Shelby's Foundation A Little Skimpy on Donations Page 2

Article: 

A watchdog group formed by the Better Business Bureau says charitable grants should account for at least 65% of a charitable organization's total expenses. Here's how the Carroll Shelby Children's Foundation stacks up for 2002-05.

	TOTAL EXPENSES	GRANTS	%
2002	$164,178	$10,200	6.2
2003	$399,618	$17,299	4.3
2004	$308,941	$40,300	13
2005	$286,375	$24,944	8.7

Source: Carroll Shelby Children's Foundation tax returns
LOS ANGELES -- As Carroll Shelby lay in Cedars Sinai hospital here in 1990, awaiting a heart transplant, he was horrified by the number of children around him who desperately needed lifesaving organs.

"Two boys on either side of me passed away because they did not receive a transplant in time," the legendary car guy has said.

As he grieved for the children, Shelby prayed - promising that if he received a heart and survived he would do something to help other kids. He got the transplant and in 1991 formed the Carroll Shelby Children's Foundation.

Its mission: help pay medical expenses for families with children in need of organ and tissue transplants or suffering from acute cardiac disorders. It also gives money to organizations researching coronary disease and organ transplants.

Among other things, the foundation has raised funds through the sale of memorabilia signed by Shelby and, lately, the auctioning of classic Ford cars. But in recent years, Shelby's charity in Gardena, Calif., has picked up a reputation for giving out only a tiny fraction of the money that it takes in.

Indeed, the reputation seems well-deserved. A review of the foundation's tax documents shows that from 2002 through 2005, its net assets grew from $1.6 million to $2.9 million. Yet in each of those years less than 1 percent of assets was given out as grants - a level that charity professionals say is embarrassingly low.

Not a foundation guy

Shelby, 84, is a world-class car guy. As a race car driver in the 1950s, he broke land speed records at Bonneville for Austin Healey and won the 24 Hours of Le Mans. He later designed cars and in the 1960s conceived the Shelby Cobra sports car and later the Shelby Mustangs he built for Ford.

But it seems he is far from the world's best foundation chief. He has run his public charity on the fly with just his closest business associates and hasn't been putting the money to its intended use. Shelby and his wife, Cleo, started the foundation, tried to make the decisions themselves - and then appear to have neglected it. But the foundation's administrators say they have begun to professionalize the operation.

No one has accused Shelby or the foundation staff of misappropriating money. But Shelby's administrators admit that the organization has been run too loosely and hasn't doled out enough funds.

In 2005, the latest year for which tax returns are available, the foundation took in $594,062 in contributions and gave out only $24,944 in grants. More than half of that money went to two charities: the National Institute of Transplantation, which received $10,000, and St. Vincent Meals on Wheels, which received $5,000.

Recently, much larger sums have started to roll in - mainly because of a new partnership with Ford Motor Co. Since 2006, Ford has donated four vehicles that have brought in about $1.76 million from auctions and raffle sales. Yet the foundation still isn't doing much with the proceeds.

Shelby declined to be interviewed. But John Luft, president of Carroll Shelby Licensing Inc., says the problems are being addressed. He insists that Jenni Shreeves, the foundation's executive director since 2004, and new corporate partner Ford Motor Co. are making much-needed improvements.

5% rule

Nonprofit organizations endowed by private individuals or corporations are required to give at least 5 percent of their total assets to charities annually, says Kelly Simone, a lawyer with the Council on Foundations in Washington. The law is intended to prevent parking otherwise taxable funds in nonprofits.

The Shelby foundation has donated far less than 5 percent, although it is not bound by the same regulations. Shelby's charity avoids the 5 percent rule because it gets all its funds from public donations. Shelby has not put his own money into the foundation.

The foundation also has fallen far short of voluntary standards set by the BBB Wise Giving Alliance, an Arlington, Va., organization that helps donors make informed judgments about charities.

The alliance says that at least 65 percent of an organization's total expenses should go for grants. In the case of the Shelby foundation, grants represented no more than 13 percent of expenses in any of the four years for which tax documents were reviewed.

Alliance COO Bennett Weiner said the expenses don't appear to be out of line; the organization just isn't spending much of what it takes in.

