Orange County Register

(Name corrected below)

Buy a $150 raffle ticket. Win a $1.2 million house. What’s not to like?!

This particularly brilliant bit of fundraising is employed by two local non-profits, The Ocean Institute in Dana Point, and the Irvine Public Schools Foundation.

Which got The Watchdog to thinking. How much money do these house raffles really cost, and how much do they bring in?

Today, we’ll poke into the financials of the Ocean Institute - home of the tall ship Pilgrim and lots of fishies and thousands of kiddies on field trips. Beloved by many, it barely earns two of four possible stars from nonprofit watchdog Charity Navigator, which maintains it is not as efficient as other similar charities.

The Ocean Institute’s most recent tax returns show that the house raffle is almost single-handedly responsible for turning around OI’s ailing finances. (In the interest of full disclosure, the Register is a sponsor of the raffle.)

RED INK TO BLACK

Just a few years ago, the Ocean Institute was awash in red ink. It spent more than it earned in two of the three years examined.

Then, voila! The house raffle began. And so did the surpluses. In 2006:

• It cost $1.8 million to do the house raffle;
• It brought in $2.6 million;
• and it cleared $824,545 for the Institute, after all was said and done.

The Institute’s deficit, which was as high as $732,345 in 2004, turned into a $594,577 surplus in 2006.

It racked up a net surplus of $633,658 in 2007, as well, and was named “Business of the Year” by the city of Dana Point. (Read Chris Daines’ report about this year’s raffle here.)

IN RECOVERY

The two years of overspending are largely responsible for the Institute’s low rating on Charity Navigator, but it is now moving full steam ahead in a positive direction, said Stetson.

“We just had the best two years in the history of the organization, from a financial perspective,” he said. “I’ve been here for 16 years, and president for a little over two years, and as you can see from the numbers, we’ve had a tremendous turnaround, which is great for the organization. A large part of that is due to our raffle, which has proven to be an effective source of fund raising and a tool for raising awareness as well.”

This is the fourth year for the house raffle. It launched one month ago, and has already raised more than $900,000. The grand prize drawing will be Nov. 8. In past years, tickets have been sold in all 50 states, and in 15 countries, said Stetson. “It’s been extremely helpful to the health of the organization.”

IT TAKES MONEY TO MAKE MONEY

Institute’s Tall Ship Festival - a big favorite of would-be pirates (coming up Sept. 6 and 7) - is a very modest money-maker. Here’s the financial detail on its other special events:

• The Tall Ship Festival cost $97,246; brought in $120,791; and cleared $23,545.
• The golf tournament cost $116,991; brought in $280,296; and cleared $163,305.
• The build-a-boat event cost $25,417; brought in $64,630, and cleared $39,213.
• The jazz event cost $121,124; brought in $219,074; and cleared $97,950.

SMILE! THE THREE-YEAR $NAPSHOT

Between 2004 and 2006, the Ocean Institute’s:

• Revenue has grown by a healthy 31 percent ($5.37 million to $7 million).
• Expenses increased only 5 percent ($6.1 million to $6.4 million).
• Net assets increased 3 percent ($15.8 million to $16.4, mostly due to its ocean-front property).

Said Stetson: “We just raised $16.5 million to build this new facility. It’s very expensive to operate, and we have three very expensive tall ships. This is actually our 30th anniversary, and we set a record in the number of students attending - 116,000.” It has 121 employees and 400 volunteers.

FUN NEW STUFF

Construction on a new Seaside Learning Center - expected to be the last major bit of construction at the Institute - will start this fall and wrap up in the spring. About $2.5 million of the $4 million price tag has been raised. There will be a new, longer dock/learning space, a “historic pier,” and new exhibits and acitivites for the kids. ”There are great naming opportunities,” Stetson said.

WHO MAKES WHAT?

To the Institute’s credit, compensation for the head honcho is below the national average of $150,000. Here are the top-paid employees (including benefits):

• Daniel Stetson, president: $138,115
• William Burger, vice president, $129,350
• Henry Helling, vice president, $117,575
• Stephen Dougherty, financial officer, $95,300
• Bentley Cavazzi, marketing director, $73,035

There were two independent contractors earning more than $50,000, and they’re all about advertising. They are:

• Gregory Goggins, Summerland, $120,000
• Ronald L. Geisman, Laguna Beach, $72,159

So. There you go. If you’re going to buy a ticket for the raffle, you are now fully informed.

(CORRECTION: The name “Bentley Cavazzi” was originally posted as “Beverly Cavazzi.” The Watchdog regrets the mistake and promises to make an appointment with the eye doctor.)

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