride -- to $450,000. Locally, it also has organized the Avon Breast Cancer walk, held in May, and a night walk this month from Fairfax County to the District to raise awareness of suicide prevention.
Pallotta had been one of the country's most successful promoters of charitable events. But criticism grew as the company expanded and began aggressively promoting itself. Its events are characterized by emotional opening and closing ceremonies, slick marketing and creature comforts for participants, including cucumber eye masks and massages. Expenses run into the millions, though net proceeds are often high, too. But recently, many riders and walkers have complained that the events' purity has been clouded by excessive promotion. At walks and rides attended by survivors and relatives of people with breast cancer and AIDS, vans were set up marketing the company's other events and selling books by founder Dan Pallotta.
As expenses soared, the criticism cut into the number of participants, who collect donations from relatives, friends and co-workers.
Two years ago, 1,600 participants in the D.C. AIDSRide raised $4.6 million, and expenses ran $2.2 million. Last year, 2,000 riders raised $6.6 million, and expenses were $3.5 million.
This year, only 1,100 cyclists participated. "The bottom line is, we needed another 1,000 riders to make it a success," Baker said. "A lot of expenses are fixed."
Several riders said they had difficulty raising money this year. Potential donors specifically cited low returns on Pallotta events.
"A lot of people sat it out," said Meyer Persow, who rode in all seven D.C. AIDSRides. "A lot of people who usually support me sent their donations straight to Food & Friends. They knew it would be used 100 percent by the charity."
Pallotta TeamWorks also produced "Out of the Darkness," a night-long walk against suicide held two weeks ago. Robert Gebbia, executive director of the American Foundation for Suicide Prevention, expects to learn this week how much the event raised.
"The event did very well in terms of attendance," he said, noting that 2,300 walkers each raised $1,000. "We're optimistic that our event, which was very successful, will be continued."
Pallotta, though, has lost numerous clients this year.
This spring, Avon Products announced that it would no longer use the company to produce its three-day breast cancer walks and would launch its own walkathons. After seven years of collaboration, Food & Friends decided to hold its own bike event next year. The huge Heartland AIDSRide across the Midwest also is being dropped.
Staff writer Amy Argetsinger contributed to this report.
© 2002 The Washington Post Company