by Glenn Stout
Make no mistake, though: if Armstrong is indicted, the survival of Livestrong will hang in the balance. It seems obvious that Novitzky, an aggressive former IRS agent, would be keenly interested in the organization and how it operates. If so, he’s not alone. At least two other major publications have done serious reporting on Livestrong—that is, they started to. In both cases, Livestrong lawyers succeeded in shutting down the stories before they were published. They applied the same pressures to Outside, blitzing my editors with pissed-off emails, phone calls, and, eventually, a five-page letter from general counsel Mona Patel complaining about “Mr. Gifford’s conduct, professionalism, and method of reporting.” One of my crimes was a failed attempt to get a source to talk off the record, an ordinary journalistic practice.
All of which now makes me wonder if I missed something. During an investigation that played out over several months—involving dozens of interviews and careful examination of Livestrong’s public financial records—I found no evidence that Armstrong has done anything illegal in his role as the face of the organization. As far as I can tell, he paid for the private jet himself—which is now for sale, by the way, along with his ranch outside Austin—and he’s apparently been scrupulous about his expenditures as they relate to the nonprofit. When Armstrong travels on Livestrong business, the foundation insists, he picks up his own tabs.
“Since day one, Lance has never been reimbursed for an expense,” says Greg Lee, Livestrong’s CFO. “Period.” Armstrong told me that Livestrong’s board—which includes venture capitalist Jeff Garvey, CNN medical reporter Sanjay Gupta, and Harlem cancer fighter Harold Freeman—“would resign immediately if any of that shit happened.”
The financial records appear to back up Armstrong’s assertion, and if there’s a more nefarious reality behind the curtain, it may take someone with subpoena power to bring it to light. In addition to Novitzky’s investigation, the IRS examined the foundation’s 2006 returns, although Livestrong officials say it was a routine review.
On the program side, I learned that Livestrong provides an innovative and expanding suite of direct services to help cancer survivors negotiate our Kafkaesque health care system. Beyond that, though, I found a curiously fuzzy mix of cancer-war goals like “survivorship” and “global awareness,” labels that seem to entail plastering the yellow Livestrong logo on everything from T-shirts to medical conferences to soccer stadiums. Much of the foundation’s work ends up buffing the image of one Lance Edward Armstrong, which seems fair—after all, Livestrong wouldn’t exist without him. But Livestrong spends massively on advertising, PR, and “branding,” all of which helps preserve Armstrong’s marketability at a time when he’s under fire. Meanwhile, Armstrong has used the goodwill of his foundation to cut business deals that have enriched him personally, an ethically questionable move.
“It’s a win-win,” says Daniel Borochoff, head of the American Institute of Philanthropy, a watchdog group. “He builds up the foundation, and they build up him.”
Equally interesting is what the foundation doesn’t do. Most people—including nearly everybody I surveyed while reporting this story—assume that Livestrong funnels large amounts of money into cancer research. Nope. The foundation gave out a total of $20 million in research grants between 1998 and 2005, the year it began phasing out its support of hard science. A note on the foundation’s website informs visitors that, as of 2010, it no longer even accepts research proposals.
Nevertheless, the notion persists that Livestrong’s main purpose is to help pay for lab research into cancer cures. In an online “60 Minutes Overtime” interview after the May broadcast, CBS anchor Scott Pelley said Armstrong’s alleged misdeeds were mitigated because “he has raised hundreds of millions of dollars for cancer research.”
Pelley isn’t alone in getting that wrong: a search of the New York Times turns up dozens of hits for “Armstrong” and “cancer research.” An Associated Press story from August 2010 described Livestrong as “one of the top 10 groups funding cancer research in the United States.” The comments section of any article about Armstrong will inevitably include messages like this one from ESPN.com: “keep raising millions for cancer research lance, and ignore the haters.” At one point, the foundation brought in a PR consultant to try and clarify the messaging, but Armstrong himself says there’s only so much they can do. “We can’t control what everybody says they’re wearing the bracelets for,” he told me.
