September 5, 2002 | Read Time: 2 minutes
A for-profit company that organized bikeathons to benefit people with AIDS and charity walks for breast-cancer research has suspended most of its operations and laid off 250 employees, according to The San Francisco Chronicle and The Washington Post.
Pallotta TeamWorks, in Los Angeles, had raised $222-million for charities since 1994, according to the company’s Web site. The company did not respond to requests for comment from The Chronicle of Philanthropy. Jayne Kacer, of Costa Mesa, Calif., a lawyer for the company, confirmed that Pallotta TeamWorks had furloughed many of its workers. A spokeswoman for the company told the Associated Press that the shutdown was designed to save money and guarantee that its scheduled events could go on as planned.
The fund-raising company has been embroiled in recent years in lawsuits and other challenges by AIDS groups over bikeathons it had organized in California. Advocacy groups there were sued by the company after they announced plans to hold their own bikeathon events earlier this year. A California court denied Pallotta TeamWorks’ claim of exclusive rights to bikeathons that raise money for people with AIDS.
AIDS activists and others also questioned whether Pallotta TeamWorks was turning over enough of the money it raised through events to charity and research groups. The company’s founder, Dan Pallotta, was accused by some AIDS-organization leaders of spending too much on marketing campaigns and expenses.
Critics of the group in Washington, D.C., say that nearly 86 percent of the $3.6-million raised in June during a Pallota TeamWorks–organized bikeathon went to expenses, largely because the event drew 50 percent fewer participants than it did in 2001, according to charity leaders. Six previous D.C. AIDSRides had raised a total of $15-million for charities, says Craig M. Shniderman, executive director of Food & Friends, a charity that serves meals to people with AIDS or cancer.
