It’s not all fun videos and plastic buckets. With an unprecedented fundraising boost from its viral campaign, the ALS Association finds itself facing additional scrutiny of its practices, criticism of the campaign, and—believe it or not—worries about how donations will affect its balance sheet.
The Ice Bucket Challenge definitely means a lot of good things for the ALS Association. The viral social media campaign has raised a staggering amount of money ($79.7 million as of Monday afternoon) and brought renewed attention to amyotrophic lateral sclerosis, the fatal degenerative condition also known as Lou Gehrig’s disease.
But, perhaps surprisingly, a lot of sudden attention and money for a nonprofit charity can have their disadvantages.
Viral fundraising campaigns have been known to backfire. Two notable examples: Invisible Children’s Kony 2012 campaign (which drew high levels of scrutiny to a once-obscure organization) and Wyclef Jean’s Yéle Haiti charity (which folded amid allegations of gross financial mismanagement).
Even the ALS Association’s strong financial track record is no guarantee it will avoid complications from the campaign’s success.
Even the ALS Association’s (ALSA) strong financial track record is no guarantee it will avoid complications from the campaign’s success. Among the challenges facing the group:
Criticism of the campaign: As Associations Now‘s Katie Bascuas wrote earlier this month, some critics have suggested that the charity aspect has become an afterthought in the Ice Bucket Challenge campaign. Some organizations have questioned whether the challenge is the best way to support ALS research funding. For example, the nonprofit voter registration group Ourtime.org argued that the challenge’s funding benefits are minimal compared to the significant decline in research funding from the National Institutes of Health. “A month-long viral social media campaign consisting of billionaires, media moguls, and celebrities alike has raised [tens of millions], while a seemingly trivial percent cut in NIH funding means billions of dollars,” argued the group’s Matthew Segal. California officials, meanwhile, have a more practical concern: The state is in the middle of a drought that has led to widespread wildfires. The state’s Department of Water and Power last week suggested ways that residents could participate in the Ice Bucket Challenge without wasting water.
Criticism of the association’s practices: Since the challenge went viral a few weeks ago, some have questioned ALSA’s methods and practices. Politico has rounded up a long list of critics, ranging from animal rights supporters (who oppose testing on mice and other animals) to religious and antiabortion groups (who object to ALSA’s support of embryonic stem cell research). In a statement last week to The Daily Banter, the association emphasized its ethical standards regarding animal testing. “Similar to organizations globally, the ALS Association supports laboratories and scientists that strictly adhere to the guidelines provided by the National Institutes of Health,” the group’s Carrie Monk told the website. “The association is committed to honoring donor intent. If a donor is not comfortable with a specific type of research, he or she can stipulate that their dollars not be invested in that particular area.”
A balance sheet headache: But the biggest challenge may be the way the sudden spike in donations could, at least temporarily, affect ALSA’s standing with nonprofit watchdog groups like Charity Navigator and the Better Business Bureau, which track and rate how charitable organizations spend their money. ALSA has a good track record: It spent 72 percent of its fiscal 2013 revenue on programs and services, as opposed to administrative and fundraising expenses. But Fortune notes that unless the association spends nearly all of its Ice Bucket windfall on services in the current fiscal year, the huge proceeds from the campaign will cause its four-star rating to slide.
ALSA says such a rapid spending spree isn’t in the cards.
“If a [hypothetical] $3 million organization gets a $10 million bequest one year, there’s no way the members of its board can thoughtfully spend three times as much” in one year’s time, ALSA Chief Chapter Relations and Development Officer Lance Slaughter told the magazine. “We’re going to work with these watchdog groups. They understand that anomalies take place.”
Charity Navigator CEO Ken Berger told Fortune that it plans to eventually change its single-year review to a multiyear process, but “right now, though, it’s an annual snapshot.”