At the same time, though, Armstrong and his supporters help perpetuate the notion that they are, in fact, helping battle cancer in the lab. “I am here to fight this disease,” he angrily told journalist Paul Kimmage at a press conference held during his 2009 comeback. In 2010, the foundation agreed to let an Australian hospital call its new research facility the Livestrong Cancer Research Center. And when I recently visited my local RadioShack, a major Armstrong sponsor, the clerk asked, “Would you like to make a donation to the Livestrong foundation to help support cancer research?”
No wonder people get confused.
With its reclaimed-wood surfaces and industrial-chic design, Livestrong HQ resembles a cutting-edge Whole Foods—another signature Austin institution. Here in East Austin, the poorer side of town, there’s no Whole Foods, just dusty carnicerías that sell fantastic tongue tacos. A renovated warehouse, the $9 million building opened in 2009.
In the lobby, I meet Livestrong spokeswoman Katherine McLane and Chris Dammert, head of what’s known as navigation services. Our first stop is the building’s walk-in navigation center, adjacent to the main entrance, where bilingual staffers offer cancer patients financial consultation, help with insurance issues, and counseling. Since the center opened in late 2010, Dammert says, some 207 families have come in—lower traffic than he’d like. “We’re hoping to build awareness over time,” he says.
The walk-in center is a hands-on version of the online and telephone support services that Livestrong has offered since 2005. Dammert leads me upstairs to an area where two “navigators” are settling into their cubicles. This is where patients or loved ones can phone in to a hotline with questions. Depending on their needs, callers are either directed to one of two in-house social workers for emotional support or referred to outside agencies.
Livestrong sends about two-thirds of the callers to organizations like the Virginia-based Patient Advocate Foundation (PAF), which deals with insurance and billing issues. In 2010, Livestrong paid PAF $727,000 for helping its clients; the organization even has a staffer on-site in Austin. In addition, Livestrong helps connect people with clinical trials and offers assistance to patients who (like Lance did) need help learning about sperm banking or egg freezing. Last year, the foundation says, it saved its members more than $2 million on fertility services.
Lastly, Livestrong publishes a set of cancer guidebooks, which include a journal, a record keeper to help organize paperwork, and a manual walking readers through the many steps of treatment. These are available from the Livestrong website for free.
One unlikely “nav” beneficiary is cycling journalist Charles Pelkey, diagnosed last summer with male breast cancer. Pelkey has been a critic of Armstrong—“I don’t particularly like the man,” he says—but after he tweeted about his cancer, a Livestrong navigator contacted him to offer assistance. “There are really wonderful people who work there,” Pelkey says. “I respect everything they do.”
Dammert hands me off to McLane for the rest of the tour, and it’s clear Armstrong didn’t hire a milquetoast for the job. Tall and serious, she came to the foundation in 2007 from the Bush Department of Education. “My job was to defend the No Child Left Behind law,” she says. “Every teacher in America hated it, including my parents.”
Armstrong is a visitor, not a daily presence; when I was there in June, he had already decamped to Aspen for the summer. But his handprints are all over the place, from the framed yellow jerseys outside the staff gym to the enormous yellow chopper (a gift from the guys on Orange County Choppers) par
ked near the lobby. Every available surface is occupied by pieces from Armstrong’s art collection—including the Shepard Fairey “Lance face” poster and a wooden carving of a female torso emerging from a globe.
We end up in a conference room with 34-year-old Doug Ulman, Livestrong’s $320,000-a-year CEO. Earnest and intense, he looks like he could be Lance’s younger brother. Ulman was a sophomore soccer player at Brown University when he was diagnosed with a rare tumor and two types of melanoma. After successful treatment, he started his own foundation for young adults with cancer; Armstrong read about him in the Brown alumni magazine and sent an admiring email. They hit it off, and Ulman came aboard in 2001. At the time, Livestrong had four staffers and a budget of about $7 million. Now it has a staff of 88, and it took in $48 million in 2010.
