In the video below, Ken Stern, former CEO of National Public Radio, discusses the current state of the charitable sector, and gives his take on how so many seemingly for-profit entities are allowed to be classified as charities -- including college bowl games.
The full version of the interview can be found here, in which Stern discusses his new book, "With Charity For All." In the book, Stern takes on the charitable sector, which he says, "operates with little accountability, no real barriers to entry, and a stunning lack of evidence of effectiveness." Stern discusses in detail what's broken in the charitable sector, how to fix it, and how Americans can best make a difference. Given Stern's unique perspective from his time at NPR, we also discussed with him the future of radio and the technologies that are disrupting it.
Brendan: One of the things that surprised me about the book is you talked about the college bowl games, which were actually described as non-profit entities, as well, despite the multi-million dollar contract with ESPN, through Disney there.
Why are they allowed to do that and still make a profit? Do you see any signs of this changing in the future?
Ken: They're allowed to do it because no one's watching. The IRS, which is the exclusive entry point to become a tax-exempt charity, approves 99.8% of all applications to be public charities. If you have a form, you have a pen, and you have a stamp, with a small check, you can start a charity, essentially today.
The results are, not surprisingly, a lot of charities don't really look like charities. The bowl games, the organization that governs the US Open golf tournament, roller derby, beer festivals. are all actually organized as charities.
The bowl games are, to me, a stand-out example of that. They are really, essentially large-scale parties with large contracts with TV organizations. They put on cruises, they entertain the commissioners and big sponsors. That's what they're about -- nothing to do with charitable purposes as people ordinarily know it.
Brendan Byrnes has no position in any stocks mentioned. The Motley Fool recommends Walt Disney. The Motley Fool owns shares of Walt Disney. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
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