Fund-Raiser Has Been Attacked Over Amount Charities Gained

At the close of this year’s California AIDS Ride in June, the symbolism couldn’t have been more obvious--a harbinger of what was to come for Pallotta TeamWorks, the event producer.

A year earlier, more than 2,000 cyclists had attended an elaborate closing ceremony at the Los Angeles Coliseum. This year, 715 riders pedaled across the finish line at Santa Monica City College.

Last weekend, Pallotta TeamWorks, which had raised more than $200 million for charity in its 10-year history, announced that it had laid off 250 employees and closed.

On Tuesday, many who had profited from or participated in Pallotta events wondered whether this was an end or just a setback for Dan Pallotta, who introduced new models for fund-raisers while coming under fire for being more businessman than philanthropist.

“There’s something about Pallotta and the empire he built that is a bit of a Greek tragedy,” said Mark Cloutier, a San Francisco AIDS activist who sued Pallotta in April, alleging that Pallotta had delivered less than one-third of the $28 million his company received from its 2000 and 2001 Vaccine Rides to charity. That suit is pending.

Pallotta TeamWorks, a commercial organization, was scheduled to produce 24 events this year in the United States and overseas, supporting such causes as breast cancer and suicide prevention.

But many of them were plagued with difficulties, in large part because of questions about how much of the money raised by participants had actually gone to charity and about the validity of the production fees charged by Pallotta TeamWorks, which recently hovered in the mid-$200,000 range.

On the first AIDS Ride in 1994, 478 people rode 565 miles, from San Francisco to Los Angeles, and raised $1.4 million. Seventy-three percent of that money went to charity, according to the Pallotta Web site. But in 1998, a group of Florida AIDS charities dropped Pallotta TeamWorks after only 11.83% of the $1.133 million raised went to charity.

In October, the two charities that had benefited from the California AIDS Ride--the Los Angeles Gay and Lesbian Center and the San Francisco AIDS Foundation--broke ties with Pallotta TeamWorks, saying that unexpected cost overruns had cut into proceeds from the ride.

Earlier this year, sponsors of the Washington AIDS Ride in June, disappointed by the money raised this year, announced that they too would sever ties with Pallotta TeamWorks.

Pallotta, who did not return calls seeking comment, has insisted that he is an easy target.

“It’s never been about the money for me, but it’s never not been about the money,” he told the San Francisco Chronicle this year. “When an organization like ours is profitable, we can invest those profits back in the business, which is what we’ve done.”

Some organizations, including the Walker-Whitman Clinic and Food and Friends, both beneficiaries of the Washington ride, said that putting all the blame on Pallotta is unfair.

They cited a poor economic environment for charitable giving and bad publicity about Pallotta’s overhead costs.

Pallotta TeamWorks helped the two Washington groups raise $14 million in seven years, said Craig Shniderman, executive director of Food and Friends. “That alone is nothing to sneeze at..... I’m not going to be dancing on their grave.”

Avon announced that this would be its last year in partnership with Pallotta on the Avon Foundation’s Breast Cancer Crusade, which is scheduled to take place in October.

Avon said that it fully expects the crusades, which are three-day walks, to proceed as planned in Los Angeles, Atlanta and New York. But some people complained that they couldn’t get straight answers on whether the walk would take place.

Among those was Stacey McClennen, who planned to take part in the California walk. “I’m a team captain,” she said. “We’re 12 women, and we’re all flying in from other places, even Canada, and we have already bought our tickets. At this point, we are coming anyway and walking on our own if we have to.”

*

Times staff writer Johanna Neuman in Washington contributed to this report.