Charity Slammed for 'Sweetheart Deal' With For-Profit AIDS Walk Organizer
CHELSEA — The city's AIDS Walk raises more than $5 million each year for HIV/AIDS prevention and advocacy efforts — but in recent years more than a third of the funds have gone to pay expenses and fees at the for-profit company that helps organize the event, DNAinfo.com New York has learned.
MZA Events, a private company that organizes AIDS Walks around the country, has received free office space and millions of dollars a year from the nonprofit Gay Men's Health Crisis to plan the New York City AIDS Walk — all while eating up 35 to 40 percent of annual donations in expenses, sources said.
Clients and leadership at Gay Men's Health Crisis have begun to speak out against what they see as a "sweetheart agreement" with MZA.
They were particularly incensed to learn that the company got free rent at GMHC's West 33rd Street offices, because the nonprofit began charging rent for small community groups to use its space in September. Those groups had used office space there for free for years, and many were left struggling to pay.
"We're kicking out the nonprofit groups and they can't pay rent, but they're giving this profit-making company free space," said a member of GMHC's leadership, who asked not to be identified because it could cost him his position in the organization.
The group's Consumer Advisory Board was scheduled to discuss the issue at a meeting last week.
MZA Events lists its New York corporate office at 446 W. 33rd St., the same address as GMHC's offices. In an agreement with MZA that was filed with the state attorney general, GMHC agreed to "provide, at its expense, suitable office space" consisting of "10 rooms."
Seth Rosen, GMHC's managing director of development, said that it was a "mischaracterization" to say MZA gets free rent.
"We pay them, they work with us to produce the AIDS Walk," Rosen said. "It is necessary for them to be co-located with us, because we work so closely with them in a daily — if not hourly — coordination."
GMHC has worked with MZA on the New York City AIDS Walk — the organization's largest event by far, which draws about 45,000 participants — for 28 years, Rosen said.
A spokeswoman for the organization said that the 2012 walk brought in $5,813,180, but added that detailed financial records were not yet available.
According to an agreement signed by the two parties for the 2012 AIDS Walk, MZA's services command a hefty fee: a $285,000 base payment, a $20,000 bonus if the walk raises more than $2 million and another bonus of 3.1 percent of proceeds from the walk.
Earlier records show a more complete picture. The 2010 AIDS Walk pulled in $6,425,557, with $2,226,131 going toward expenses and $4,199,426 retained by GMHC — meaning the expenses cost roughly 35 percent of revenue. In 2009, expenses totaled 38.7 percent of revenue.
MZA took in $408,633 as a fee in 2010, but the walk also paid nearly $800,000 for the company's salaries and benefits, records show.
MZA's track record is reportedly worse elsewhere. The company came under fire in San Francisco, after 58 percent of donations from its 2011 AIDS Walk there went to expenses. MZA cut ties with its longtime nonprofit partner on the event, the San Francisco AIDS Foundation, in December.
And in 2010, only 48.78 percent of donations raised by the MZA-organized AIDS Walk in Los Angeles went to AIDS Project Los Angeles, according to a report by the California Attorney General.
Calls to Craig R. Miller, MZA's president and CEO, were not returned.
The company's earnings were sent to a number of GMHC members in a recent email questioning MZA's continuing role as a partner with the nonprofit.
"It was extremely disturbing to find that in some AIDS Walks events organized by MZA. Sixty cents of every dollar someone thought they were giving to fight HIV/AIDS — instead was going to a for-profit company, that provides no such services," the email said.
Insiders at GMHC said they didn't even know that MZA was involved in the AIDS Walk, and had assumed the nonprofit organized it on its own.
"Most people think the AIDS Walk is GMHC — if you're giving money to the AIDS Walk, you're giving it to GMHC," a GMHC official said.
"But at least 35 to 40 percent is not going to GMHC. Why donate to the AIDS Walk when you can just donate to GMHC?"
But Rosen, the GMHC development director, said the event could not be organized in-house.
"This is an event that attracts 45,000 people," he said. "We only have two people on our event staff."
The 2013 New York AIDS Walk kicks off on May 19.