Weiner says at least two-thirds of all charitable organizations adhere to the alliance's entire list of 20 standards. Among the guidelines is having at least a five-member board of directors. Shelby's board has had

only three members - Shelby, his wife and Neil Cummings, general counsel for Shelby Automobiles Inc. The board recently expanded to five members - adding Luft, Shelby's licensing chief, and Amy Boylan, president of Shelby Automobiles.

Luft said the foundation plans to comply with another alliance guideline: scheduling regular deliberations on grant allocations. Starting this month, he said, twice-a-year meetings will be held to decide where proceeds will be donated.

In addition, the foundation retained Wells Fargo Bank to help set up an endowment fund and better manage its money.

"Prior to bringing Jenni on, the foundation had no direction," said Luft, referring to Shreeves, the executive director. "There was no infrastructure. It was Carroll's little foundation, and we had a modest amount to give out."

Last year, Shreeves, a full-time employee, launched the group's first national fund-raising campaign when it raffled off a vintage Cobra. The result: the sale of $485,000 in raffle tickets - almost as much as the nonprofit took in through all of 2005. This year, the foundation is raffling a Ford Shelby GT500 donated by Ford.

Before Ford began donating cars, almost half of the foundation's revenue came from individuals who contributed $100 to $200 in exchange for Shelby-autographed memorabilia.

"The corporate sponsorship from Ford has taken us way up," said Luft, 51, a former Walt Disney and Hilton executive. Now, he said, the charity has a responsibility to Ford to account for how the proceeds are used.

Together again

After a nearly 30-year separation, Ford and Carroll Shelby went back into business together in 2005. Ford hired Shelby to help with development of a Mustang variant that went on sale last summer as the Ford Shelby GT500. Ford's sponsorship of the Shelby charity was a natural outgrowth of the new collaboration.

Ford spokeswoman Whitney Drake says the cooperation with Shelby's foundation is a good fit.

"Carroll is the oldest double-organ recipient," Drake said. Shelby received the heart transplant and later a kidney from his son, Mike, in 1996. "If he

hadn't benefited from his transplants, he wouldn't be with us today to help us collaborate on new products. This is another way for us to give back."

So far in 2007, the foundation has received $725,000 in cash through the auction of two Ford-donated Shelby GTs. Ford sold them at a Barrett-Jackson auction and then turned the proceeds over to the foundation.

The charity expects to reap at least $500,000 from raffle tickets it is selling for the donated 2007 Ford Shelby GT500. The winner will be announced Aug. 18.

"Only since our partnership with Ford have we had this kind of money," Luft said. "This is a learning curve. So you may see a low percent of money going out now so we can reach our endowment goal. Our bank (Wells Fargo) is helping us decide that (goal). None of us are schooled or trained in that area.

"Before, Carroll and Cleo would decide randomly" who would get the money, Luft said. "Carroll would basically give it to organizations that he knew, but he really was committed to giving back."

Small staff

According to tax documents, Shreeves earned $68,618 in 2005 as the foundation's only full-time employee. The staff now consists of three full-timers - Shreeves, her assistant and a project director who oversees the shipping of the autographed memorabilia. The foundation's directors receive no compensation.

Shreeves, a 34-year-old public relations specialist, has a nephew who had open heart surgery at birth. Now she is working with outreach groups such as the Children's Organ Transplant Association to help identify qualified grant recipients.

Most of the foundation's grants have been made to organizations in Los Angeles such as the National Institute of Transplantation, which does research on organ transplants, trains surgeons and conducts community and patient education programs. The institute was awarded three grants from 2002 through 2005 totaling $25,000.

On June 22, the foundation announced its first grant this year: a $10,000 donation to the Children's Medical Center in Dallas for the care of an 18-month-old girl born with a heart defect.

But with its new board of directors meeting this month for the first time, Luft said, the Shelby foundation is ready to join "the major leagues."

"Everything being done today is to make sure the foundation lives beyond Carroll," he said. "So we're looking at how we endow. Someday we won't have the autograph program. So this is the team that may effectively take the foundation over after Carroll is gone."