Where does $100 to March of Dimes Go?
If you made a $100 donation to the March of Dimes (MOD) in 2015, how was that money spent? According to the IRS Form 990 (2015), there are two ways in which to look at how that donation was spent: by looking at the four categories in which the organization classifies expenses: program, management, fundraising, and grants; or by looking at the line item expense, with the later providing more detail:
-$ 56: Salaries, Benefits
-$ 11: Printing
-$ 10: Other Expenses (no detail provided)
-$ 7: Postage
-$ 5: Office
-$ 5: Travel and Conferences
-$ 3: Telemarketing/Data Fees
-$ 1: Equipment Rental
-$ 1: Other Services (accounting, legal)
-$ 99: Subtotal Line Item Expenses
$ 1: Amount Remaining
-$ 16: Grants to Domestic and Foreign Organizations
-$1.15: Total Amount Spent
As illustrated above, MOD spent $1.15 for every $1 in revenue raised in 2015 (the organization raised $185 million in cash revenue and spent $211.8 million in cash expenses, leaving a shortfall of $26.8 million. To meet the shortfall, the organization relied on the funds in the fund balance. The net fund balance only had $24.6 million and had to also recognize $3.4 million in unrealized losses in their securities portfolio. To prevent insolvency, the organization booked $19.4 million in pension/post-retirement credits (thereby reducing pension liabilities) which left the organization with $13.4 million in net fund assets (like a savings account) at year-end.
If expenses are viewed by category (program, management, fundraising or a grant), then the $100 contribution was spent as follows:
-$ 71: Program Expenses
-$ 16: Fundraising Expenses
-$ 12: Management Expenses
-$ 16: Grants
-$115: Total Amount Spent
In 2015, MOD spent more than they raised, just as they did in 2014 (the organization raised $196 million and reported $204 million in expenses). Although the organization had $140 million in net assets at the beginning of FY 2015 (with nearly $105 million in liquid cash or securities), they had four large liabilities: $78.5 million in retirement benefits and medical accruals of their employees, $19.9 million in grants payable, $9.9 million in accounts payable, and a $5 million unsecured note payable.
Spending approximately $26.8 million more than the organization brought in in 2015 put the organization in a difficult financial position which resulted in several cost cutting measures including layoffs that resulted in the payment of $2.2 million in severance packages. However, it is important to note that the 10 most highly compensated staff received $3.7 million in 2015:
- Jennifer Howse, President: $512,011
- Lisa Bellsey, Esq, EVP: $438,726
- Richard E Mulligan, Former EVP: $431,346 (including $251,081 in other comp which appears to be severance)
- Edward McCabe, MD, Medical Director: $414,633
- Joseph L Simpson, SVP: 395,700
- Paula Ransom, SVP: $348,685
- Donica Montague, VP, Philanthropy: $305,714
- Nora Gooch, SVP: $304,806
- Gerald Carrino, SVP: $296,235
- David Horne, Asst Treasurer: $274,091
In 2015, MOD also reports first class or charter travel and gross up payments. Although the tax return does not say how many staff flew first class, the return does say the organization permitted the President of the organization (Jennifer Howse) to use unrestricted flights or business class on all fights to minimize flight change fees. Really. With the difference between tourist and business often thousands of dollars and change fees usually $200, how can an organization justify having anyone flying business and/or first class? And, how can any organization who is spending more money than they are bringing in justify business or first class travel? It is important to note that Stacey D. Stewart replaced Jennifer Howse as President of the organization beginning January 1, 2017.
The IRS Form 990 also reports MOD utilizes all types of solicitations – mail, e-mail, phone, in-person, events, and grants – to raise funds. In 2015, the organization reported the 7 highest paid fundraisers raised $8.2 million and were compensated $5.3 million (65 cents of every dollar) leaving $2.9 million (35 cents of every dollar) although the tax return indicates the MOD received $3.6 million (which appears to be because the organization did not deduct $700,000 in fees to a fundraiser). The 7 organizations are:
- Infocision Management Group: Raised $2.4 million, compensated $1.8 million, $600,000 to MOD
- Community Counseling Services: Raised $2.2 million, compensated $1.2 million, $1 million to MOD
- The Pursuant Group: Raised $1.3 milloin, compensated $700,000: $600,000 to MOD
- The Donor Care Center: Raised $1 million, compensated $650,000: $350,000 to MOD
- The Maness Group: Raised $800,000, compensated $70,000: $730,000 to MOD
- Advanced Business Technology: Raised $400,000, compensated $100,000: $300,000 to MOD
- Thompson, Habib, and Dennison: Paid $700,000
In conclusion, MOD has been spending more money than it raises with the largest portion of the funds (56%) allocated to compensating staff. $18 million in “other” cash expenses are reported on the tax return without detail which represents 10% of revenue in 2015. The organization’s largest liability is to its employees in the form of pension benefits and medical accruals ($54 million at FYE 2015). The organization also appears to be compensating professional fundraisers very well, leaving less than 35 cents of every dollar they raise for the organization. The IRS Form 990 also reports the senior staff is well compensated ($3.7 million to the 10 most highly compensated individuals) with business and/or first class travel permitted despite the financial situation of the organization.
To read the IRS Form 990, click here.