The Truth About Your Ice Bucket Challenge Donations

If you are reading this, you have probably heard of the ice bucket challenge.  In short, you get nominated to take the ice bucket challenge.  Once nominated you have two options that you are supposed to choose: either donate $100 to the Amyotrophic Lateral Sclerosis Association (ALSA) or pour a bucket of ice water over your head, donate $10 to the ALSA, and nominate three more people to take the ice bucket challenge.  “Amyotrophic lateral sclerosis (ALS), often referred to as Lou Gehrig’s Disease, is a progressive neurodegenerative disease that affects nerve cells in the brain and the spinal cord.”  It is a terrible disease that ultimately results in death. Donating money to this charity sounds like a good cause.

There are some critics. There are articles and videos that claim ALSA does not spend the money correctly.  After coming across this dissent, I became curious and decided to investigate.  How does the ALSA spend their money and is that spending appropriated correctly? Let us find out.

In this video the author says that less than 8% of the 2012 ALSA expenses went to research.  The 2012 ALSA annual report (see page 12) confirms this claim.  In the table below we can see that 7.71% of ALSA expenses went towards research.  I found it interesting that the consolidated financial summary is accompanied by this comment “The consolidated summary has not been audited or reviewed by the auditors and is not part of their financial reports.” and decided to investigate.  After investigating, I found a discrepancy.  The consolidated financial summary reports a “total combined revenue” of $55,446,772 but the total expenses for 2012 is reported as $15,435,227.  I could not reconcile the numbers in this report.  Feel free to comment if you reconcile the numbers.

Using the expenses for 2012, we see an entirely different situation.  ALSA spent $3,904,240, or 25.3% of their 2012 expenses on research.  In addition, ALSA spent $4,629,111 or 30.0% on patient and community services, $1,859,100 or 12% on public and professional education and $3,269,624 or on fundraising.  In 2012, ALSA spent a total of $13,662,075 or 88.5% of their expenses on research, fundraising, or ALS awareness leaving 11.5% for overhead. Put another way, in 2012 88 cents out of every dollar spent by ALSA went to better understanding ALS.

We find a similar trend for the 2013 year.  In 2013 the ALSA had an expense total of $25,737,701, 66.7% more than in 2012.  Of the $25,737,701, ALSA spent $6,616,367, 25.7%, on research.  While ALSA proportionally spent similar amounts of research, the total dollar amount spent on research increased in 2013.  Additionally, 91.5% of ALSA spending in 2013 went towards research, fundraising or ALS awareness leaving only 8.5% for overhead.

The trend continues for the year ending in 2014.  In 2014 the ALSA had an expense total of $26,204,122.  Of this, ALSA spent $7,170,481, 27.4%, on research.  The ALSA spent 1.7% more in 2014 on research.  Additionally, 92.7% of ALSA spending in 2014 went towards research, fundraising or ALS awareness leaving only 7.3% for overhead.

Of course this doesn’t even begin to address money and awareness raised by the ice bucket challenge.  The ALSA has raised $79.7 million  as of August 25th.  You can rest assured knowing that, for the most part, your donations are being put to good use.  But don’t just take my word for it.  The ALSA meets all the Better Business Bureau’s 20 standards for charity accountability.  In addition Charity Navigator gives them a 4 star rating.

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2 Comments
  1. There is an interesting Tedtalk about this problem in the way nonprofits spend money and how they are viewed for spending the money in certain ways. Basically it showed the idea that this non profit hired a ceo from private sector and paid him millions of dollars (just like in the private for profit job he left) but because he was really good at turning a profit. The amount of money they raised for ‘the cause’ went up 6000% but they got criticized for spending so much money on something other than ‘the cause’

    the point i took from it was (was worded differently in the video but same message) “who cares if 90% of the money you raise went to the cause if it was only $43, we used 90% of the money to hire people that could make it so we raised hundreds of millions”

    Again like everything else it takes money to make money, spend it wisely and the pie chart you are showing might not be hundreds of dollars, it might be millions

    • Exactly. Hiring talent is often times expensive. I’d be more than happy to contribute to a cause that paid a person millions if that person was able to increase awareness and revenue.

      It is why I wanted to address the ice bucket challenge here. Debunking the 7% claim while also informing that the money is being spent rather well.

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