[May Be Updated. Carol Costello, Cnn Anchor:] It's always a controversy, where does money given to charities actually go? The company that runs huge AIDS and breast cancer walks and rides is under fire for not giving charities a larger percentage of the return. CNN's Patty Davis takes a look.
[Patty Davis, Cnn Correspondent:] The Washington, D.C. AIDS Ride, 330 grueling miles, an estimated $3.5 million raised for AIDS charities. Coffee shop owner Dale Roberts and many of his friends who rode last year refused to take part this time.
[Dale Roberts, Former D.c. Aids Rider:] I raised over $5,000 last year. And from the numbers that they said, it was about 50 percent went to overhead and Pallotta.
[Davis:] Although Pallotta Teamworks, a for-profit company hired to run the D.C. AIDS Ride, is only making $225,000 from the event, it has been criticized for its high overhead and expenses at this and other charitable events it runs. A class action lawsuit over three rides last year alleged Pallotta had promised a return to AIDS vaccine research of around 60 percent but delivered far less, just 21 percent.
[Victor Schachter, Attorney:] When you think that in the year 2001 that almost $19 million was raised and only $4 million of that went to the beneficiary organizations, you wonder who the fund raising is really for.
[Davis:] The controversy over how much the groups receive has prompted Washington's AIDS Ride sponsors and Pallotta to sever ties next year. [voice-over]: Pallotta Teamworks owner Dan Pallotta says it costs money to make money.
[Dan Pallotta, Pallotta Teamworks:] We have to pay for meals for people, we have to keep them safe, we have to provide medical support, we have to provide water and snacks and electrolyte drinks along the route. We have to advertise throughout the year. Why does it cost a lot of money to raise this much money? Part of it is because we have to spend so much on advertising.
[Davis:] Pallotta says his company has raised $225 million for charity over the last eight years. On average, he says, 60 percent of the money raised from events goes to charity. That's close to the 65 percent recommended by the Better Business Bureau's charity watchdog group.
[Unidentified Male:] Congratulations, riders. Thank you very much.
[Davis:] Even though he's not on his bicycle this year, Dale Roberts is supporting riders with free drinks at his coffee shop.
[Roberts:] By doing this, we're showing that we support the cause.
[Davis:] With Washington AIDS groups planning to run the AIDS Ride on their own next year, Roberts says he may even saddle up again. Patty Davis, CNN, Washington.