July 9 (Bloomberg) -- Volunteers for a children’s clinic in Moline, Illinois, are collecting empty beer and pop cans after TARP slashed the money it will receive from the city’s John Deere Classic golf tournament.

Wells Fargo & Co. and U.S. Bancorp are among those that didn’t renew their sponsorship while under scrutiny for how they’re using Troubled Asset Relief Program money, said Clair Peterson, director of the golf tourney that starts today. Moline-based Deere & Co. is the main sponsor of the event, which was sixth in fundraising among 44 PGA Tour events last year.

“A lot of it is just being paranoid about what Congress has said about the sponsorships,” Zach Johnson, the 2007 Masters champion who serves on the Deere Classic’s board, said as he left the 18th green after a practice round this week. “It’s a misperception as to what really takes place and what the PGA Tour is about.”

Local charities share in the Deere Classic profits through bonuses on money they raise themselves. The groups collect pledges tied to how many birdies are made during tournament play. The event will pay a 5 percent bonus this year, down from the 10 percent last year that totaled $400,000, Peterson said.

When TARP recipient Northern Trust Corp. paid for singer Sheryl Crow to perform at its Los Angeles PGA Tour event in February, it triggered criticism from U.S. Representative Barney Frank, a Massachusetts Democrat, and other congressional leaders. Chicago-based Northern Trust repaid the $1.6 billion in federal aid last month.

Burden on Therapists

“Times are tough,” said W.K. Juncker, development director of the Children’s Therapy Center of the Quad Cities. “We are working our therapists to death. If we had the money lying around, we would probably add another person to the staff.”

Volunteers for the facility that treats disabled children are collecting empty beverage cans and claiming the 5-cent deposit refunds to make up for a smaller contribution from the Deere Classic, he said.

“Some of us may be forced out of existence,” said Claudia Robinson, chief executive officer of Gilda’s Club Quad Cities, a support center for cancer patients. “We are all chasing the same dollar, and the dollar can become 10 cents if we have to split it 10 ways.”

The Quad Cities are a cluster of four communities along the Mississippi River on the Iowa-Illinois border. Unemployment among the 375,000 residents jumped to 6.9 percent in May from 4.7 percent a year earlier, according to Illinois state data. Deere has laid off more than 1,100 people this year, including more than 200 in Davenport, Iowa, one of the Quad Cities, and its fiscal second-quarter profit fell 38 percent.

Need for Services

The loss of sponsors “multiplied the difficulties of putting on a tournament in a recession,” said Peterson, the tournament director. The 500 participating charities, including libraries, veterans groups and homeless shelters, will receive less while demand for their services is rising, he said.

In addition to Johnson, competitors in this year’s Deere Classic include Lucas Glover, the U.S. Open winner, and Shaun Micheel, the 2003 PGA Championship winner. The tournament is held at Deere Run, a Tournament Players Club built in 2000 on land once owned by Patricia Hewitt, the great-great- granddaughter of company founder John Deere.

Mortgaging for Tournament

Before Deere, the world’s largest maker of agricultural equipment, became the main sponsor, local organizers took out second mortgages on their homes to keep the tournament going, said Decker Ploehn, a board member and city administrator for Bettendorf, Iowa, another of the Quad Cities.

This year, QCR Holdings Inc. decided against sponsoring a hospitality tent at the hometown event because of public and political sentiment, said Todd Gipple, chief operating officer for the Moline-based parent of Quad Cities Bank & Trust. The U.S. Treasury bought $38.2 million in QCR senior preferred stock as part of TARP’s capital purchase program, the company said.

Wells Fargo dropped its Deere Classic support because of the weak economy, said Angie Kaipust, a spokeswoman. She declined to say whether its $25 billion in TARP funds was a consideration. The San Francisco-based bank will donate $55,000 directly to charities in the Quad Cities area, about as much as last year, she said.

Dropping Milwaukee

Minneapolis-based U.S. Bancorp is contributing to the Deere Classic’s charity fund, said Steve Dale, a spokesman. The bank, which repaid its $6.6 billion of TARP money last month, also will drop its lead sponsorship of Milwaukee’s PGA tournament after this year. The changes are being made not because of TARP but after re-evaluation of the company’s philanthropic giving, Dale said.

Some federal aid recipients, such as New York-based Morgan Stanley, which repaid $10 billion of TARP money last month, are sponsoring the Deere Classic this year. Deere’s lending unit also received federal aid.

Ten Chevrolet dealers stepped in to fill the gap left by General Motors Corp.’s Buick division when it dropped its sponsorship, saving the tournament $100,000, Peterson said.

Deere isn’t ready to comment on whether it will extend its sponsorship after next year, when its contract ends, said Bill Becker, director of global brand management. Deere benefits from the global television broadcast, being the official golf-course equipment supplier and other agreements with the PGA Tour, he said.

Players said they appreciate the dilemma facing companies such as Deere, even if they resent the congressional criticism of their sport.

“People are kind of holding their money close to the vest,” Micheel said. “The first things that go are some of the things like golf, the entertainment -- putting $3 or $4 or $5 million into a golf tournament when you are having to lay people off. And I understand that.”

To contact the reporter on this story: Melita Marie Garza in Chicago at mgarza4@bloomberg.net.

Last Updated: July 9, 2009 00:01 EDT