I've just figured out the scam that is being conducted under the name of Dwight D. Eisenhower and the foundation that bears his name.
Last year, our daughter received an invitation to apply for a place on a People to People (PTP) trip to China. She's a very smart kid and has been receiving college information (unsolicited) since the seventh grade, so we assumed that her name was on some sort of gifted or talented list. We were flattered that she was chosen and encouraged her to begin the process. She did, got interested, and took a trip to China early this summer.
Now, the trip is over, and the endless and incessant telemarketing calls have encouraged me to do some digging that I probably should have done a year ago. Here's what I've learned in the space of a few minutes' research:
1) The $8,500 trip was not conducted through the warm-and-fuzzy Eisenhower foundation, but through a Spokane-based public company called Ambassadors Group, Inc. (traded on NASDAQ under the symbol EPAX)
2) Ambassadors Group, Inc. (AGI) pays a kickback to the Eisenhower foundation for the right to use its name in marketing travel services to students
3) If the cost of the PTP adventure seems a bit high to you, you have good reason to be skeptical: In 2009, the last year for which financials are available, AGI reported a gross margin on travel services of 85 percent. That is, only 15 percent of the cost of the trips sold went to pay for airfare, accommodations, tours, etc.
4) Where did the 85 percent go? Well, almost half ($39 million) went to selling and marketing--a portion of which is surely the kickback to PTP. Another portion no doubt funds the expensive telemarketing system and the continual recruiting meetings from one end of the country to another.
5 The company's operating profit in 2009--a recession year, remember--was $30 million, or over 30 percent of sales. For this performance, the CEO of the $98M company took home almost $2M in total compensation.
Well, there it is. Can your son or daughter have a good experience on a PTP trip? Perhaps, but at a huge premium in price versus a guided family trip, for example. If you sign up, you might want to consider investing in EPAX to get some of your 85 percent back.