Where does your $1 to St. Jude Children’s Research Hospital Go?
If you’ve participated in any of the thousands of fund-raising activities for St. Jude Children’s Research Hospital or shopped at CVS, Target, Pottery Barn, Williams Sonoma, Dick’s Sporting Goods, Brooks Brothers, GNC, Claire’s, or Kmart, then you’ve probably been asked at the cash register to make a donation to the St. Jude Children’s Research Hospital. More than likely, you’ve said yes, as evidenced by the $976 million (nearly $1 billion) collected by the ALSAC (American Lebanese Syrian Associated Charities) – the fundraising organization for St. Jude Children’s Research Hospital – for the year ending June 30, 2013.
You may have been told that 100% of your donation goes to the hospital or patients (I was told this) but that does not appear to be accurate because ALSAC does not give the total donation to the hospital (based on their income tax filing). Of the $976 million collected by ALSAC, $488 million (50%) went to St. Jude Children’s Research Hospital while $278 million (29%) went to functional fundraising expenses (which include salaries, wages, benefits, mailings, campaign expenses, travel, and more including $3.3 million to 8 key employees for program services, management, and fundraising). The remaining $210 million (21%) went into their fund balance, which had $2.8 billion at year-end (most of which is in cash and securities).
In other words, for every $1 received, 50 cents went to St. Jude Children’s Research Hospital while 29 cents went to pay ALSAC’s functional expenses and 21 cents was added to their fund balance.
St. Jude Children’s Research Hospital received a total of $695 million for the year ending June 30, 2013. $488 million (70%) came from ALSAC along with $104 million (15%) from patients, $84 million (12%) from government grants and contributions, $10 million (1.5%) from other contributions, gifts, and grants, and $10 million (1.5%) from other sources, such as patents, licensing, cafeteria, vending machines, etc.
Functional expenses for the hospital were $654 million, most of which – $374 million (57%) – were salaries and management compensation-related expenses (note: $7.8 million was paid to 11 key highly compensated employees which equates to about $700 thousand each). Also reported: $93 million (14%) in other expenses (no detail provided on the tax return), $65 million (10%) on laboratory and pharmaceutical supplies, $21 million (3%) on occupancy, $10 million (1.5%) on IT, $10 million (1.5%) on travel, $5 million (1%) on legal, and more.
In other words, the hospital used that 50 cents as follows: about 28 cents for salaries and compensation-related expenses, 7 cents on other expenses, 5 cents on laboratory and pharmaceutical supplies, and 10 cents on all other expenses (occupancy, IT, travel, legal, accounting, interest, office, telephone, etc).
-$0.29: Functional expenses at ALSAC
-$0.21: Added to fund balance at ALSAC
$0.50: Given to St. Jude Children’s Research Hospital
-$0.28: Salaries and compensation-related expenses
-$0.07: Other expenses
-$0.05: Laboratory and Pharmaceutical supplies
-$0.10: Occupancy, IT, travel, legal, accounting, interest, office, telephone, etc
Given that St. Jude Children’s Research Hospital is a “research, treatment and educational center,” high salary expenses are to be expected because the primary services are labor intensive. Of course, there are pharmaceuticals, lab and surgical supplies but these expenses pale in comparison to the human labor cost. Smart, talented, and hard-working employees need to be well compensated or they will go elsewhere.
Most people don’t have a problem making a contribution to pay these expenses but they may take issue with having their charitable dollars pay some of the management and functional fees (see Part IX: Statement of Functional Expenses on Form 990) – especially those of the fundraising arm, ALSAC.
When functional expenses of a fundraising arm account for 29% of donated dollars, you have to ask how efficient the fundraising really is? The counter argument is that they spent 29 cents and got back $1, netting 71 cents (giving 50 cents to the hospital), although the question of whether they could have spent less to get the same dollars (and thereby contributing more to the hospital) also needs to be asked. But the bigger question is:
Why did ALSAC add $210 million to their fund balance and why keep $2.8 billion in a fund balance instead of giving more to the hospital to assist more children and families?
The website for the hospital says they have to keep 1.5 years of operating expenses (in case donations stop coming in) which equates to less than $1 billion. That leaves $1.8 billion that could go to treat more children.
There is also the issue of what many cashiers soliciting donations at the cash register of numerous retailers tell inquisitive customers: that their total contribution is going to the hospital. The tax returns tell a different story. But, this is not to say the hospital does not do great work – they do but as a donor, I want more than 50% of my contribution to go to the hospital and, although I don’t like being solicited at grocery or retail stores, I want to be told the truth if I ask where a donation goes.
All of the above figures were obtained from the IRS Form 990 filed by both entities: ALSAC and St. Jude Children’s Research Hospital, Inc. To access and review this information click on the links below:
Form 990 St. Jude’s Children’s Research Hospital, Inc. for the year ending June 30, 2013