THE NONPROFIT SCANDAL OF THE YEAR: THE FIESTA BOWL
Bill Jones

EXECUTIVE SUMMARY – The overriding failure of the Fiesta Bowl’s Board of Directors (BoD) was its abrogation of its Duty of Care in managing the Nonprofit Organization (NPO). The Duty of Care requires directors of an NPO be reasonably informed about the organization’s activities, participate in making decisions, and do so in good faith with the care an ordinary prudent person would exercise in similar circumstances. This duty requires the individual BoD members pay attention to NPO activities and operations. Per a New York Times summary, top executives at the Fiesta Bowl funneled campaign contributions to local politicians, flew other Arizona elected officials to various points around the country at the bowl’s expense, racked up a $1,200 bill at a strip club and even spent $30,000 on a birthday party for the chief executive, according to an investigative report commissioned by the Bowl’s BoD. Lessons on internal controls from the scandal are important to sports programs’ cultures throughout the country. This scandal could determine how an NPO’s tax exempt status is overseen. The scandal also had implications for political contributions and NPO governance.
FACTS OF THE SCANDAL
Known in Arizona as the "Nonprofit Scandal of the Year," the Fiesta Bowl, the umbrella organization for four Section 501(c)(3) organizations the Arizona College Football Champion, the Arizona Sports Foundation, Fiesta Events, and the Valley of the Sun Bowl Foundation were rocked by avoidable controversy. The Fiesta Bowl staff learned of the problem following an Arizona Republic newspaper article December 18, 2009 written by Craig Harrison. The staff then retained Grant Woods, a former Arizona Attorney General to conduct the first investigation into allegations in the Republic article. Woods reported to the Fiesta Bowl's