Like his boss, Ulman is energized by adversity. Tacked to the wall of his cube is a photocopied quote from Ken Berger, the head of Charity Navigator, an influential ratings and watchdog group. “It is just going to devastate them,” he said in an Associated Press article.
“It” is the federal investigation against Armstrong, which Livestrong staffers have tried to compartmentalize. “We can’t predict what’s going to happen in the world of cycling,” Ulman says. “We have to stay focused on fulfilling our mission.”
That mission has evolved considerably. In the early years, Ulman says, the foundation awarded grants for research on both testicular cancer and cancer survivors. The grants were small, in the low six figures or less, and were aimed at scientists pursuing cutting-edge ideas.
“For a young researcher it was great,” says Julien Sage, a Stanford professor who received a total of $150,000 from 2004 to 2005. “I had no data, just an idea.” Small, speculative grants like his, he explains, are essential to young scientists who are developing the data they need to apply for more substantial government funding.
The main reason for the shift, Ulman says, was scale. The American Cancer Society raised $900 million last year. And the National Cancer Institute awards nearly $2 billion a year in research grants. Ulman says Livestrong was too small to make a difference in such a big pond. “We started to realize that there’s literally billions of dollars in cancer research, and we asked, Is that the best use of the money we’re raising?”
Point taken. It’s worth noting, though, that the Michael J. Fox Foundation had about the same revenue as Livestrong in 2008—$40 million—and gave away $33 million of that in grants for Parkinson’s research. The Susan G. Komen Foundation also does a huge amount of pink-ribbon “awareness” work, but it still dished out $145 million in breast-cancer research grants over the past two years. With Livestrong gone, there is no equivalent private funder for testicular-cancer research.
Sage says that the kind of contribution Livestrong was making is still needed. “It’s a mistake to stop supporting basic research, because there are a lot of things we can learn,” he says. “There are still people who die from testicular cancer, and we need to look for better ways to treat them.”
Ulman doesn’t see it that way. “We are all about people,” he says. “Most organizations are about the disease. They’re about trying to solve a disease, and we are about trying to improve the lives of people that are battling the disease . . . What can we do today to improve their lives? As opposed to saying we’ll fund research that in 15 years might help somebody live a little longer.”
McLane agrees. “If we applied the science we already have, we could cure almost everybody,” she says. “The search for a cure could have already been successful. It’s removing the barriers to the treatment that can cause that cure that is the real problem for many people all over the world.”
After Armstrong retired from cycling, the only direction his foundation seemed to be moving was down. In 2005, the last year he won the Tour, revenues grew to $52 million, fueled largely by the famous $1 Nike Livestrong wristband. But when Armstrong left the spotlight, the wristband fad waned and foundation revenues sagged by $20 million the next year.
They stayed lower despite a notable success in 2007, perhaps Livestrong’s greatest achievement. Armstrong spent much of that year campaigning for Proposition 15, a Texas ballot initiative to create a huge pool of public money for cancer research and prevention. He worked the Texas legislature and traveled the state by bus with then–state representative Patrick Rose, and the measure passed. “There is no chance that Prop 15 would have become a reality but for Lance’s personal involvement,” Rose says today.
But it took Comeback 2.0 to put Livestrong on people’s radar again. Armstrong announced his plans in a September 2008 Vanity Fair interview, in which he said his return would be built around what he called a “global cancer summit.” The comeback was portrayed as a completely charitable mission. “I am essentially racing for free,” he told the magazine. “No salary. No bonus. This one’s on the house.”
His reboot was a smashing success: huge crowds and adoring headlines greeted Armstrong’s return to racing at the Tour Down Under in Australia. In Sacramento, fans lined the prologue course of the Tour of California waving yellow signs with the Lance face and the slogan HOPE RIDES AGAIN. He ended up with a podium finish at the 2009 Tour de France, and Livestrong revenue surged back over the $40 million mark.
But the comeback also saw Livestrong’s final evolution from a research nonprofit into something that looks more like a hip marketing agency. Rather than funding test-tube projects, it was deploying buzzwords like leverage, partnering, and message.
One way to spread the message is to slap Livestrong’s name on just about everything, from Livestrong Survivorship Centers of Excellence (there are eight at major hospitals nationwide) to Oakley sunglasses to, at one point, a Livestrong Build-a-Bear (complete with yellow cycling outfit). The Livestrong label is so appealing that the owners of the Major League Soccer franchise Sporting KC decided to donate the naming rights for its new stadium, guaranteeing the foundation $7.5 million over six years. Normally, a corporation would pay to have its name put on such a venue, but team owners are betting that Livestrong Sporting Park will attract more business and goodwill than, say, AT&T Arena would. (Lance even has his own seat: Box 1, Seat 007.)
Did the doping allegations bother them? “We asked the foundation about that,” says team co-owner Robb Heineman. “They said he’s the most tested athlete in the history of sports, and he maintains he’s never done it.”
Livestrong prides itself on the fact that—on paper anyway—it spends 81 percent of every dollar on programs. This is a big improvement over 2005, when the American Institute of Philanthropy took Livestrong to task for spending 45 cents of every dollar on fund-raising. Now AIP gives Livestrong an A-minus, while Charity Navigator rates it three stars out of four.
But the foundation’s financial reports from 2009 and 2010 show that Livestrong’s resources pay for a very large amount of marketing and PR. During those years, the foundation raised $84 million and spent just over $60 million. (The rest went into a reserve of cash and assets that now tops $100 million.)
A surprising $4.2 million of that went straight to advertising, including large expenditures for banner ads and optimal search-engine placement. Outsourcing is the order of the day: $14 million of total spending, or more than 20 percent, went to outside consultants and professionals. That figure includes $2 million for construction, but much of the money went to independent organizations that actually run Livestrong programs. For example, Livestrong paid $1 million to a Boston-based public-health consulting firm to manage its campaigns in Mexico and South Africa against cancer stigma—the perception that cancer is contagious or invariably fatal.
Livestrong touts its stigma programs, but it spent more than triple that, $3.5 million in 2010 alone, for merchandise giveaways and order fulfillment. Curiously, on Livestrong’s tax return most of those merchandise costs were categorized as “program” expenses. CFO Greg Lee says donating the wristbands counts as a program because “it raises awareness.”
This kind of spending dwarfs Livestrong’s outlays for its direct services and patient-focused programs like Livestrong at the YMCA, an exercise routine tailored to cancer survivors available at YMCAs nationwide ($424,000 in 2010). There’s also a Livestrong at School program, offered in conjunction with Scholastic magazine ($630,000 in 2010). “Explain to students that Lance was very sick with cancer but that he was treated and got better,” begins one sample lesson plan for grades three through six.
Livestrong spends as much on legal bills as on these two programs combined: $1.8 million in 2009–2010, mainly to protect its trademarks. In one memorable case, its lawyers shut down a man in Oklahoma who was selling Barkstrong dog collars. Meanwhile, “benefits to donors” (also merchandise, as well as travel expenses for Livestrong Challenge fund-raisers) accounted for another $1.4 million in spending in 2010.
There’s still a research department, but now it focuses on things like quality-of-life surveys of cancer survivors. During my visit, I was plied with glossy reports and brochures, which are cranked out by the truckload. The foundation’s 2010 copying-and-printing bill came to almost $1.5 million.
But Livestrong’s largest single project in 2009—indeed, the main focus of Armstrong’s comeback—was the Livestrong Global Cancer Summit, held in Dublin in August. The summit ate up close to 20 percent of the foundation’s $30 million in program spending that year.